Aviation Union of South Africa and Another v South African Airways (Pty) Ltd and Others

South African Airways (SAA) outsourced its facilities management services to LGM South Africa Facility Managers and Engineers (Pty) Ltd (LGM) under a long-term outsourcing agreement concluded in 2000. SAA’s employees engaged in those services were transferred to LGM in terms of section 197 of the Labour Relations Act 66 of 1995 (LRA). In 2007 SAA terminated the outsourcing agreement due to LGM’s breach and intended either to take the services back in-house or to contract them out again. LGM contemplated retrenching its employees. The Aviation Union of South Africa and another union sought declaratory and interdictory relief, contending that the termination of the outsourcing agreement and continuation of the services by SAA or another contractor constituted a transfer of a business as a going concern under section 197, requiring automatic transfer of employees.

Leave to appeal was granted. The appeal succeeded and the order of the Supreme Court of Appeal was set aside. The order of the Labour Appeal Court was effectively restored, declaring that section 197 is capable of application when services provided under the outsourcing agreement are taken over by SAA or contracted out to another party.

This case is a leading authority on the application of section 197 of the LRA to second-generation and subsequent outsourcing. It confirms that employees are not deprived of statutory protection merely because a business is outsourced more than once, and it entrenches a purposive, constitutionally compliant interpretation of labour legislation.