An analysis of the law on employees' rights during the liquidation of companies in Botswana

Abstract

This study discusses Botswana's legal framework in relation to the protection of employees' rights in the event of a company's liquidation. Its main focus is on the protection of employees as provided for under the corporate insolvency and labour laws of the country. The study drew its inspiration from the fact that, although there have been several studies conducted worldwide on the rights of workers, there is little research that has been conducted in Botswana on the rights of employees when a company is being liquidated. The main aim of this study was to examine whether Botswana's corporate insolvency law adequately protects employees' rights during the liquidation of a company. The study was motivated by the general concern that when a company is liquidated in Botswana, employees are the ones who suffer the most as their rights are not adequately protected by legal instruments, unlike employers and their creditors who can resort to legal recourse. For data collection, the study relied on a qualitative research approach involving the scrutiny of both labour and corporate statutory frameworks in the protection of employees' rights in Botswana. The study started with a historical overview of Botswana's company law from the pre-independence era to post independence, focusing on a comparative analysis of the implications of international insolvency standards on domestic law. The results show that Botswana's corporate insolvency law, in so far as the protection of employees' rights are concerned, fails to meet the international insolvency standard tests as enunciated by ILO Conventions, UNCITRAL insolvency legislative guide, as well as the World Bank principles. This finding is supported by the fact that Botswana's insolvency framework is fraught with weaknesses such as the lack of employees' claims guarantee fund, the absence of a unified insolvency legislation, the

existence of an elaborate and unnecessarily complex creditor claims procedure, a prolonged winding up procedure and the general lack of employees' recognition as a unique class of creditors deserving special protection in corporate insolvency proceedings. In order to untangle the cumbersome legal complexities of liquidation, the study recommends that a reform of the corporate insolvency law in Botswana be made so that the rights of workers can be recognised. The need for law reform is spurred by lessons drawn from benchmarking approaches and corporate law perspectives of the unified insolvency legal framework of OHADA which has authoritatively established itself as a model of an insolvency framework to be adopted by developing countries such as Botswana.