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Forum contributions

FORUM CONTRIBUTION: Effects on the employment relationship of the insolvency of the employer: A worker perspective

Peter Carolus, Thierry Galani Tiemeni and Kurt Ziervogel, look critically at the Insolvency Act prior to the amendments of 2002 and the limited protection it gave workers on the insolvency of the employer. The effect of the Act was that workers’ contracts of employment were automatically terminated by their employer’s insolvency, leaving them with a limited preferent claim against the employer’s insolvent estate.

The authors discuss how the 2002 amendments to the Insolvency Act and the LRA addressed these problems by providing for the suspension rather than termination of employment contracts in the event that the business can be saved or sold as a going concern. They also discuss the right of workers as creditors to appoint their own liquidator to supervise the liquidation process and conclude with a detailed examination of challenges faced by trade unions on issues arising from the insolvency of employers.

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