Abstract

Interesting scenarios occur whenever a company commences business rescue proceedings — leading to tensions between those involved. One such interesting scenario is the interpretation and application of s 136(1)(a) of the Companies Act 71 of 2008. This provision impacts employment contracts that existed immediately prior to the commencement of business rescue proceedings. This provision allows those contracts to continue on the same terms and conditions, except to the extent that changes occur in the ordinary course of attrition, or the employees and the company, in accordance with applicable labour laws, agree to different terms and conditions. With the exception in place — tensions may occur between a business rescue practitioner whose duty is to rescue a financially distressed company and employees whose interests are to continue to be employed on the same terms and conditions. It, therefore, becomes crucial to balance the interests of both parties so that the company can be rescued without any delays. This paper aims to critically analyse s 136(1)(a) and its application during business rescue proceedings. The idea is to give a critical understanding of the provision so that those who intend to invoke s 136(1)(a) know how it applies.