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Article 51/2022

To what extent is a business rescue practitioner entitled to commence consultations regarding possible retrenchment without such process being contemplated in the company’s business rescue plan?  To what extent are business rescue practitioners prevented from issuing notices in terms of s189(3) of the LRA in the absence of business rescue plans catering for such procedure?

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The relevant part of s136 of the Companies Act 71 of 2008, reads:

‘136  Effect of business rescue on employees and contracts:

(1) Despite any provision of an agreement to the contrary –

(a) during a company’s business rescue proceedings, employees of the company immediately before the beginning of those proceedings continue to be so employed on the same terms and conditions, except to the extent that –

(i) changes occur in the ordinary course of attrition; or

(ii) the employees and the company, in accordance with applicable labour laws, agree different terms and conditions; and

(b) any retrenchment of any such employees contemplated in the company’s business rescue plan is subject to s189 and 189A of the Labour Relations Act, 1995 (Act 66 of 1995), and other applicable employment related legislation.’

It would be wrong for courts to ignore the clear language of a statute under the guise of adopting a purposive interpretation, as doing so would be straying into the domain of the legislature (Smyth and Others v Investec Bank Ltd and Another 2018 (1) SA 494 (SCA), at 509, paragraph [45]). In Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 543, Innes CJ enunciated the principle in these terms:

‘Speaking generally, every statute embodies some policy or is designed to carry out some object. When the language employed admits of doubt, it falls to be interpreted by the court according to recognised rules of construction, paying regard, in the first place, to the ordinary meaning of the words used, but departing from such meaning under certain circumstances, if satisfied that such departure would give effect to the policy and object contemplated. I do not pause to discuss the question of the extent to which a departure from the ordinary meaning of the language is justified, because the construction of the statutory clauses before us is not in controversy. They are plain and unambiguous. But there must, of course, be a limit to such departure. A Judge has authority to interpret, but not to legislate, and he cannot do violence to the language of the lawgiver by placing upon it a meaning of which it is not reasonably capable, in order to give effect to what he may think to be the policy or object of the particular measure.’

In South African Airways (Soc) Ltd (in business rescue) and Others v National Union of Metalworkers of South Africa obo Members and Others (2020) 41 ILJ 2113 (LAC); (2020) 31 SALLR 144 (LAC), the following approach was adopted:

  • the recovery of a financially distressed company is to be achieved by balancing the rights and interests of all stakeholders – the rehabilitation of a company that is financially distressed is to be achieved by means of the following: (i) temporary supervision; (ii) temporary moratorium on rights of claimants; (iii) development and implementation, if approved, of a business rescue plan (that maximises the likelihood of a company continuing in existence on a solvent basis or, if not possible, results in a better return for creditors or shareholders than would have resulted from immediate liquidation of a company)
  • the primary aim is to preserve the whole corporate entity, including the preservation of jobs
  • the purpose of s136(1)(b) is to safeguard employees from being subjected to retrenchment without a business rescue plan – see, further, s150(2), which requires an indication of the effect of the business rescue plan on the number of employees and conditions of employment
  • if the business rescue plan contemplates retrenchments and has been approved, such retrenchments must be conducted in terms of the LRA with the business rescue practitioner (‘BRP’) assuming control over the process
  • the labour appeal court held that, where legislation has been enacted to give effect to a constitutional right, a party may not bypass that legislation and rely directly on the general provisions of constitutional right to fair labour practices in s23 or the equality clause in s9 of the Constitution (Safcor Freight (Pty) Ltd t/a Safcor Panalpina v SA Freight & Dock Workers Union (2013) 23 ILJ 335 (LAC), at paragraph [18]).  This is in conformity with the subsidiarity principle which provides that, where legislation was enacted to give effect to certain constitutional rights, reliance must first be placed on the provisions of the specific legislation, and challenged if they do not adequately give effect to the constitutional rights in question (Baron and Others v Claytile (Pty) Ltd and Another 2017 (5) SA 329 (CC), paragraph [10]). The constitutional right to fair labour practices finds legislative expression in the LRA. Its scope covers the interests of both employers and employees (AMCU and Others v Royal Bafokeng Platinum Ltd and Others (AMCU 2) 2020 (3) SA 1 (CC); 2020 (4) BCLR 373 (CC), paragraph [50])
July 20, 2026

Precautionary suspensions

In the public sector, the Senior Management Service Handbook (SMS Handbook) directly addresses precautionary suspensions and the 60-day time limit.

Clause 2.7(2)(c) of the SMS Handbook provides that ‘If a member is suspended or transferred as a precautionary measure, the employer must hold a disciplinary hearing within 60 days. The chair of the hearing must then decide on any further postponement.’

Regulation 6 of the Local Government: Disciplinary Regulations Senior Managers, 2010 (Regulations) provides for the precautionary suspension of senior municipal employees and Regulation 6(6)(a) provides: ‘If a senior is suspended, a disciplinary hearing must commence within three months after the date of suspension, failing which the suspension will automatically lapse.’

What are the principles governing a determination of the question as to whether or not a senior municipal employee’s suspension automatically lapses in terms of the aforesaid Regulation 6(6)(a)?

Obviously, the answers to the aforesaid question are very relevant in the private sector where, firstly, a collective agreement regulates a similar process or, alternatively, such contractual rights have been created between the parties, to be enforced in terms of s77(3) of the BCEA.

July 13, 2026

In the previous article, we dealt with the consequences of a plant level collective agreement with a definite beginning and end date. We indicated to you that, in line with s23(2) of the LRA, and an analysis of the relevant case law, that, once such a collective agreement reaches its expiry date, it expires and is no longer of any force or effect. In this article, we deal with the scenario where a plant level collective agreement is concluded for an indefinite period and the employer gave notice to terminate same.

What are the consequences when a party to a plant level collective agreement, concluded for an indefinite time period, gives notice to terminate such collective agreement?

July 6, 2026

In terms of s23(2), a collective agreement binds, for the whole period of the collective agreement, every person so bound in terms of s23(1)(c) (the members of a registered trade union and the employers who are members of a registered employers’ organisation who are a party to the collective agreement, if the collective agreement regulates the terms and conditions of employment, or the conduct of the employers and employees) who was a member at the time it became binding, or who becomes a member after it became binding (irrespective of whether or not that person continues to be a member of such trade union or employers’ organisation for the duration of the collective agreement).

What is the relevant case law development as to a plant level collective agreement that has an expiry date, i e does such collective agreement continue to be of force and effect after such expiry date?