SALE OF BUSINESS BY EMPLOYERS AND WHAT EMPLOYEES SHOULD GUARD AGAINST The sale of a business affects not only the change in ownership but also the employees of the business. It is therefore a usual practice for new business owners to want to effect certain changes in the business structure upon acquiring it from the previous owner. It is also not uncommon to hear of a dispute wherein employees seek payment of terminal benefits from the person whom they regard as employer and only to be told by the person who they regard as employer that he is not liable to pay them benefits on the scale that they want because he bought the business from someone else. The relevant legislation governing the sale of businesses by employers in Swaziland is the Employment Act of 1980 (as amended). In terms of section 33 bis of the said Act, an employer is expected to comply with certain conditions prior to effecting any sale or takeover of its business to another person. In terms of section 33 bis of the Employment Act 1980(as amended) an employer is obliged to first ensure that prior to selling his business, that he first pays all benefits accruing and or due for payment to the concerned employees at the time of such sale or takeover of the business. In the alternative to the above, section 33 bis also allows for a situation where the new owner of the business issues a written guarantee to the employees in terms of which he undertakes to pay all benefits accruing to the employees from their previous owner within 30 days. The written guarantee should be in terms which the employees agree to and understand. It should also be approved by the Commissioner of Labour. The Industrial Court however, in the case of SWAZISPA HOLDINGS vs. SWAZILAND HOTEL CATERING ALLIED WORKERS UNION AND ANOTHER INDUSTRIAL COURT CASE 254/2011 held that the sale of shares in a business(i.e. a company) is not necessarily a sale of the business or take over as contemplated by section 33 bis of the Employment Act. The finding of the court in the above case was to the effect that the sale of shares did not have the effect of changing the identity of the Employer and that the employees were notwithstanding the sale still employees of SWAZISPA HOLDINGS. In conclusion therefore, when an employee is faced with a situation where the employer is intending to sell his business, the concerned employee should ensure that the following requirements are complied with by the employer before the sale of the business is completed; i) That the employer pays all benefits accruing and or due for payment to each employee and/or alternatively ii) That the employees obtain a written guarantee from the new owner of the business to the effect that all benefits accruing to them at the time of the sale of the business and/ or termination of the previous employment shall be paid by him within 30 days. It is also prudent to inform the office of the Commissioner of Labour of the contemplated sale or transfer of the business. In the event an employer fails to comply with the terms of section 33 bis of the Employment Act, criminal charges may be brought against him, which may result in imprisonment upon conviction. WRITTEN BY: COMMISSIONER NSINDISO THWALA
Posted on: Mon, 23 Sep 2013 10:21:40 +0000
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