MRL3701 Semester 1 Assignment 02 Unique number: 690957
Due date: 1 June 2021 Student number: 55612792 Ashleigh Hala
Assignment 02
Section 38(1) of the Insolvency Act1 states that “the sequestration of an employer’s
estate suspends the employment contract between him and his employee with
immediate effect”2. This suspension means that employees are not required to
render any services and are not entitled to a salary or wage during this time,
according to section 38(2)(a)3, although employees can receive compensation for
loss suffered as a result of the suspension (section 38(10)(a)4. According to
section 38(2)(b)5 the employee does not receive an employment benefit during this
time, although unemployment benefits from the date of suspension may be
received (section 38(4))6.
In 2002, an amendment was made to the Insolvency Act in the form of section
9(4A), stating that a copy of the sequestration application must be given to
employees of the insolvent debtor before an order for provisional sequestration
can be granted. In Gungudoo & another v Hannover Reinsurance Group Africa Pty
(Ltd) & another [2012] 3 All SA 609 (SCA), the court interpreted this section as
‘employees’ meaning people employed by the business of the debtor and not
employees employed at the debtor’s residence (domestic workers)7.
Section 9 (4A) of the Insolvency Act8 requires the applicant to provide the debtor’s
employees with a copy of the application to a notice board to which the employees
have access inside the debtor’s premises or somewhere that the employees will
have easy access to it9.
The case of Stratford v Investec Bank Ltd 2015 (3) SA 1 (CC), saw a counter-
application launched by the Stratford’s and their three domestic workers to argue
against the interpretation of section 9(4A) in Gungudoo & another v Hannover
Reinsurance Group Africa Pty (Ltd) & another. They argued that this interpretation
was incorrect, as it violated the right to equality, human dignity and fair labour
1
24 of 1936.
2
Sharrock, R., 2012, (91).
3
Insolvency Act 24 of 1936.
4
Insolvency Act 24 of 1936.
5
Insolvency Act 24 of 1936.
6
Insolvency Act 24 of 1936.
7
Sharrock, R., 2012, (52).
8
24 of 1936.
9
Sharrock, R., 2012, (52).
Due date: 1 June 2021 Student number: 55612792 Ashleigh Hala
Assignment 02
Section 38(1) of the Insolvency Act1 states that “the sequestration of an employer’s
estate suspends the employment contract between him and his employee with
immediate effect”2. This suspension means that employees are not required to
render any services and are not entitled to a salary or wage during this time,
according to section 38(2)(a)3, although employees can receive compensation for
loss suffered as a result of the suspension (section 38(10)(a)4. According to
section 38(2)(b)5 the employee does not receive an employment benefit during this
time, although unemployment benefits from the date of suspension may be
received (section 38(4))6.
In 2002, an amendment was made to the Insolvency Act in the form of section
9(4A), stating that a copy of the sequestration application must be given to
employees of the insolvent debtor before an order for provisional sequestration
can be granted. In Gungudoo & another v Hannover Reinsurance Group Africa Pty
(Ltd) & another [2012] 3 All SA 609 (SCA), the court interpreted this section as
‘employees’ meaning people employed by the business of the debtor and not
employees employed at the debtor’s residence (domestic workers)7.
Section 9 (4A) of the Insolvency Act8 requires the applicant to provide the debtor’s
employees with a copy of the application to a notice board to which the employees
have access inside the debtor’s premises or somewhere that the employees will
have easy access to it9.
The case of Stratford v Investec Bank Ltd 2015 (3) SA 1 (CC), saw a counter-
application launched by the Stratford’s and their three domestic workers to argue
against the interpretation of section 9(4A) in Gungudoo & another v Hannover
Reinsurance Group Africa Pty (Ltd) & another. They argued that this interpretation
was incorrect, as it violated the right to equality, human dignity and fair labour
1
24 of 1936.
2
Sharrock, R., 2012, (91).
3
Insolvency Act 24 of 1936.
4
Insolvency Act 24 of 1936.
5
Insolvency Act 24 of 1936.
6
Insolvency Act 24 of 1936.
7
Sharrock, R., 2012, (52).
8
24 of 1936.
9
Sharrock, R., 2012, (52).
