Jose Filipe Perreira da Silva Cristelo Marques and Others v Group Five Construction (Pty) Ltd (under supervision) and Others

Seven former employees of Group Five Construction (Pty) Ltd ('Group 5') were retrenched on 30 April 2019. The company was under business rescue proceedings supervised by business rescue practitioners (second and third respondents). The applicants launched an urgent application on or about 10 July 2019 (more than two months after retrenchment) seeking payment of severance pay due under section 41 of the Basic Conditions of Employment Act 75 of 1997 (BCEA). It was common cause that the severance pay was due and owing to the applicants. The business rescue practitioners opposed the application on two grounds: firstly, that the application was not urgent, and secondly, that the Labour Court lacked jurisdiction to entertain the application in the absence of written consent from the practitioners or leave from the High Court.

• Whether the application for payment of severance pay was urgent
• Whether the Labour Court has jurisdiction to entertain an application for payment of severance pay against a company under business rescue proceedings in the absence of consent from the business rescue practitioners or leave from the High Court
• Whether section 133(1) of the Companies Act 71 of 2008 (which imposes a moratorium on legal proceedings against a company under business rescue) applies to labour disputes
• Whether section 210 of the Labour Relations Act 66 of 1995 and section 136(1)(b) of the Companies Act subordinate the moratorium provisions of section 133(1) to employment-related legislation
• Which court has the power to uplift the moratorium imposed by section 133(1) of the Companies Act

The application was dismissed. No order was made as to costs, with each party bearing their own costs.

The Labour Court does not have jurisdiction to entertain an application for payment of severance pay or to make any order against a company under business rescue proceedings that would require the court to implicitly uplift the moratorium on legal proceedings imposed by section 133(1) of the Companies Act 71 of 2008. The moratorium on legal proceedings in section 133(1) applies to labour disputes, and only the High Court (as defined in section 128(e) of the Companies Act) has the exclusive power to grant leave to proceed against a company under business rescue in the absence of written consent from the business rescue practitioner. Section 210 of the Labour Relations Act 66 of 1995 and section 136(1)(b) of the Companies Act do not subordinate or override the moratorium provisions of section 133(1) in respect of employment-related claims. The term 'legal proceedings' in section 133(1) must be interpreted purposively to include all forms of legal proceedings (including arbitrations and Labour Court proceedings) to give effect to the purpose of business rescue, which is to provide the business rescue practitioner with breathing space to assess and restructure the company's affairs.

The court observed that in terms of section 41 of the BCEA, the Labour Court is not the statutorily designated forum for severance pay claims unless they arise in the context of determining a dispute over unfair dismissal for operational reasons, with the ordinary forum being arbitration. The court expressed sympathy for employees who have lost their employment through no fault of their own but noted that non-payment of remuneration is not ordinarily considered self-evident justification for launching urgent proceedings. The court also noted that the suspension of legal proceedings does not deprive employees of their right to continue with claims at a later stage, as claims are only suspended during the period of business rescue operations. While not deciding the point definitively, the court suggested that justified circumstances may exist for the High Court to grant leave to proceed where permission to uplift the moratorium has been refused by the business rescue practitioner.

This case is significant for clarifying the jurisdictional limits of the Labour Court in matters involving companies under business rescue. It confirms that the moratorium on legal proceedings in section 133(1) of the Companies Act 71 of 2008 applies to labour disputes and that only the High Court has the power to grant leave to proceed against a company under business rescue, even where employment rights are at stake. The judgment reinforces the principle that business rescue proceedings take precedence over labour law dispute resolution mechanisms, subject only to High Court oversight. It demonstrates that section 210 of the LRA (which provides that the LRA prevails over other laws except where expressly amended) does not override the moratorium provisions of the Companies Act. The case is important for employees, employers, business rescue practitioners, and legal practitioners in understanding the interaction between labour law and business rescue law, and the proper forum for pursuing employment-related claims against companies under business rescue. It also clarifies that severance pay claims under section 41 of the BCEA are ordinarily pursued through arbitration rather than in the Labour Court, unless they arise in the context of unfair dismissal disputes.