Introduction

The Labour Court (“LC”) in Solidarity and Others v Tsebo Facilities Solutions (Pty) Ltd and Others (C472/23) [2026] ZALCCT 49 has provided important clarification on the interpretation and application of section 41(4) of the Basic Conditions of Employment Act 75 of 1997 (“BCEA”), particularly in circumstances where employees secure employment with an incoming service provider following a tender transition.

At the heart of the judgment is a recurring question in retrenchment jurisprudence: whether employees who obtain alternative employment prior to or during a retrenchment process automatically forfeit their entitlement to severance pay, and in particular, what role, if any, the retrenching employer must play in securing that employment for section 41(4) to apply.

The Court delivered a significant reaffirmation of the causation requirement embedded in section 41(4), emphasising that forfeiture of severance pay is not triggered by mere re-employment, but rather by whether such employment was arranged by the employer.

Background to the dispute

The matter arose from the long-standing outsourcing arrangement between Tsebo Facilities Solutions (Pty) Ltd (“Tsebo”) and Sanlam. Tsebo had provided services under a Service Level Agreement (“SLA”) for approximately two decades, employing around 125 employees.

Following a tender process, Sanlam awarded the contract to CBRE, with the transition date set for 1 June 2020. Tsebo was accordingly notified of the termination of the SLA effective 31 May 2020.

In anticipation of the transition, Tsebo initiated a section 189(3) consultation process in May 2020, ultimately issuing notices of termination of employment to affected employees shortly thereafter.

Crucially, however, a number of employees had already secured employment with CBRE prior to the conclusion of the retrenchment process. This included instances where CBRE had independently recruited candidates, in some cases before the formal conclusion of any alternative employment arrangements between Tsebo and CBRE.

Despite this, Tsebo withheld severance pay on the basis that the employees had “found alternative employment” and were therefore excluded from severance entitlement in terms of section 41(4) of the BCEA.

The arbitration outcome

The CCMA upheld Tsebo’s position, finding that section 41(4) applied and that the employees had forfeited severance pay. The commissioner reasoned, inter alia, that:

• The employees had accepted employment with CBRE;
• Tsebo had played an instrumental role in facilitating discussions with CBRE;
• The Alternative Employment Agreement (“AEA”) demonstrated employer involvement sufficient to trigger forfeiture; and
• The continuity of employment with CBRE negated entitlement to severance pay.

The award was subsequently taken on review to the Labour Court.

The central legal issue

The Labour Court identified the decisive issue as whether the requirements of section 41(4) of the BCEA had been met, specifically:

Whether the employer had arranged alternative employment for the employees, or whether the employees obtained such employment independently of the employer’s efforts.

This required the Court to interrogate the proper meaning of “arranged” in section 41(4), and whether mere participation in restructuring discussions or engagement with an incoming service provider is sufficient to constitute causation.

The Labour Court’s findings: causation is decisive

The Court set aside the arbitration award, holding that the commissioner had fundamentally misconceived the nature of the enquiry.

1. Acceptance of employment is not determinative

The Court held that the mere fact that employees accepted employment with CBRE does not trigger forfeiture of severance pay. Section 41(4) requires a causal link between the employer’s conduct and the securing of alternative employment.

The enquiry is not whether employees found new jobs, but whether the employer actively caused or arranged that employment.

2. Independent recruitment breaks the causal chain

A key factual finding was that several employees had been recruited directly by CBRE through its own processes, including advertised vacancies and independent applications.

The Court emphasised that where employment is obtained through:

• independent recruitment processes, or
• direct engagement between employee and incoming employer, the retrenching employer cannot be said to have “arranged” the employment for purposes of section 41(4).

In such circumstances, forfeiture does not arise.

3. Timing is critical

The Court placed significant weight on chronology:

• Some CBRE offers pre-dated the AEA;
• Recruitment processes commenced before the section 189 process;
• The AEA was concluded only after certain employees had already been appointed.

On this basis, the Court found it “logically impossible” for Tsebo to have caused employment outcomes that had already materialised independently.

4. The AEA did not constitute “arranged employment”

The Court rejected the commissioner’s reliance on the Alternative Employment Agreement, finding that:

• The AEA did not guarantee appointment;
• CBRE retained full discretion over hiring decisions; and
• Several employees covered by the AEA were still retrenched.

Accordingly, the AEA could not transform discretionary recruitment into employer-arranged employment.

5. Section 41(4) requires a strict causation standard

The Court reaffirmed the principle from Irvin & Johnson Ltd v CCMA that forfeiture provisions must be interpreted strictly.

Importantly, the Court held that:

• Severance pay compensates for loss of service, not post-dismissal hardship;
• Re-employment is irrelevant unless caused by the employer; and
• The statutory purpose is not displaced by “seamless transitions” between employers.

The Court’s conclusion

The Labour Court concluded that the commissioner’s findings were:

• not rationally connected to the evidence;
• based on a misconceived legal test; and
• inconsistent with the requirements of section 41(4).

The award was accordingly reviewed and set aside and substituted with an order confirming the employees’ entitlement to severance pay.

Key legal principles emerging from the judgment

This decision reinforces several important principles for employers and practitioners:

• Severance pay under section 41(2) is triggered by retrenchment, not financial need or re-employment.
• Section 41(4) forfeiture applies only where the employer causes or arranges alternative employment.
• Independent recruitment by a third party breaks the causal link required for forfeiture.
• Participation in restructuring processes or consultations is insufficient on its own.
• Timing and factual chronology are central to the causation enquiry.
• The existence of a transition agreement (such as an AEA) does not automatically amount to arranged employment.

Concluding remark

The judgment in Solidarity v Tsebo Facilities Solutions provides important clarity in outsourcing-driven retrenchments, particularly where incoming service providers independently recruit affected employees. It confirms that section 41(4) of the BCEA is not a broad exclusionary mechanism tied to re-employment, but a narrowly defined causation-based provision requiring active employer involvement in securing alternative employment.

Ross Hendriks | SchoemanLaw Inc

Specialist Employment and Labour Law