If you are a business owner and want to be compensated for money or goods an employee has stolen from you by deducting the money from the employee’s retirement savings, there is a strict process you must follow before a retirement fund will make the deduction.
Apart from obtaining proof of the employee’s guilt, you need to apply to a magistrate’s court for a compensation order. It is only when you are in possession of such an order that a retirement fund may deduct what is owed to you from a member’s benefit.
In a recent case before the Pension Funds Adjudicator, Muvhango Lukhaimane, S Ndumiso complained that he had not been paid his withdrawal benefit from the Auto Workers Provident Fund because his former employer, Ascension Trading cc, trading as Ascension Motors, had put in a claim against the benefit with the fund.
According to the adjudicator’s ruling, Ascension Motors terminated Ndumiso’s employment in October 2014, following allegations of theft. The company filed a criminal case against Ndumiso and asked the Auto Workers Provident Fund to withhold his payout pending the outcome of the investigation and trial. Ndumiso was convicted of theft and given a suspended three-year jail sentence.
In March this year, when Ndumiso applied for his benefit, he was told to wait for three months, because his former employer had laid a claim on his savings.
In responding to Ndumiso’s complaint, the Auto Workers Provident Fund told the adjudicator’s office that, in light of Ndumiso’s guilt and the sentence handed down, it had asked Ascension Motors to confirm that it had received a judgment ordering the payment of R21 300, the amount it claimed had been stolen. Ascension Motors did not submit such an order to the fund, and the fund told the company that if it failed to produce one, it would pay Ndumiso his benefit.
In her ruling, Lukhaimane says that, in terms of the Pension Funds Act, a fund may deduct an amount due by a member to his employer in respect of compensation for “any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the member”.
However, she says there was no evidence that Ascension Motors had followed the correct legal steps to obtain compensation by, in accordance with the Criminal Procedure Act, obtaining a compensation order from a magistrate’s court.
“It is only when an employer is in possession of such an order, deemed to be a civil judgment, that a fund may deduct [what is owed from] a member’s benefit and pay it to such an employer,” Lukhaimane said.
She ordered that Ndumiso be paid his withdrawal benefit by the provident fund.