REMEDY FOR CHANGE IN TERMS AND CONDITIONS IN A TAKEOVER AS A GOING CONCERN

[Ivan Israelstam]

REMEDY FOR CHANGE IN TERMS AND CONDITIONS IN A TAKEOVER AS A GOING CONCERN
Section 186(1)(f) of the LRA defines as a dismissal the resignation of an employee resulting from the new employer’s provision of conditions at work that are substantially less favourable than those provided by the old employer in a case where the business has been taken over as a going concern. Should an arbitrator find such a dismissal to have been unfair, would reinstatement be appropriate as part of the remedy? Or would such resignation constitute a constructive dismissal that necessarily renders the employment relationship intolerable and therefore unrestorable?

[Ingrid Lewin]

Reinstatement, on the same terms and conditions as prevailed at the time of the transfer, would be the primary remedy unless:

(a) the employee did not want to be reinstated; or
(b) evidence is adduced to prove that:
a. the new employer’s provision of conditions at work that are substantially less favourable than those provided by the old employer have rendered further employment intolerable; or
b. it is not reasonably practicable for the employee to be reinstated.
c.
The dismissal cannot “necessarily” be regarded as a constructive dismissal.
Reinstatement, on the same terms and conditions as prevailed at the time of the transfer, would be the primary remedy unless:

(a) the employee did not want to be reinstated; or
(b) evidence is adduced to prove that:
a. the new employer’s provision of conditions at work that are substantially less favourable than those provided by the old employer have rendered further employment intolerable; or
b. it is not reasonably practicable for the employee to be reinstated.
c.
The dismissal cannot “necessarily” be regarded as a constructive dismissal.

[Anna Peal]

I agree with Ingrid that reinstatement could be an option because this is not necessarily a constructive dismissal. However, would it be right for the unfairly dismissed employee not to be reinstated merely because the employer brought evidence to show that reinstatement would be impractical? Surely the intention of section 197 is for the employee to be employed by the new employer despite the impracticalities of doing so?

[Michael Bagraim]

Reinstatement into their original position on the same term and conditions can be an appropriate remedy however, constructive dismissal in most circumstances would probably not mean a reinstatement is appropriate. Often the relationship is damaged and the position that originally existed does not exist any longer.

[Ingrid Lewin]

In response to Anna’s question I would like to add that the impracticality that could lead to the possible decision not to reinstate the employee must relate to something other than the employer providing less favourable conditions than those which prevailed prior to the transfer.

[Author]

Posts