Mergers, Acquisitions and Outsourcing
In essence Section 197 of the LRA provides for the new employer to step into the shoes of the old employer.
Section 197 of the LRA
Section 197 secures the continuation of employment upon the sale or transfer of a business. The section ensures an automatic migration of the entire employment relationship from the old employer to the new employer. In essence section 197 provides for the new employer to step into the shoes of the old employer, as follows:
- The new employer is automatically substituted in the place of the old employer in respect of the employment contracts,
- All rights and obligations applicable between the old employer and its employees continue in force as if they were rights and obligations between the new employer and the employees’
- Anything done by the old employer is considered to have been done by the new employer, and
- The transfer from one employer to the other does not interrupt the employee’s continuity of service.