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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])
November 9, 2026

Section 187(1)(f) of the LRA reads as follows: ‘A dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against the employee, directly or indirectly, on any arbitrary ground, including but not limited to religion, conscience and belief”.

In terms of s187(2)(a) of the LRA, despite the aforesaid s187(1)(f), a dismissal may be fair if the reason for the dismissal is based on the inherent requirements of a particular job.

What approach is to be followed to determine, firstly, whether the reason for the dismissal on the basis of religion, conscience or belief is based upon an inherent requirement of a particular job?

And, secondly, what approach is to be followed to determine whether or not an employer complied with its duty to reasonably accommodate the aforesaid category of employees?

November 2, 2026

In the previous article, we set out the traditional approach to s187(2)(b) of the LRA, covering the scenario where an employee reached the normal or agreed-upon retirement age, but continued to work beyond such age. The constitutional court, in Motor Industry Staff Association and Another v Great South Auto Body CC t/a Great South Panelbeaters (Landman); Solidarity obo Strydom and Others v State Information Technology Agency Soc Ltd (Solidarity) – combinedly referred to as Landman; Solidarity – had the opportunity to scrutinise such traditional approach and delivered three conflicting judgments. So, what approach should role players now employ, seeing that consensus was not reached in the constitutional court?

October 26, 2026

In terms of s187(1)(f) of the LRA, a dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against the employee, directly or indirectly, on any arbitrary ground, including, but not limited to, age.

In terms of s187(2)(b) of the LRA, despite s187(1)(f), dismissal, based on age, is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.

What is the approach traditionally adopted where an employer permits an employee to work beyond the normal or agreed-upon retirement age and subsequently wishes to terminate the services of the employee, based on age, and wishes to rely on the defence as set out in s187(2)(b)?