Labour Law Considerations When Selling A Farm

When a farm is sold as a going concern, the new owner typically inherits the existing employees and their existing employment contracts.  

The right to remain employed means that these employees should generally keep their jobs and terms of employment without significant changes. This includes maintaining their existing wages, benefits, and working conditions. 

However, there are certain conditions and circumstances under which changes can occur. For example, the new owner may negotiate certain amendments to employment contracts or may need to retrench employees due to operational restructuring purposes. In such cases, there are legal processes and requirements that must be followed, including consultations, negotiations, severance and/or leave pay. 

It’s crucial for both buyers and sellers in such transactions to be aware of their obligations and the rights of employees under South African labour law.  

Failure to follow the correct procedures upon the sale or purchase of a farm could lead to employees referring the dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) or Labour Court (if the dispute remains unresolved at the CCMA). This could cause far-reaching consequences for the seller and/or the purchaser, as the employer could face a Court Order directing them to pay up to twenty-four months’ compensation per employee.   

Consulting with legal experts or labour specialists can assist in ensuring compliance with these regulations and procedures when buying or selling a farm as a going concern.