Paying the price for being a careless employer or simply rewarding myopic employees Malatji v Gauteng Building Provident Fund, Alexander Forbes Financial Services (Pty) Ltd and LR Civil (Pty) Ltd (PFA/NP/9447/2011/LMP) (unreported) : recent case law

• Author: L.G. Mpedi
• DOI: 10.10520/EJC166185
• Published date: 01 January 2014
• Date: 01 January 2014
• Pages: 355-363

355

Onlangse regspraak/Recent case law

Malatji v Gauteng Building Provident Fund,

Alexander Forbes Financial Services (Pty) Ltd and

LR Civil (Pty) Ltd

(PFA/NP/9447/2011/LMP)

(unreported)

Paying the price for being a careless employer or simply rewarding myopic

employees

1Introduction

The risk of becoming old and, as a result, not being able to participate or

continue participating in the labour market and earn a living for oneself

and dependants as well as the risk of dependants falling on hard times

due to the passing on of the breadwinner are catered for in the South

African social security system. One way in which these risks are covered

in South Africa is by means of retirement funds (i.e. pensions fund and

provident fund). It is estimated that there are about 3000 active

retirement funds in South Africa (National Treasury Charges in South

African Retirement Funds (National Treasury (2013)) 4). Being social

insurance funds, the retirement funds are contributory-based. For a

person and/or his or her dependants to enjoy the protection provided

(such as death, disability and funeral benefits) he or she must be a

member. A “member” is defined to mean:

“in relation to (a) a fund referred to in paragraph (a) of the definition of

‘pension fund organization’, any member or former member of the

association by which such fund has been established; (b) a fund referred to in

paragraph (b) of that definition, a person who belongs or belonged to a class

of persons for whose benefit that fund has been established, but does not

include any such member or former member or person who has received all

the benefits which may be due to him from the fund and whose membership

has thereafter been terminated in accordance with the rules of the fund”

(section 1 of the Pension Funds Act 24 of 1956).

In addition, he or she and his or her employer must pay the requisite

contributions.

At the moment, there is no general statutory duty for all employees

and their employers to belong to a retirement fund. However, this does

not imply that the notion of compulsory membership to a retirement

scheme is foreign to the South African social security system. As a matter

of fact, there are instances where an employee can be compelled to

belong to a retirement fund. For example, an employee can be obliged

to belong to his or her employer’s retirement fund by means of a contract

of employment and/or collective agreement. In addition, there are cases