|dc.description.abstract||The question arose whether an employee could be fairly dismissed in cases of transfer of a business. Common law caused great uncertainty in respect of the employment contracts of employees. They were dismissed by their former employer, to the effect that they had to apply for work at the new employer all over again. Section 197 of the 1995 LRA, which was amended by the Labour Relations Amendment Act 12 of 2002, was brought into life. According to this section employees, along with all their rights and obligations, will automatically transfer with the business to the new employer, hereby ensuring the continuity of the employees' employment. The business had to be transferred as a going concern to qualify for the protection offered by section 197. When an insolvent business is transferred, section 197A ensures that the employees within that solvent business transfers with the business to the new employer, as if it is a solvent business. Their rights and obligations remain in force against the former employer.
Effect must be given to the right of every employee to fair labour practices in terms of section 23 of the Constitution of the Republic of South Africa, 1996. There for, in terms of section 187(1)(g) of the 1995 LRA, the dismissal of an employee which is based on the transfer of a business, is strictly forbidden. Dismissal in these cases will be deemed automatically unfair. However, to sustain a balance between the rights of the employee and the rights of the employer, the employer must be able to dismiss an employee. Such dismissal will be fair only in cases where it is based on the employer's operational requirements.
An attempt will be made to compare the South African law with the English law. The English common law also caused uncertainty regarding the employees' contracts. The answer to this uncertainty was the Employment Protection (Consolidation) Act 1978 [EP(C)A] and the Transfer of Undertakings (Protection of Employment) Regulations 1981 which has been amended by the 2006 TUPE Regulations. Paragraph 17 of the
EP(C)A ensures the continuity of the employees' employment contracts, whilst regulation 4 of the 2006 TUPE Regulations regulates the automatic transfer of the employees to the new employer.
In order to transfer in terms of the 2006 TUPE Regulations the employee had to be in the employer's employment immediately prior to the transfer of the undertaking took place. The undertaking also had to be transferred as a going concern. If an insolvent business was to be transferred, a wholly owned subsidiary business would be formed in terms of regulation 4 to take over the functions of the solvent business until it is sold. During this time the former employer lends his workforce to the subsidiary business. When the business is sold the employees has to transfer to the new employer.
In English law the dismissal of employees based on the transfer of a business is not prohibited, but in terms of regulation 7(1) of the 2006 TUPE Regulations it will be automatically unfair under which circumstances the employee can claim damages or reinstatement. As is the case in South African law, the employer is being provided of an escape route. Should an employer wish to get rid of an employee, he can fairly dismiss that employee in terms of regulation 7(2) only if the dismissal is based on economical, technical or organisational reasons.
The ultimate purpose of this dissertation is to prove the existence of grounds for the fair dismissal before or after a transfer of business of undertaking. In South African law, dismissal can be fair when it is based on the operational requirements of the employer, and in the English law dismissal can be fair when it is based on some economic, technical or organisational reason. The dissertation will be written in the form of a law comparison by using textbooks, law reports, law journals and legislation.||