The recent decision in PRSS Solution (Pty) Ltd v M G Marara and Others by the Financial Services Tribunal (the Tribunal) underscores the crucial responsibility of employers to comply with their obligations under the Pension Funds Act (the Act). In particular, this includes registering employees with a pension fund and notifying the fund upon their exit. This case offers a stark reminder of the consequences of failure to engage with regulatory processes.
Background of the Case
PRSS Solutions (Pty) Ltd (the Applicant) employed Mr Marara (the employee) from November 2018 until April 2024. As a participating employer in the Private Security Sector Provident Fund (the Fund), the Applicant was responsible for registering the employee as a member and making appropriate provident fund contributions.
However, the Fund indicated that the employee was not registered under the Applicant at the time of employment and had only been recorded as a member from March 2024, just one month before his termination. Following this, the employee filed a complaint against the Applicant with the Pension Funds Adjudicator, which eventually led to the contested determination.
Failure to Register and Notify
A critical issue in this case was the Applicant's failure to register the employee at the beginning of his employment, as required by the Fund's rules and Section 13A of the Act. The Fund further highlighted that the Applicant did not notify it of the employee's termination, thereby delaying the processing of his withdrawal benefit.
The Adjudicator found that the Applicant should have registered the employee by December 2018 and made contributions from April 2019 onwards. The Applicant's non-compliance caused the employee's fund credit to reflect contributions only from March 2024, thereby prejudicing his financial position.
The Adjudicator further held that the appropriate relief is to place the employee in the position he would have been in had the Applicant timeously registered him and paid all contributions due, thereby correcting the prejudice caused by the Applicant's non-compliance.
The Adjudicator's determination therefore included various orders to give effect to the payment of pension benefits due to the employee. Notably, the Applicant was ordered to submit all outstanding employer contribution schedules for April 2018 to February 2024 to facilitate the calculation of arrear contributions.
Significance of Section 30F of the Act
One of the pivotal aspects of this case was the application of Section 30F of the Act, which provides:
"When an Adjudicator intends to conduct an investigation into a complaint, she shall afford the fund or the person against whom the allegations contained in the complaint are made, the opportunity to comment on the allegations."
The Applicant was given the opportunity to respond to the complaint, first by 4 October 2024, and then a final extension to 23 October 2024. Despite these opportunities, the Applicant failed to respond, which led the Adjudicator to proceed in its absence. The Tribunal upheld this approach, emphasising that the Applicant had been afforded a full and fair opportunity in line with Section 30F, which it missed.
This section exists to ensure procedural fairness; however, it also places a duty on the employer to actively engage with complaints and regulatory investigations. Ignoring this process risks adverse decisions that cannot later be easily undone.
The Tribunal's Findings
The Tribunal dismissed the Applicant's application for reconsideration, finding no legal grounds to overturn the Adjudicator's determination. It found that, among other things:
- The Applicant was given sufficient notice of the proceedings by the Adjudicator and failed to utilise same.
- The Applicant's duty to notify the Fund of the employee's termination and submit necessary documentation had not been fulfilled, justifying the Adjudicator's order.
Key Lessons for Employers
This case highlights several vital responsibilities of employers under the Act:
- Timely Registration: Employers must register eligible employees with the pension or provident fund immediately upon employment, as dictated by the fund rules and Section 13A of the Act.
- Regular Contributions: Contributions must be made timeously and in full. Failure to comply can attract penalties and create significant liability for arrears.
- Notification of Exit: Upon termination of employment, employers are required to notify the fund and submit relevant claim forms and documentation without delay. Failure to do so can obstruct benefit payouts to employees.
- Engagement with the Adjudicator: When a complaint is filed, employers must respond promptly to enquiries from the Pension Funds Adjudicator. Section 30F ensures the right to comment, but this right can be forfeited by inaction, leading to one-sided determinations.
Conclusion
The PRSS Solution decision reinforces the importance of administrative diligence and legal compliance in pension fund matters. Employers must take proactive steps to meet their duties under the Act, not only to avoid liability but to ensure the financial well-being of their employees. Failure to engage with the regulatory framework, including ignoring opportunities under Section 30F, can lead to severe consequences, including enforcement actions and Tribunal confirmations of adverse determinations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
