Posted by: Linx | 2011-03-31


Hi there

The company I work for has been bought over by new people. The new boss wants to save money and he wants to do this by cancelling over pensionfund. But in order for us to get the our money, as well at the previous owners contribution, the new boss said that he will retrench us and then employ us again on a 1 year contract. I am currently permanently employed and don''t feel comfortable with the fact that I will be on a contract basis for 1 year. What happens after that year?

My questions are:
1. Is this legal?
2. Can''t I just stop my pensionfund?
3. If we are all employed on contract basis, will we still pay UIF and PAYE? and if not, if SARS finds this out, won''t we been seen as part of the guilty party?
4. What about UIF? If I am retrenched I can''t earn a salary and claim UIF can I?

Please assist

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Our expert says:
Expert ImageLabour lawyer

re: Retrenchment

When a company is taken over in terms of Section 197 of the Labour Relations Act people must be taken over on the same terms and conditions. You can't unilaterally stop the pension fund. Even if you are employed on a contract basis PAYE and UIF must be deducted. If you are retrenched you can claim UIF.

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