Embiveni Meat Industries employees win E17.2m case
IT was victory again on Friday for the 200 employees of Eswatini Meat Industries (EMI) after the Industrial Court of Appeal dismissed the appeal by the former directors on the payment of E17.2 million worth of terminal benefits.
The exact amount is E17 268 956.90. The former directors of EMI had appealed against the judgement delivered by Judge Faith Ng’andu on September 18, 2023, when he ordered the former directors to pay all the workers their terminal benefits in compliance with Section 33 bis of the Employment Act of 1980 within 30 days of the judgment. This was after the employees, whose services were terminated, ran to court to demand the payment of their terminal benefits, following the takeover of EMI by Inyatsi Group Holdings (Pty) Ltd, for E120 million. They demanded over E17.2 million from the former directors of EMI as their terminal benefits.
In his judgement back in September, Judge Ng’andu stated that the sale and takeover of all shares and assets of EMI by Inyatsi Group Holdings triggered the operation of Section 33 of the Act.
This section provides that an employer shall not sell his business to another person or allow the takeover of the business to another person unless he first pays all benefits accruing and or due for payment to the employees at the time of the sale or takeover. Judge Ng’andu noted that the former directors of EMI had undertaken to comply with Section 33 before the takeover of the company. However, according to the court, the former directors failed to ensure compliance with Section 33 of the Act.
The judge said the court was called upon to determine if Section 33 applied to the agreement that the parties labelled a ‘share purchase agreement’.
“Did this sale of shares fall squarely within the provisions of Section 33 bis, thus entitling the applicants (workers) to demand payment of their terminal benefits by the employer as provided for in the above section?”
“Section 33 bis clearly states two conditions or transactions that attract the liability of the employer to pay the terminal benefits. It is when the employer sells the business to another person, the payment of terminal benefits is immediately activated. The second condition is where the employer allows the takeover of the business by another person, then the terminal benefits of the employees ought to be paid,” said the judge.
Agreement
Judge Ng’andu said in the agreement between the shareholders of EMI and Inyatsi Group Holdings, despite it being labelled a ‘share purchase agreement’ in terms of Clause 2(b) thereof, the purchaser was acquiring all the issued share capital held by the former shareholders in the company.
“Indeed the 10th respondent (EMI) is a legal entity that enjoys a legal personality apart from the shareholders. It had the right and duties and was the employer of the applicants herein. Further, the 10th respondent was separate from the shareholders. However, the sale of the entire shares in the 10th respondent by the first to ninth respondents (former directors) to the purchaser, allowed the takeover of its business by another as envisaged by Section 33 bis. Not only is that read from the terms of the sale agreement, but also can be seen from the event that followed thereafter,” further stated the judge.
In court, the 200 employees submitted that the shareholders of the company had sold all their shares to Inyatsi Group Holdings and left without paying them all their benefits, amounting to E17 268 956.90. They told the court that Jonathan Williams, who was the Managing Director (MD) of EMI and a major shareholder, had resigned from the company and was believed to be planning to relocate overseas.
Respondents in the matter were Williams, Kjott-OG Fjorfebransjens Landsforbund, Ben Dlamini, Vincent Lukhele and Sipho Shongwe. Others were Richard Dlamini, Mguntu Dlamini, Howe Investments (Pty) Ltd, TWK Agriculture Limited and EMI.
On Friday, delivering the judgment Judge Nkosinathi Nkonyane said the evidence presented before the Court revealed that the appellants (former directors) were paid an amount of E120 million as the purchase price and that this amount was inclusive of the terminal benefits.
“The appellants having failed to deny the company’s evidence that the purchase price of E120 000 000 was inclusive of the terminal benefits of the employees, they have no legal basis to hold on to the portion of the money which was meant to cater for the employees terminal benefits,” reads the judgment in part.
The appellant’s (former directors) appeal was dismissed and the judgement of the Court a quo delivered on September 18, 2023, was upheld.
The appellants were represented by Adv. H. Barnes SC & Adv. N. Lewis (instructed by Henwood & Company). The 1st to 199th respondents were represented by Modicai Donga (S.V Mdladla & Associates) and the joined respondents, Nombulelo Mhlanga and Lidia Martins, were represented by Banele Gamedze from Musa M. Sibandze Attorneys. Derrick Jele from Robinson Bertram represented the 200th respondent.