Some legal effects of a tr ansfer of business as a going concern

Woensdag, Maart 9th, 2011

Transfer of pension rights w as a major dispute in legal and business circles. Where the undertaking (or par t thereof) is transferred as a going concern employees now enjoy continued employment as a result of the statutory  obligations contained in section 197(2). The contractsof employment of persons employed by the transferor immediately pr ior to the transfer are therefore transferred to the transferee. Furthermore, the transfer of the undertaking does not affect the continuity of the employment of transferred employees. This result in the transferred employees being safeguarded from being selected for retrenchment by the new employer, on the basis of the last- in-first-out selection criter ion (LIFO) . Previous service w ith the old employer must be taken into consideration by the transferee. Section 197 applies whenever there is a transfer of the business as a going concern.

A transfer should not be restricted to the sale of a business, but includes a merger, takeover, or restructur ing within a company or group of companies as w ell. It could also take place by virtue of an exchange of assets or a  donation.

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