Yes, you have to tell all your employees you're insolvent: ConCourt

All employees, including household staff, must be informed if their bosses are declared insolvent, the Constitutional Court ruled on Friday.

"This court declared that the word 'employees' in section 9(4A) of the Insolvency Act includes domestic employees," said Acting Justice Monica Leeuw who drafted the unanimous judgment.

"This interpretation best promotes the spirit, purport and objects of the Bill of Rights."

The declaration was contained in a judgment related to a sequestration order granted against a couple who owed Investec Bank R240 million.

The couple and their domestic employees appealed the High Court in Cape Town's granting of a final sequestration order. They contended it was unconstitutional because only the couple's business staff had been notified of the action, and not their household workers.

The Constitutional Court found notifying employees was compulsory, but dismissed the appeal in this particular case.

"On the facts of this case, the court held that the petition had been made available in a manner that was reasonably likely to become accessible to the... domestic employees."

The court ruled there could be instances where a provisional sequestration order could be granted, despite a failure to provide notice, "as the purpose of the provision is not to provide a technical defence to debtors".