Insolvency often comes suddenly and unannounced all too frequent that employees know when the gates are locked against them. Although Employees have certain rights they are considered as unsecured creditors that their rights are not given a paramount consideration when a company undergoes insolvency therefore their rights are frozen on Insolvency and workers cannot issue proceedings without the consent of the court. In this situation the question that normally arises is what happens to employees working for an insolvent company? What happens to the interest and the rights that they are to acquire when a Company is liquidated for reasons of insolvency?
This study focuses on the corporate insolvency and protection of employee’s rights where the researcher addresses the nature of protection of employee’s rights in Tanzania drawing relevant examples from laws of various jurisdictions with regard to corporate insolvency and how employee’s rights are treated in such a situation.
As a matter of practice in Tanzania employees have been facing problems to acquire their rights and interest from an insolvent company and worse the Employment and Labour Relations Act does not provide a general statutory protection of employees in this situation for there are no specific provisions in the labour laws that provides for employees’ protection in this circumstance. Likewise, the Companies Act does not give a paramount consideration to rights of employees when a company undergoes insolvency for the law is not adequate to prevent an employer from putting employee’s accrued entitlements at risk.
The findings and analysis of this research have revealed that if employees’ rights are not clearly stipulated in the labor laws, then it will be hard for the affected employees.