Siviwe* tried to make a claim from his provident fund only to find out that his name doesn’t appear on the fund’s system at all. His payslips showed that his former employer was deducting money for a provident fund contribution every month, but the provident fund told him his former employer had not been making any payments to them for any provident fund in Siviwe’s name. What can he do? Scorpion Legal Protection discusses what the law says, and what action Siviwe can take.

Scorpion Legal Protection’s advice

The law that applies here is Section 13A of the Pension Fund Act. No employer is allowed to deduct pension/provident fund contributions from an employee’s salary and then not submit these to the fund. This is a criminal offence, and the employer/director of the company can be personally liable and prosecuted for it. In fact, by law, the employer must submit contributions to the fund administrator within 7 days of the money being deducted from the employee’s salary.

If the matter is still within 3 years since Siviwe left the company, he can take the issue to the Pension Funds Adjudicator (PFA), who will do their own investigation. If the employer is found guilty, the PFA will compel the employer to pay the contributions to the fund administrator, with the interest calculated by the administrator. If the employer does not comply, the matter will be referred to an attorney for enforcement.

If it is more than 3 years since Siviwe stopped working for the company, not much can be done, because these kinds of legal matters prescribe (become invalid) after 3 years. The same is true for civil claims. Siviwe can try lodging a case with the Financial Sector Conduct Authority (FSCA) to see if they will take the issue up, as their office does not consider the issue of prescription. Alternatively, Siviwe can open a criminal case against his former employer – as long as he has written proof that his former employer owes him this money.

It is also possible for the provident fund administrators to open a criminal case against the employer or refer the matter to the PFA, however, fund administrators won’t enforce the outcome of the PFA, so this might not offer any real help to Siviwe.

It’s important to understand that this process is quite complicated, and can take a long time to be resolved, especially if you don’t have professional legal help.

Tips:

• Pension and provident fund issues need to be reported/dealt with as soon as possible, because after 3 years they prescribe and you will not be able to claim unpaid contributions.
• If you’re worried this could happen to you, you can contact your pension or provident fund administrator yourself to check on the status of your fund.

If you have a query, follow us on our Facebook page and ask your question during our next Live Q&A (every first Thursday of the month).

* This is only basic advice and cannot be relied on solely. Names have been changed to protect identity.