Where a whole or part of a business is transferred to another as a going concern section 197 of the Labour Relations Act comes into effect. This forces the new entity to take over all the obligations of the old undertaking.

Quite often a outsourcing undertaking may trigger s197 (of the LRA) and should both parties be unaware of such, it could land them in hot water.

BGD discusses when this may happen and what Employers should consider before outsourcing a part of their business. 

Case Law:
South African Municipal Workers Union and Others v Rand Airport Management Company (Pty) Ltd and Others (JA9/03) [2004] ZALAC 17 (LAC)