Who gets priority between the Labour Court and the Business Rescue?

Have you ever wondered what might happen to your salary if a moratorium has been placed on the company because it is under business Rescue?

Section 133 of the Companies Act, 2008 provides that no legal proceedings or enforcement action against the company maybe commenced except with the Practioners consent or with the terms prescribed by a court.

Our Labour Court had to decide on whether it had authority to order companies under business rescue to pay salaries to its aggrieved employees whilst the company was under the moratorium imposed by Section 133 of the Companies Act.

Unfortunately, it was held that the Labour Court and other Labour forums such as the CCMA would not have jurisdiction to deal with matters relating to the upliftment of the moratorium in order to force a company under business rescue to pay salaries and benefits.

However, this does not mean that since it lacks jurisdiction then, there is no alternative remedy for employees. Section 135 of the Companies Act, 2008 provides that any unpaid amount of remuneration, re-imbursement for expenses or any other amount relating to employment that becomes due to an employee during that companies’ business rescue proceedings would be paid in priority to other claims.

It is prudent that for more information you do not hesitate to contact Duvenage Attorneys.