n Law, Democracy & Development - Reincarnating the vibrant horse? The 2002 amendments and transfers of undertakings




According to the Explanatory Memorandum to the Draft Labour Relations Bill the common law inhibited commercial transactions involving the transfer of undertakings. This was because a new employer could not take over a business employees and all. Contracts of employment could not simply be transferred from the old to the new employer without the employees' consent. Rather, they had to be terminated on the basis of operational requirements by the old employer and new contracts had to be concluded between the employees and the new employer. Retrenchment, however, brought with it an often-lengthy consultation process and retrenched employees had to be paid severance benefits which escalated the costs of the transaction. On the other hand, if the old employer retrenched its employees prior to the transfer of the business, they were left at the mercy of the new employer. They would have to re-apply for their jobs, with their continuity of employment and the continuation of their previous terms and conditions being far from certain.


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