Companies face myriad labour laws on moving into Africa

Growing economic integration between SA and its continental peers may ultimately see local companies obligated to retain employees even when they move parts of their operations offshore.

25 Jul 2016

Companies face myriad labour laws on moving into Africa

In the interim, South African companies have to grapple with different labour regimes and increasingly assertive watchdogs as they balance restructuring with labour law compliance.

There is no single labour regulatory framework on the continent governing cross-border company movements, so companies have to comply with a multiplicity of laws, says Bowman Gilfillan head of employment and benefits Chris Todd.

Regulations governing employee rights and conditions of service when a company undertakes a cross-border merger or acquisition fall under national jurisdictions.

However, the global trend is to move towards regulatory conformity, says Todd, whose law firm on Thursday hosted a seminar on the pan-African perspective.

Retaining employment rights and conditions of service when a company changes hands has been a key demand from organised labour, which views mergers as a threat to job security.

Labour unions also see outsourcing and companies moving operations offshore as a "race to the bottom" for wages and conditions of service.

Other African countries are placing more obligations on firms entering their markets in terms of retaining jobs and contributing to economic development.

Competition authorities, including in SA, are increasingly including public interest stipulations - such as no merger-related retrenchments - when approving transfers of ownership, particularly when a foreign firm is involved.

"Parties doing business across jurisdictions are going to have to accept that local regulators will impose conditions in their national interest," says Todd.

Talita Laubscher, a partner in employment practice at Bowman Gilfillan, said there was no legal clarity on post-merger restructuring that easily differentiated between job losses as a result of a merger and those for broader operational requirements.

There had been some guidance from the labour court, but how the Competition Tribunal would define causality was not yet established, said Laubscher.

"Hopefully, we will have crosspollination between the Labour Court and the Competition Commission, to come up with a common test," said Laubscher.

Source: Business Day via I-Net Bridge

Source: I-Net Bridge

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