When an undertaking is sold or transferred in any way, the employment of the people working in it is deemed to transfer to the new owner on terms no less favourable than before, and their continuity of service is treated as unbroken.

Section 16(1) says exactly that. It means a new owner cannot treat the staff as new starters, cannot reset their years of service, and cannot offer worse terms as a condition of keeping them. Continuity matters well beyond sentiment: notice periods, leave accrual and retrenchment packages are all calculated on length of service. The section does not prevent a lawful termination or a lawful retrenchment carried out on its own merits.

Applies to: Employees of an undertaking that is sold, merged or otherwise transferred