The high court in Johannesburg recently handed down a judgment in which it placed Mezepoli and Plaka, two high-profile Johannesburg restaurants, into business rescue. This was on the basis that their unpaid salary bill to employees was a legal debt and that the restaurants’ legal defence, of inability to pay, constituted grounds to place them in business rescue.
The court’s entire argument, underpinned by an assumption that employees were able to tender their services and were therefore entitled to their salaries, is legally incorrect. The reason is that though the court correctly held that the legal obligation to pay salaries arises from an employee merely tendering services, and not having to actually perform any work, it then went further to find that employers were not excused from their legal obligation to pay salaries since employees were able to tender their services, and further that the level 5 lockdown regulations expressly recognised as an essential service “implementation of payroll systems, to the extent that...
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