THE APPLICATION OF SECTION 197 OF THE LABOUR RELATIONS ACT IN AN OUTSOURCING CONTEXT (PART 2)

Abstract

Section 197 of the Labour Relations Act (LRA) in both its original form and in its amended form caused much confusion and debate. An analysis of the amended section 197 was conducted by considering the interpretation and application of the courts as well as various authors’ views. This analysis attempted to clarify the impact of section 197 on transfers of businesses as going concerns. An analysis of the application of section 197 to outsourcing arrangements then followed. It showed that a distinction between first- and second-generation outsourcing is paramount to determining whether or not section 197 is applicable to outsourcing arrangements. Case law has not provided certainty in this area as the various courts have held opposing views with regard to whether a literal or purposive approach should be adopted. All the implications (whether positive or negative) should be rigorously considered by the courts to clarify the true application of section 197 in an outsourcing context.