Know your rights when your current employer intends on selling the business.
Section 197 of the Labour Relations Act deals with the transfer of a business and the rights of employees affected by such a transaction.
As per the LRA Section 197 Transfer of contract of employment specifies:
(1) In this section and in section 197A –
(2) If a transfer of a business takes place, unless otherwise agreed in terms of subsection (6) –
It is clearly stipulated in this Section that there is no interruption/brake in service and therefore the contract of employment continuous with the new employer as if it was still with the old employer.
In an article by lvan lsraelstam, Chief Executive of Labour Law Management Consulting it states that “Section 197 of the Labour Relations Act (LRA) places heavy responsibilities on the employer who takes over the business (or part thereof) of another employer as a going concern. This section forces the new employer to take over all the labour related obligations of the old employer.” (Own Emphasis)
As stipulated above, there are a few things listed in Section 197 of the Labour Relations Act that the old and new employer has to agree on in writing and disclose to the employees, like:
The old employer may still be held jointly and severally liable for certain commitments to his former employees.
In a Nutshell: Employers who intend on selling or buying should take careful note of the requirements of Section 197 of the LRA and needs to strictly adhere to these requirements.
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