Factual Background

This matter concerned a BP service station (BP) located in Stellenbosch. The Express Store is on the same premises. Interestingly, the applicant, Merriman BP Service Station (Pty) Ltd (Merriman), was the franchisee in respect of both BP and the Express Store. The assets and stock of both were tied to Merriman. Although conceding that BP’s employees fell within MIBCO’s scope, Merriman disputed this insofar as the Express Store was concerned. It argued that the Express Store’s transactions were processed on Pick ‘n Pay’s system, and the cashiers could not process BP’s payments. What remained indeterminable during arbitration was whether both serviced the same customer base. The operations manager testified that despite this, the Express Store did not support BP in any way. In fact, if were to close, BP’s business would not be impacted in any way. It would continue trading without any problems.

Issue

The matter came before the bargaining council, which determined that the Express Store fell within MIBCO’s scope, relying primarily on the fact that both businesses were conducted and owned by a single unified legal entity (Merriman). The arbitrator also interpreted “separately registered establishments” strictly to mean separately incorporated entities, concluding that the exclusion did not apply as the Express Store had not been registered under a separate corporate entity. Any secondary or attached activities to BP would fall under the motor industry unless they were of sufficient magnitude to constitute a standalone business. Because the Express Store could not survive independently of BP, it was ancillary to BP.

On review before the Labour Court, the central issue was whether the Express Store constituted an “ancillary activity” forming part of the filling station business under MIBCO’s registered scope. The court also had to consider whether the arbitrator had correctly interpreted the phrase “separately registered establishments” and what standard of review applied to a demarcation award involving both legal interpretation and factual application.

Labour Court’s findings and analysis

The court rejected the arbitrator’s strict reading of “separately registered” as requiring a separate legal entity. MIBCO’s scope is concerned with economic activity, not corporate form. If “separately registered” meant separately incorporated, the result would be arbitrary. By way of an example, an unincorporated sole trader could be treated differently from an incorporated entity doing the same work. The exclusion refers to “establishments”, not “companies” or “employers”. Merriman’s point was that the Pick ‘n Pay Express was a distinct brand/franchise establishment operating separately from the filling station, even though both franchises were held by the same company.

The crux of the court’s reasoning was operational interconnectedness. The court recognised that “ancillary” can mean either a necessary incidental activity supporting the main business, or simply an auxiliary activity conducted as part of that business. In the context of MIBCO’s scope, the court favoured the latter interpretation. It is not enough that two businesses are neighbouring, complementary or commonly owned, without operational integration. The court accepted that the Express Store would not have existed without the filling station, but held that this merely explained why the Express Store was established at that location and not that the Express Store formed part of the filling station’s operations. An activity is ancillary only if it is a subsidiary component of the core business, one conducted by the main business as part of its activities.

The real question was whether the two operations were integrated such that the Express Store could properly be characterised as an activity of the filling station. On the evidence, the Express Store was operationally independent. The store and forecourt operated side by side, not as one integrated enterprise. The court also noted the absence of evidence that the Express Store served the filling station’s customers. While complete customer overlap may not be required, the arbitrator could not simply assume an ancillary relationship without such evidence.

Key takeaways

Employees of a convenience store located at a petrol station will not automatically fall within MIBCO’s scope merely because the store is on the same premises as the filling station.

The degree of operational interconnectedness is the central question. Common ownership, shared premises and commercial complementarity are relevant, but not decisive unless they show that the activities are genuinely integrated and conducted as part of one business.

Evidence that the convenience store actually serves the filling station’s customers is important. Although a complete customer overlap may not be required, an ancillary relationship cannot be assumed without evidence of how the customer base is shared or served.

Corporate structuring is not determinative of bargaining council jurisdiction. The focus remains on the nature of the economic activity and how the business is conducted in practice.

The outcome remains fact-specific. A convenience store may still fall within MIBCO’s scope where the evidence shows sufficient operational integration with the filling station’s business.