One of the ways that an employer can terminate an employment contract is by dismissing an employee. The common law position is that the employment relationship that existed between the employer and the employee comes to an end by virtue of dismissal.

One of the ways that an employer can terminate an employment contract is by dismissing an employee. The common law position is that the employment relationship that existed between the employer and the employee comes to an end by virtue of dismissal.

But this is not the case under the Labour Relations Act. According to the act, the employment relationship continues beyond the termination of an employment contract. Let us take a case where an employer sells a business as a going concern and before the sale, employees were dismissed and these dismissals were challenged. The question is whether or not the dismissed employees continue to be employed by the new employer who purchased the business.

Section 197 of the act regulates the sale of business as a going concern. This section says that if a transfer of a business takes place, then, unless otherwise agreed, the new employer is automatically substituted for the old employer regarding the contracts of employment in existence immediately before the date of transfer. This requires that an employment contract be in existence, otherwise no transfer can take place.

The same section says that anything done before the transfer by the old employer, including the dismissal of an employee, the commission of an unfair labour practice or an act of unfair discrimination, is considered to have been done by the new employer. This means that the new employer is liable for the dismissal that happened before the transfer occurred.

This issue came before the labour appeal court in the matter of Transport Fleet Maintenance and another versus Numsa and others, and the relevant section was the old 197. In this case, the court came to the conclusion that the word "employee" in section 197 includes a person who has been dismissed but still has an employment relationship with his former employer because he is still pursuing legal remedies for the dismissal.

The court found that where a person challenges the fairness of his dismissal in order to secure a reinstatement, but before the litigation or arbitration is finalised, the business of the dismissed employee's former employer is transferred as a going concern to another person or entity, then the dismissed employee has the right to use the provisions of the act at the time of the transfer of business against the business transferor.

The employee may try to obtain an award or order of reinstatement, compensation or other relief for the dispute about the fairness of his dismissal. A dispute about the fairness of the dismissal can be resolved by the application of law as contemplated by section 34 of the Constitution.

Both section 197 and the case law above, confirm that the employment relationship may continue beyond termination depending on what the employee does with the dismissal.