Impact of labour law on South Africa’s new corporate rescue mechanism

Abstract

South Africa’s recently enacted Companies Act introduces a new business rescue mechanism. Corporate rescue has the aim of resuscitating faltering companies. 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 is being struck between employees’ and creditors’ interests in this business rescue mechanism. The investigation is done against the background of ILO and EU standards and South Africa’s labour and insolvency law frameworks. The conclusion is drawn that the potential success that this rescue mechanism may hold could be eroded due to the over-protection of employees in the model adopted by South Africa.