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In Merriman BP Service Station (Pty) Ltd v Motor Industry Bargaining Council (Western Cape) and Others (C04/2021) [2026] ZALCCT 94, the Labour Court reviewed and set aside a demarcation ruling which had brought employees of a Pick n Pay Express convenience store within the registered scope of the Motor Industry Bargaining Council (MIBCO). The store operated on the same premises as a BP filling station and was owned by the same corporate entity, but the Court held that those facts were not enough to make the store an “ancillary activity” forming part of the filling station business.

The case is important because it confirms that a demarcation enquiry is not resolved by labels, premises, ownership structure, or commercial convenience. The real question is whether the employees or employer are engaged in the economic activity covered by the bargaining council’s registered scope. Where the issue turns on the interpretation of that scope, the Labour Court applies a correctness standard, not a deferential reasonableness standard.

The Dispute

The applicant operated two businesses from the same premises in Stellenbosch: a BP fuel service station and a Pick n Pay Express convenience store. It was common cause that the filling station operations, including the forecourt employees, fell within MIBCO’s registered scope. The dispute was whether the Pick n Pay Express employees also fell within that scope.

MIBCO’s scope included the business of filling and/or service stations, encompassing “ancillary activities forming part of a service station linked to the convenience store environment”, such as the preparing, serving and selling of food or beverages to customers, excluding separately registered establishments whose sole activities relate to the restaurant, tearoom and catering environment.

The commissioner accepted that the convenience store fell within MIBCO’s scope. In broad terms, the commissioner reasoned that the store was ancillary to the filling station because it was located on the same premises, was operated by the same employer, and offered convenience-store products and food or beverages to customers in the service-station environment.

The Court’s Criticism of the Commissioner’s Approach

The commissioner, however, made five clear mistakes:

1. Treating common ownership as decisive: The central error was the commissioner’s reliance on the fact that the BP franchise and the Pick n Pay Express franchise were both held by the applicant and did not have separate juristic identities. The Court found that this reasoning incorrectly made corporate form the controlling factor in a sectoral demarcation enquiry. The Court explained that a demarcation dispute is concerned with whether employees or employers are engaged in a particular sector or area, not whether a business is housed in one company, two companies, a franchise arrangement, or another legal structure. If the commissioner’s approach was correct, the same economic activity could move in or out of MIBCO’s scope merely by rearranging the corporate structure – an illogical result.
2. Misinterpreting “separately registered”: The commissioner also treated “separately registered” as if it referred to separate registration as a company or separate juristic personality. The Court rejected that interpretation. It held that the wording referred to “establishments”, not “companies” or “employers”, and that incorporation status was not determinative of whether a convenience-store facility was ancillary to and formed part of the filling station. This matters because the scope clause was aimed at activities and establishments, rather than at technical company-law structures. A sole trader, a company, a franchisee or a group structure may all conduct activities that either do or do not fall within a council’s scope; the legal shell is not the answer.
3. Failing to test operational integration: Because the commissioner placed too much weight on ownership, he failed to ask the more important question: Was there sufficient operational interconnection between the filling station and the store? The Court held that this was both an error of law and a misdirection in the evaluation of the relevant facts with available evidence showing operational independence. Pick n Pay transactions were processed through Pick n Pay systems meaning that store employees could not process fuel payments, and evidence was led that the Pick n Pay Express store could continue trading even when the fuel forecourt was shut down due to technical problems.
4. Taking “support” out of context: The commissioner relied on evidence that the store staff “supported” the filling station. The Court found that this statement had been taken out of context. The same witness also testified that if the Pick n Pay Express store were to close, the filling station could continue operating, and vice versa. The Court’s point was practical: Two businesses may support or complement each other commercially without one being legally ancillary to the other for sectoral demarcation purposes. A convenience store may attract customers to a forecourt, and a forecourt may attract customers to the store, but mutual benefit does not equal operational integration.
5. Confusing commercial complementarity with ancillary activity: The Court accepted that the Pick n Pay Express store probably would not have existed on those premises but for the filling station. However, it held that this historical or commercial dependency did not make the store an ancillary activity of the filling station. The relevant issue was not whether the filling station created a business opportunity for the store, but whether the store’s activities formed part of the filling station’s activities. The Court concluded that the two businesses were conducted side by side, not as one integrated operation. The convenience store was complementary to the filling station, but it was not subsumed into the filling station’s business as an incidental or ancillary activity.

Applying the Demarcation Test

The judgment usefully restates the proper approach to demarcation disputes.

First, the decision-maker must identify the meaning of the bargaining council’s registered scope. Where the dispute turns on interpretation of that scope, the issue is a question of law, and the review standard is correctness. The Labour Court relied on the Labour Appeal Court’s approach that reasonableness is not sufficiently exacting where the issue is statutory or regulatory interpretation.

Second, once the scope is correctly interpreted, the decision-maker must determine what activities the employer and employees actually perform. The enquiry is functional and factual: What is the nature of the economic activity? Are the employees engaged in the sector covered by the council?

Third, the interpreted scope must be compared with the proven activities. If the business performs activities falling within the scope, the decision-maker must then determine whether those activities are independent, incidental, ancillary, or part of a separate establishment.

Fourth, in a case involving alleged ancillary activities, the Court will consider the degree of operational integration. This spans shared systems, shared functions, shared payment processes, interchangeability of employees, dependency of one operation on the other, whether one activity is conducted by the main business as part of its own activities, and whether the additional activity is merely conducted alongside the main business.

Fifth, the Court will not treat shared premises, common ownership, customer overlap or mutual commercial benefit as decisive. While those factors may be relevant, they are not enough on their own. In this specific case, the lack of anything more than common premises and ownership, without evidence of operational integration, could not bring the Pick n Pay Express store within the ancillary-activity wording of MIBCO’s scope.

The Court’s Finding

The Court held that the commissioner’s analysis was superficial and affected by errors of law in interpreting the relevant MIBCO scope provision. Had the commissioner correctly focused on whether the Pick n Pay Express activities were truly part of the filling station’s activities, he would have concluded that the two businesses operated independently.

The Labour Court therefore reviewed and set aside the demarcation award and substituted it with a finding that the employees engaged in the Pick n Pay Express store do not fall within the scope of MIBCO. A no-costs order was made because both parties had a legitimate interest in obtaining certainty on the issue.

Why the Case Matters

This judgment is a useful reminder for employers, bargaining councils, and commissioners that demarcation is a substance-over-form enquiry. A convenience store at a filling station is not automatically covered by MIBCO simply because it is on the same premises, has the same owner, or serves customers who may also buy fuel. The decisive enquiry is whether the store is truly part of the filling station’s operations, or whether it is a separate retail operation conducted alongside the forecourt business.

What ultimately determines the outcome is therefore not location or ownership, but the extent of operational integration.

Read the full judgement here: Merriman BP Service Station (Pty) Ltd v MIBCO & Others