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Labour Law: Outsourcing

outsourcing

The takeover of an entity or part thereof by a new owner or a new management often causes loss of jobs and employees are often desperate to stay on with the new enterprise. On the other hand, the new owner/management very often already has its own staff and wants to avoid the expense of taking on additional employees.

Over the last few decades, many companies have transferred parts of a business to another company, which continues to provide a service to the original company. Transfers of the employees takes place under Section 197 of the Labour Relations Act. If the company subsequently decides to cancel that arrangement and appoints another company to provide the service, do all of the employees move over again? Ivan explains the complexities and implications of this question.

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