There was a need to protect the rights of employee upon the sequestration or liquidation of their employer.The termination of contracts of employment for the above reason meant that employees were not considered as dismissed and therefore they did not receive any protection or benefits the law offered e.g.Consultation means that the parties must seek to reach consensus on appropriate means and ways to save the whole business or part of it by the sale of whole or part of it; or transferring it as a going concern in terms of section 197A of the Labour Relations Act; or by a scheme or compromise in terms of section 311 of the Companies Act; or by any other manner.An employee whose services have been terminated in this manner is entitled to claim severance benefits as if they were dismissed for operational reasons, from the employer's insolvent / liquidated estate in terms of section 41 of the Basic Conditions of Employment Act.
It is important to claim benefits as these will be automatically deducted from your claim even if you have not claimed them.
severance pay in terms of the Basic Conditions of Employment Act or the right not to be unfairly dismissed in terms of the Labour Relations Act.
The amendment to Section 38 of the Insolvency Act applies to the insolvency of individual employers who trade in their personal capacity and to companies and close corporations wound up due to insolvency.
Redundancy is where the employer has ceased or intends to cease the business, or the business in the place where the employee is employed.
The requirements of that business for the employee to carry out his or her particular kind of work, or to carry out a particular kind of work in the place of the employee's employment have ceased or diminished, or are expected to cease or diminish.
Where a final liquidation order is granted, the employee must lodge a claim with the trustee / liquidator.