transfer as a going concern

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The sale of a business - or part of a business - may take place when a company is in financial difficulty, and wanting to restructure to avoid going into liquidation.  The new owner may want to reduce the staff complement - but the Labour Relations Act makes any retrenchment as a result of a transfer of a going concern an unfair dismissal. Who is responsible - the old or new employer? Ivan Israelstam explains further.


What is a "transfer as a going concern" and what are the implications for employees who are part of the transfer? This week Ivan Israelstam explains how the courts have developed the answer to these very complex questions over a period of time. 


A second generation transfer arises when a company first outsources a part of the company to a service provider company, who takes over the employees related to that company department or service. The contract is for a fixed period and the orginal company then re-tenders to a different service provider company to take over the provision of the services. The question arises: does the second service provider company have to take over those employees who were part of the original transfer? The answer has not been clear, and the courts have differed on the correct interpretation of s197 of the Labour Relations Act. This week Ivan Israelstam explains these different interpretations.

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