Impact of Labour Law on South Africa’s New Corporate Rescue Mechanism

Abstract

South Africa's recently enacted Companies Act introduces a new corporate rescue mechanism known as 'business rescue'. One of the aims of corporate rescue is the resuscitation or reorganization of companies in financial distress. The legal disciplines of labour, insolvency, and corporate law interact during business rescue proceedings. In this contribution, the question is posed whether an appropriate balance has been struck between employees' and creditors' interests in this new corporate rescue mechanism. The investigation is conducted against the background of International Labour Organization (ILO) and European Union (EU) standards and South Africa's labour, insolvency, and corporate law frameworks. The conclusion is drawn that the potential success that this rescue mechanism has to offer could be weakened due to provisions that result in the over-protection of employees.