The new pension case South African workers and companies need to know about

If an employee harms an employer through dishonesty, theft, fraud or misconduct, the South African Pension Funds Act provides that the employer may, in certain circumstances, recover losses from the benefits payable to that employee if the employee resigns to be a member of the fund or to retire.

However, this will only apply if the employee has written liability to the employer or as a judgment is given against the employee in any court, said law firm ENSAfrica.

“However, an employer may encounter problems if the employee has not acknowledged guilt and demands payment of their benefits in circumstances where the employer has yet to receive a judgment against the employee. In this situation, the courts have ruled that, in appropriate circumstances, the trustees of the fund may withhold payment of the benefit, or part of it, until the employer receives a court order.

“In the past, the Pension Fund Judge has doubted sanctioning the withholding of employees’ pension benefits in the absence of a judicial order that the employer receives against the employee, unless there were extremely compelling reasons to do so.”

High court case

In the recent High Court case of Jacobs v Telkomthe employee launched an application requesting that his pension benefits be paid to him after he was fired from his employer, Telkom.

Telkom rejected this application and instituted a counter-application in terms in which it sought an order against the pension fund prohibiting it from paying the relevant funds to the employee, pending the finalization of a civil action which it pursued against the employee.

The Supreme Court referred to the Pension Funds Act, as well as the rules of the relevant fund that allow the fund to maintain benefits where legal proceedings have been instituted, or where criminal charges have been brought against an employee, until the case is settled. by a competent court. This provision was subject to a prima facie case and a reason to believe that the employer has a reasonable chance of success.

“The employee based his claim that he would pay out his pension money on the fact that the delay in finalizing the action that the employer took against him was unreasonable. However, the court found that the delay was caused by several factors and not “It can only be attributed to the behavior (or lack thereof) of the employer. It also emphasizes the employee’s duty not to contribute to delays,” said ENSAfrica.

“The court considered the employee’s statement that he demanded the money to meet his existing financial obligations, but found that if the employee received the pension money paid out, he (on his own version) would use the money for these obligations. and thus leaving Telkom with no appeal.Every judgment that Telkom affirmed against the employee would therefore be of no value.

The Supreme Court granted the interim ban to Telkom. This confirmed the ability of an employer to successfully, and at least temporarily, exclude from a pension fund the payment of benefits in terms of a pension fund rule to an employee upon termination of employment, notwithstanding the requirements of Article 37D of ‘ the Pension Funds Act have not been complied with.

“This is because section 37D may make a deduction, but requires an acknowledgment of liability on the part of the employee, or a judgment against the employee. In the event that pension amounts are paid before a lawsuit is filed. finalized, there must be some appeal to an employer to ensure that the payment of all amounts is withheld until the finalization of such a lawsuit, “ENSAfrica.

“In short, this judgment has confirmed that money retained by pension funds to be paid to employees upon their termination of employment is not inaccessible. This should serve as a warning to employees in this regard as well as a reminder to employers of the possible recourse they have against employees for monetary claims.

  • Commentary by Samantha Bonato and Peter le Roux of ENSAfrica.

To read: The largest banks in South Africa in 2022

The new pension case South African workers and companies need to know about

Source link The new pension case South African workers and companies need to know about

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