Section 13A of the Pension Funds Act (PFA) requires that employers pay contributions for a particular month within seven days after month-end. It also stipulates that they provide member schedules in respect of contribution payments to the fund and that compound interest is paid on late contributions.
This was one of the legal aspects that was argued in a recent matter between an employer and the Pension Fund Adjudicator (PFA), after the PFA essentially found that the employer had failed to comply with the requirements of section 13A as outlined above.
The employer’s Tribunal application
The two main issues that the employer based its application on were that:
- Mr M’s (the employee) claim had prescribed and therefore the PFA was wrong in determining that the applicant was required to pay the outstanding contributions.
- The PFA was incorrect in finding that the employer had an obligation in terms of the main collective agreement to report the employee? to the Bargaining Council, and register him with the Fund.
PFA’s reasoning at arriving at its determination
- Mr M’s period of employment with his employer, (the applicant) was from 1 December 2011 until 2 January 2018.
- Mr M was entitled to a withdrawal benefit upon the termination of his employment.
- The withdrawal benefit, an amount of R59 920.76, was paid to him on 14 June 2018.
- Mr M’s complaint with the office of the PFA was that he was not registered timeously as a member of the Fund and that he had not received his full benefits.
- It appears that Mr M’s total benefit amounted to R65 001.11.
- From the calculations, an amount of R5 080.35 thereof was taxed, leaving him with an amount of R59 920.76.
- The dispute was that Mr M was not registered with the fund for the period December 2011 to June 2014.
According to the employer there were a few uncertainties, particularly on the issue whether the National Bargaining Council for Road Freight and Logistics Industry had the capacity to handle provident fund contributions or not. It was on this basis that the employer did not deduct any provident fund contributions from the Mr M’s salary during the 2011 to 2014 period and consequently did not make contributions to the Fund.
Mr M further failed to provide proof of any deductions from his salary for the period prior to July 2014.
The PFA’s determination was therefore that the employers should have registered Mr M timeously as a member of the Fund and was required to pay all the contributions on his behalf since the inception of his employment in 2011.
In considering the explanation by the employer for not registering timeously, the PFA found that the Bargaining Council’s Funds which were previously exempted from registration, were in fact obliged to register with effect from 1 January 2008. The employer did not provide any evidence that it was exempted by the Bargaining Council from participating in the Fund during December 2011 to June 2014. The only exception applied to those who were exempted and in this case the employer was not exempted. The employer therefore had a statuary responsibility to deduct contributions from the employees’ salary, pay such contributions to the Fund and keep record thereof as prescribed in the Act.
On this basis the Tribunal found that it has no basis to interfere with the determination of the PFA and its findings.
Did prescription apply?
The second ground upon which this application for reconsideration is based is on the fact that Mr M’s claim in respect of the outstanding amount had prescribed.
The employer submitted that Mr M’s outstanding contributions for the period December 2011 to June 2014 had prescribed. A period of three years had lapsed since the complainant only lodged his complaint on 8 June 2018.
According to section 30I of the PFA, the PFA is precluded from investigating and adjudicating any complaint if the act or omission to which it relates occurred more than three years prior to receipt of a written complaint in that regard. The employer further claimed that Mr M was aware of the debt since no deduction was made from his salary. Section 12(3) of the Prescription Act further stipulates that a debt shall not be deemed to be due (and recoverable) until the creditor has knowledge of the facts from which the debt arose.
The issue of prescription was not raised with the office of the PFA, thus it would be premature for the Tribunal to adjudicate on the matter. The Tribunal therefore found that the issue of prescription must be properly ventilated before the decision maker if the applicant wishes to persist therewith.
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