Potential Constitutional Concerns regarding Employees’ Rights during Business Rescue Proceedings

Authors: Clement Marumoagae and Siphethile Phiri

ISSN: 1996-2193
Affiliations: Associate Professor, University of the Witwatersrand, School of Law Visiting Associate Professor, National University of Lesotho, Faculty of Law; LLB LLM LLD Candidate Teaching Assistant, University of Venda, Department of Private Law
Source: Stellenbosch Law Review, Volume 32 Issue 3, 2021, p. 496 – 517


The South African business rescue procedure has not yet been adequately tested against the Constitution of the Republic of South Africa, 1996. In particular, the extent to which company stakeholders could raise constitutional rights to litigate against companies placed under business rescue is not clear. This contribution discusses the apparent tension between the ideal of providing business rescue practitioners the breathing space to attempt to rescue companies and the desire of the employees of those companies to litigate against such companies when they are placed under business rescue. It appears that generally, courts seem to be of the view that the moratorium established in chapter six of the Companies Act 71 of 2008  is broad enough to include employment-related disputes and that during the  period of business rescue, employees are not permitted to litigate against their employer companies. Nevertheless, it would also appear that courts have not adequately considered how this moratorium should be balanced with employees’ constitutional rights, like the right to fair labour practices, social security and equality, and whether the moratorium legitimately and reasonably prohibits employees from protecting these rights by approaching  courts during business rescue proceedings. It is argued in this contribution that either the courts or the legislature should provide clarity on the matter.