Author : Millers Attorneys

Sale of a Going Concern
Beware of Section 197 of the Labour Relations Act

Section 197 of the above Act was amended in order to secure employment.

The new employer (purchaser) is automatically substituted in the place of the old employer in respect of all contracts of employment existing before the transfer.

The only way to avoid this consequence is by written agreement between the old employer, the new employer and the registered Trade Union, failing which all aspects of the former agreement will apply to the new owner of the business.

Anything done by the former employer, e.g. any unfair labour practice or discrimination will now be considered to have been done by the new employer.

So too any arbitration award previously made will also bind the new employer.

In this regard the old saying caveat emptor (buyer beware) is extremely important when buying a business and all aspects as mentioned as well as accumulated leave pay, severance pay, unpaid amounts, etc. will have to be carefully dealt with before purchasing a business.