In South Africa, business rescue is a procedure created by the
Companies Act 71 of 2008, which aims to facilitate the rehabilitation
of companies in financial distress. Not all companies in financial
distress will fail; some only need care and guidance to keep the
wolf from the door. The business rescue procedure grants a
financially distressed company the opportunity to re-organize its
affairs by allowing for a moratorium on legal proceedings and the
implementation of a structured payment scheme with creditors
or, alternatively, to provide the creditors and shareholders with a
better return than in liquidation. In addition, it could also be argued
that a further objective of the business rescue procedure is the
retention of the company’s workforce, entirely or to some extent,
at least. Despite their improved position in rescue proceedings,
employees remain vulnerable and have subsequently been
regarded as “lost souls” in corporate insolvency procedures. It is
widely acknowledged that employees are now in a better position
when it comes to protecting their rights during employment. In
business rescue proceedings, the primary view held by many
is that employees are in a much better position than they were
during rescue proceedings in the past. The Companies Act makes
extensive provision for the involvement of employees who are
affected by the business rescue process, in its undertaking or
implementation, and creates a platform for them to contribute to
an outcome that affects them. This article investigates the outcome
of business rescue proceedings on employee rights during the
phases of business rescue, both in their capacities as employees
and creditors of the company, and over the course of various
employment relationships. It will be concluded that employees
are not as protected during business rescue proceedings as is
generally believed.