What is Section 197 of the Labour Relations Act?
Section 197 of the Labour Relations Act, No 66 of 1995 (LRA) was enacted to change the common law position, with the effect that an automatic transfer of contracts of employment from the transferring employer (previous employer) to the acquiring employer (new employer) now takes place in the event that the whole or …
How long is Section 197 valid for?
12 months
These provisions provide that for a period of 12 months after the transfer the old employer is jointly and severally liable with the new employer to any employee who is due to receive payment in regard to severance, leave pay or amounts owing in regard to a dismissal related to operational requirements, unless the …
What is a 197 transfer?
Section 197 of the Labour Relations Act deals with the transfer of a business and the rights of employees affected by such a transaction. The transfer does not interrupt an employee’s continuity of employment and an employee’s contract of employment continues with the new employer as if with the old employer.
What Is an employee entitled to upon retrenchment?
Severance pay – a retrenched employee must at least be paid 1 week’s pay for each completed year of ongoing service. However, the employer must pay the retrenched employee the amount specified in any policy or his/her employment contract, if that amount is larger.
What is a Section 189a retrenchment?
Section 189 of the Labour Relations Act (“LRA”) permits employers to dismiss employees for operational requirements. These are defined as requirements based on economic, technological, structural or similar needs of the employer.
What is a second generation transfer?
A second generation transfer arises when a company first outsources a part of the company to a service provider company, who takes over the employees related to that company department or service.
What is the minimum retrenchment package in South Africa?
one week’s
Severance pay – this should be at least one week’s remuneration per completed year of service. Remuneration is calculated including basic salary and payments in kind. Outstanding leave must be paid out in full. Notice pay may vary depending on your employment contract.
What are the legal requirements for retrenchment?
The retrenchment package The employer is legally obligated to pay retrenched employees “severance pay”, being one week’s pay for each completed year of service. This amount may be higher if the employee’s contract says so, or if the industry rate is higher due to a Collective Agreement.
What is the difference between Section 189 and 189A?
189 deals with the situation where the employer wants to single out employees “here and there” as it were, and S. 189A deals with the situation where the employer wants to retrench at least 10 or more employees, and employs more than 200 employees.
What is the correct procedure for retrenchment?
The retrenchment procedure as laid down in the Labour Relations Act (LRA) must be followed properly and in good faith by the employer. The employer must also prove that he/she has shared with the targeted employees (or their representatives) all documentary and other information pertinent to the retrenchment.
What is section 197 of the Labour Relations Act?
This article examines the effect of section 197 of the Labour Relations Act No. 66 of 1995 as amended (the Act) on employees and employers’ rights and obligations during the transfer of a business as a “going concern”.
When to use Section 197 of the LRA?
Section 197 of the LRA must be strictly adhered to . This is a handy checklist to be used for the sale or transfer of any business, trade, undertaking or service or any part thereof, as a going concern to ensure compliance with the LRA. We are preparing your download, please wait…
What happens when a contract is transferred under Section 197?
Generally, if a business transfer falls under the ambit of section 197, the outsourced contracts will be transferred to the purchaser as a normal consequence of transfer of a business as a going concern. The contracts held by the business will be transferred to the purchaser and will continue to be in effect for the contractual term.
Is the position of employees affected by section 197?
The position of employees who have been outsourced by a business undergoing a section 197 transfer is not conclusively decided in case law. Judgments differ depending on the relevant facts of each case and the relationship of the outsourced employees to the business being transferred.