The ruling is likely to have broader implications for service station operators, convenience store franchises and bargaining councils, particularly where multiple businesses operate from the same premises but maintain separate operational structures.
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The Labour Court has overturned a bargaining council demarcation ruling that placed employees working at a Pick n Pay Express convenience store located on a BP service station property under the jurisdiction of the Motor Industry Bargaining Council (MIBCO), finding that the store operates as a separate business and is not an ancillary activity of the filling station.
In a judgment delivered on Monday, Judge Robert Lagrange ruled in favour of Merriman BP Service Station, setting aside an earlier arbitration award that had determined that employees at the convenience store fell within MIBCO’s registered scope.
Merriman BP Service Station operates both a BP-branded fuel station and a Pick n Pay Express store in Stellenbosch. While both businesses are owned by the same company and operate from the same premises, the employer argued that they function independently and should not be treated as a single operation for bargaining council purposes.
The ruling is likely to have broader implications for service station operators, convenience store franchises and bargaining councils, particularly where multiple businesses operate from the same premises but maintain separate operational structures.
The case centred on the interpretation of MIBCO’s scope of registration, particularly whether a convenience store operating on the premises of a fuel station could be regarded as an “ancillary activity” of the filling station and therefore subject to the bargaining council’s jurisdiction.
The Motor Industry Bargaining Council had previously maintained that the convenience store fell within its scope because it formed part of the service station environment. An arbitrator agreed with that interpretation in a 2020 demarcation ruling.
However, the Labour Court in Cape Town found that the arbitrator committed material errors in interpreting the relevant provisions governing MIBCO’s scope.
Judge Lagrange noted that the key question was whether the activities of the Pick n Pay Express store were genuinely ancillary to the service station business or whether they operated as a separate enterprise.
The court found that there was insufficient evidence to support the conclusion that the store formed part of the filling station’s operational activities.
“The lack of anything more than being on the same premises and owned by the same company, without evidence of any operational integration, is not enough to bring the Express store within the scope of the ancillary activity of the filling station,” the judgment stated.
The court emphasised that although the two businesses may benefit from being located together and share a customer base, that relationship alone does not make one an ancillary activity of the other.
Judge Lagrange said the evidence demonstrated that the fuel station and convenience store were operationally independent, each running its own business activities despite common ownership.
“The fact that they are complementary to each other does not mean the Express store is subsumed as an incidental or ancillary activity of the filling station business,” he said.
The judgment also criticised the arbitrator’s reasoning, describing the analysis as superficial and based on a flawed interpretation of the bargaining council’s scope provisions.
According to the court, the arbitrator incorrectly focused on whether the convenience store supported the filling station rather than determining whether the store’s activities actually formed part of the service station’s business operations.
Had the correct legal interpretation been applied, the court found that the arbitrator would have been compelled to conclude that the convenience store operated independently and therefore fell outside MIBCO’s jurisdiction.
Judge Lagrange noted that there may be circumstances where a convenience store can be considered an ancillary activity of a filling station, particularly where the operations are closely integrated. However, he found that such circumstances did not exist in the Merriman case.
Given that the court was in as good a position as the arbitrator to decide the matter based on the evidence presented, it elected not only to set aside the award but also to substitute it with its own ruling.
The court ordered that the November 2020 demarcation award be reviewed and set aside and replaced it with a finding that employees engaged in the Pick n Pay Express store do not fall within the scope of the Motor Industry Bargaining Council.
No order as to costs was made, with the court finding that both parties had a legitimate interest in obtaining legal certainty on the issue.
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