Sale of business as going concern - employees position



In terms of section 197 of the Labour Relations Act, an employee’s employment survives a sale of the business or part of a business as a going concern, to a new owner. The new owner is automatically substituted in the place of the old employer and all the rights and obligations between the old employer and the employees becomes rights and obligations between the new employer and the employees.


The transfer of the business therefor does not interrupt an employee's continuity of employment, and an employee's contract of employment continues with the new employer as if with the old employer.


Even an unfair labour practice by the old employee is regarded as an unfair labour practice by the new employer and can be enforced against the new employer.


The above holds true, even in liquidation of a company, even though a contract of employment is suspended by an order placing a company into liquidation. As soon as the Liquidator sells the company’s business or even just a part of the business, all contracts of employment are revived and is transferred to the purchaser of the business in terms of section 197 A of the Labour Relations Act.

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