EMPLOYEES’ RIGHTS
DURING BUSINESS RESCUE PROCEEDINGS The Companies Act attempts to offer protection to employees of companies placed under business rescue. CLEMENT MARUMOAGAE clarifies what these rights entail
D
ue to the impact of Covid-19, some companies had to close down while others were forced to operate under reduced capacity in South Africa. For those companies that were able to ‘survive’ the dire economic challenges brought by Covid-19, tough decisions had to be taken to ensure that operations continue. Some of these companies requested their employees to work reduced shifts to avoid retrenchments. While others did not retrench employees but asked them not to render their services for a prescribed period to assess whether the economic conditions would improve, leaving some employees without income.
Several measures were initiated by government to assist some of these companies to cope with the economic challenges brought by Covid-19. One of the measures was the promulgation of the Disaster Management Tax Relief Administration Act 14 of 2020, which among others, provided a tax relieve intended to alleviate cash flow challenges for tax compliant small and medium companies and the removal of penalties for the remittance of Pay As You Earn to the South African Revenue Services. The government also initiated the much-criticised National Empowerment Fund which was designed to provide
loans to small businesses. It also established the Solidarity Fund, which was meant to alleviate suffering and distress caused by the Covid-19 pandemic. Despite these and other measures, some companies could not withstand the dire economic conditions. They were either liquidated or placed under business rescue proceedings. Some of the businesses that were placed under business rescue also contemplated retrenching employees. This article discusses the rights of employees who were/are subjected to retrenchments when companies that employed them were/are placed under business rescue.
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