By Bahle Gama
THE Inyatsi Group has been exonerated in the matter involving the 200 former Eswatini Meat Industries (EMI) employees who put in an application against former owners demanding payment for terminal benefits.
In a Supreme Court judgement issued on Monday by Judge Ng’adu with his coram, Inyatsi was cleared of the responsibility of having to pay the employees as a result of an agreement with the sellers in terms of Section 33 of the Employment Act of 1980.
Section 33 bis (i) states that an employer shall not sell his business to another or allow a takeover unless he first pays all benefits accruing and/or due for payment at the time of the sale or takeover.
According to the court, the sale and takeover of all shares and assets by Inyatsi Group triggered the operation of Section 33 of the act, which the sellers had undertaken to comply with before the takeover by the conglomerate.
The sellers penned down their voluntary agreement with Inyatsi Group that they would ensure compliance with Section 33 and pay terminal benefits before the takeover.
The court stated that it was baffled by the decision to somersault and act as if the agreement did not exist by the sellers who proceeded to court to play the innocent victims, a conduct which has been deemed completely dishonest and frowned upon.
Having fulfilled part of its responsibility in terms of the sale agreement, Inyatsi took over EMI becoming the new owner along with its assets.
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“There is no legal obligation on the part of Inyatsi towards employees not even as per the purchase agreement,” reads the judgement.
Worth noting is that when the application was put by the employees, the sellers opposed it, however during arguments, counsel for EMI indicated support for the application, agreeing that indeed the former owners needed to pay the employees.
The main issue which the judgement dwells on is the sellers’ inability to comply with their undertaking to the labour commissioner but instead allowed the takeover without ensuring the payment of the employees of their terminal benefits thus resulting in the application before the Supreme Court.
On July 21, the sellers wrote a memo to all employees titled “Notice of sale of shares of Eswatini Meat Industries Limited to Inyatsi Group.”
The memo notified employees of the sale and that all contacts of employment would be affected meaning they would be terminated effective July 31 in accordance with Section 33.
The memo further stated that each employee’s provident fund would be terminated and paid out to them in terms of the Employment Act, and the employer would use some or all of the employer contribution to the fund for the severance portion of the terminal benefits.
“Communication on the process to be followed will be made through your respective labour representatives as per normal engagement with management,” it read.
Prior to the memo, a letter dated July 17, 2023, was written by the sellers notifying the labour commissioner about the sale of EMI to Inyatsi and in the letter, they clearly highlighted Clause 12 (b) of their agreement which stated that they would abide by all relevant sections of the Employment Act as set out in clause 4 (a) (vi).
They further stated EMI would ensure to pay all eligible employees the benefit payable in terms of Section 33 bis, being the difference between the amount payable between the provident fund benefit and the amount due in terms of the section.
The sellers further went to the extent of attaching a financial statement and invited the commissioner to manage and finalise the matter. In response to the letter, the commissioner wrote prior to the sale and stated that his office had taken time to peruse the letter and found the contents to be regrettable because there was no assurance whether Inyatsi as the new employer would re-employ the existing employees.
However, despite making the undertaking to the commissioner to pay the employees their benefits, the sellers allowed for the takeover without ensuring first that the employees had been paid.
Something which the court considered to have been done for their benefit, as they (sellers) reportedly quickly demanded payment of the purchase price of their shares by Inyatsi.
“The Respondents stand to pocket E120 million from the sale of EMI. The papers reveal that the benefits of the Applicants are just a small fraction of what the sellers stand to gain from the sale of EMI to Inyatsi,” said the court.
The court stated that consequently, the sellers will remain with a small fortune even after paying each and every one of the employees their benefits which would be seen as pocket change compared to what they will remain with.
Failure to adhere to Section 33 of the Employment Act of 1980 resulted in the court issuing an order that the former owners of EMI pay all the employees their terminal benefits in compliance with the same Act within 30 days of the judgement.