Vrydag, Januarie 23rd, 2015
Transfer of pension rights was a major dispute in legal and business circles. Where the undertaking (or part thereof) is transferred as a going concern employees now enjoy continued employment as a result of the statutory obligations contained in section 197(2). The contracts of employment of persons employed by the transferor immediately prior to the transfer are therefore transferred to the transferee. Furthermore, the transfer of the undertaking does not affect the continuity of the employment of transferred employees.
This result in the transferred employees being safeguarded from being selected for retrenchment by the new employer, on the basis of the last-in-first-out selection criterion LIFO). Previous service with the old employer must be taken into consideration by the transferee. Section 197 applies whenever there is a transfer of the business as a going concern.
A transfer should not be restricted to the sale of a business, but includes a merger, takeover, or restructuring within a company or group of companies as w ell. It could also take place by virtue of an exchange of assets or a donation.