Schenellecke Logistics Parts and Accessories (Pty) Ltd v Schenker South Africa (Pty) Ltd and Others

Schenellecke Logistics Parts and Accessories (Pty) Ltd provided warehousing and operations management services at Mercedes-Benz South Africa Ltd’s Parts Logistics Centre (PLC) from 1 January 2017 under successive contracts, ultimately expiring on 28 February 2025. The services were heavily regulated by MBSA through RFQs, contracts, and IT systems, and included assets, systems, premises, and an established workforce. With effect from 1 March 2025, MBSA appointed Schenker South Africa (Pty) Ltd as the new service provider. Schenellecke alleged that the services to be taken over by Schenker were the same or substantially the same, that the PLC operation constituted a discrete business or part of a business, and that it would transfer as a going concern in terms of section 197 of the Labour Relations Act 66 of 1995, requiring the automatic transfer of employees. Schenker opposed the application, contending that only a change of service provider would occur, not a transfer of a business, and that it would use its own systems, methods, and a reduced workforce.

The Court declared that the cessation of services by Schenellecke and commencement of services by Schenker from 1 March 2025 constituted a transfer of a business or part of a business as a going concern in terms of section 197 of the LRA, and directed Schenker to comply with its obligations under section 197, including taking over the affected employees and concluding a section 197(7) agreement.

The judgment reinforces a substance-over-form approach to section 197 of the LRA in outsourcing and re-tendering scenarios. It confirms that where an organised economic entity with operational continuity transfers between service providers, section 197 applies, even if the client retains ownership of assets and systems. The case strengthens employee protections in repeated outsourcing arrangements common in logistics and industrial operations.