Botswana Miners Workers Union (BMWU) General Secretary Mbiganyi Gaekgotswe says that it is high time that companies operating in Botswana have a Liquidation Fund for the benefit of employees when they become insolvent.
A liquidation Fund is a pool of assets or capital set aside to cover obligations that may arise during the liquidation process of a company or financial entity. One of its main primary purposes is to ensure that there are sufficient resources available to satisfy creditors’ claims, pay off debts and settle any legal or administrative costs that emerge during the liquidation process.
According to the Union, the collapse of a company whether through insolvency or liquidation often carries devastating consequences for the employees jeopardising their income, benefits, and overall well-being. In fact there is no guarantee that when a company winds up due to insolvency, the full terminal benefits will be paid to employees as it depends on whether enough funds were raised from the sale of the company’s assets.
Speaking in an interview with the Telegraph, Gaekgotswe said while Botswana has a legislative framework which seeks to mitigate risks through the Insolvency Act, Employment Act and the Companies Act their effectiveness is often constrained by practical challenges and gaps in implementation leaving employees in a difficult position when a company is liquidated.
“Despite this legislative framework, employees face a complex and often disheartening reality. A critical challenge is the availability of funds. If a company’s assets are insufficient to cover its liabilities, employees may only receive a portion of their entitlements, leading to severe financial hardship. This is compounded by the lack of a dedicated Insolvency or Liquidation Fund in Botswana, a stark contrast to some countries that guarantee employee claims through such mechanisms,” he said.
According to Gaekgotswe, companies in countries like Gabon and Cameroon already have this Fund to protect the welfare of employees when a company winds up with regard to their terminal benefits. He said more often in Botswana companies have a tendency of deliberately going for liquidation to evade paying employees their full terminal benefits.
He added that the International Labour Organization (ILO) has been encouraging that there should be a Liquidation Fund to protect the interests of employees.
Botswana has over the years sought to mitigate these risks through a legislative framework enshrined in the Insolvency Act, Employment Act, and Companies Act. However, while these laws aim to provide a safety net, Gaekgotswe is of the view that their effectiveness is often constrained by practical challenges and gaps in implementation, leaving employees in a precarious position.
Adding to these challenges, he says is the intricate and often opaque claims process. The Union is concerned that employees, already grappling with job losses are often forced to navigate complex legal and administrative procedures to access their rightful benefits.
“This can be time-consuming, resource draining and emotionally devastating experience, delaying the much-needed financial relief to employees,” he highlighted.
In addition Gaekgotswe raises concerns over the enforcement of labour laws, particularly in ensuring there is prompt and complete payment of employee entitlements. He says there is lack of a clear legal framework leaving the burden on the shoulders of the Union to fight for employees in the courts of law with its limited resources. He said that currently Botswana Mine Worker Union’s is fighting for the survival of Mupane Gold Mine employees whose lives are hanging on the string with the prospects of not having their terminal benefits paid.
“In order to bolster employee protection, Botswana needs to address these shortcomings decisively,” he said.
He further added “establishing a Liquidation Fund would provide a vital safety net, guaranteeing a minimum level of compensation regardless of the company’s financial state,” He also emphasized that simplifying the claims process, potentially through a dedicated agency or online platform, would also reduce the burden on employees and expedite access to their entitlements.
The Union is also of the view that strengthening enforcement mechanisms, including increased inspections and stricter penalties for non-compliance, would further deter employers from neglecting their obligations.
