Warning: Take care when selling a business

[Dave A]

I know It sounds like I am always against the employer but the truth is for every system you will get abusers. I can point out 4 business all of them earning between 2 to 6 million per year and not a single person working for them has a contract.

OK - so why is that?

Why won't these companies make permanent employee appointments?

[manhav]

Let's take the one that labour really hates - where the business is wound up while it still has significant resources to continue trading. Why is it being wound up? Because it is making losses and there's no turnaround strategy in sight - the current operation is no longer viable. The options are to continue trading and diminish the capital further, or liquidate and apply that capital to another venture that is viable.

I wholeheartedly agree with you that no business-owner can continue dumping capital in a venture that is not making a profit. I myself am a business owner, and at the end of every month I have to go the process of determining our loss and profit.

If the processes prescribed by the LRA have been followed, especially those regarding retrenchments, then at least the employer (business owner) is covered against the claims of the retrenched employees.

Experience have, on the other hand, shown that the business owner, especially in the present financial situation, elect not to start with a new venture. He/she winds down the business, and then accepts permanent employment with another company.

I have also seen on 2 occasions that the employer, having followed the retrenchment procedure, winded down the business, only to start a new business with the same capital and assets and even from the same premises, but then with new staff.

The question I have to ask myself is whether this is fair. He got rid of 10 employees, only to employ 5 new employees in the new venture. Where is the fairness in that?

[Dave A]

I have also seen on 2 occasions that the employer, having followed the retrenchment procedure, winded down the business, only to start a new business with the same capital and assets and even from the same premises, but then with new staff.

The question I have to ask myself is whether this is fair. He got rid of 10 employees, only to employ 5 new employees in the new venture. Where is the fairness in that?

Why retrench ten and hire five? Why wind up the business? Why not just retrench five?

There has to be more to that story, and it probably involves the creditors... and/or (ex-)partners

I'm not suggesting business owners don't get up to all kinds of weird antics. What I am suggesting is the idea that the LRA is protecting employment is a fallacy. In fact, I suggest it's achieving the exact opposite - it's costing employment opportunities.

Those unscrupulous types are going to get up to mischief anyway. I suggest rather focus legislative and regulatory efforts on what would constitute fraudulent behavior, or harmful business practices.

[wynn]

And how about rewarding those that comply? say 6 months or a year reduced income tax.