Adjudicator rules employer is entitled to pension deduction after double salary payments

04 February 2021 Office of the Pension Funds Adjudicator (OPFA)
Advocate Matome Thulare, Deputy Pension Funds Adjudicator

Advocate Matome Thulare, Deputy Pension Funds Adjudicator

The Deputy Pension Funds Adjudicator, Advocate Matome Thulare, has ruled that an employer was entitled to claim a deduction for double salary payments made to the complainant for over two years.

Advocate Thulare dismissed the complaint by a member against his pension fund’s decision to withhold his withdrawal benefit.

The complainant commenced his employment with Nedbank from 1 February 2017 until 13 September 2019. He was a member of the Old Mutual Superfund Pension Fund.

Prior to being a permanent employee, the complainant had been employed by Nedbank for two consecutive periods on fixed term contracts during the period June 2016 to December 2016.

During the period of the fixed term contracts, the complainant was remunerated at the rate of R500 per hour. Upon becoming a permanent employee, the complainant’s remuneration changed to R414 per hour capped at 158 hours per month/R785 644 per annum.

The complainant admitted that he noted discrepancies in his salary after becoming a permanent employee. He said that he initially assumed that this was because of the transition from fixed term employee to permanent and that these discrepancies would resolve over time. When the discrepancies persisted, he assumed that the employer “had in fact not prejudiced him, by reducing his pay scale so drastically”. The complainant said that his IRP5 documents corresponded with his pay slips.

After an investigation by Nedbank, it was discovered that the complainant was receiving a second salary as a result of a processing error whereby he was not removed from the temporary payroll. This resulted in the complainant receiving almost double his salary for a period of just over two years.

Despite admitting knowledge of the discrepancy, he never brought it to the attention of Nedbank.

In a written statement made to Nedbank after the investigation, the complainant admitted his liability to Nedbank and undertook to repay the money. The complainant was subsequently dismissed for misconduct relating to dishonesty and criminal charges were laid against him for fraud. The complainant referred the matter to the CCMA but abandoned the arbitration after conciliation failed.

The complainant tried to access his pension fund after his dismissal and was informed that it was being withheld because of the employer’s claim against him and pending the outcome of legal proceedings against him. After failing through his legal representative to get the fund to change its decision, the complainant decided to lodge a complaint with the Pension Funds Adjudicator.

Advocate Thulare found that the complainant had admitted his liability in writing to the employer and that the basis for such liability was his misconduct relating to dishonesty, as per the findings of the disciplinary enquiry.

The Deputy Adjudicator did not accept the reason for the complainant abandoning the CCMA arbitration as being due to a lack of funds for legal representation and held that legal representation at the CCMA for unfair dismissals was not an automatic right. Furthermore, that the CCMA processes were designed to assist lay persons and that if the complainant desired legal representation, then he could have approached the Legal Aid Board.

The Deputy Adjudicator also rejected the complainant’s argument that he should been found negligent instead of dishonest.

“These payments persisted for a long time and the complainant had sufficient opportunity to query same with the third respondent. He failed to do so.

“As an employee and in terms of the employment contract entered with the third respondent, the complainant stood in a position of confidence which involved a duty to protect the interests of his employer. Accordingly, the complainant owed a fiduciary duty towards the third respondent which he failed to fulfil,” Advocate Thulare said in his determination.

The Deputy Adjudicator held that payments of almost double his expected salary should have raised alarm bells and the complainant ought to have queried same. Instead, he chose to stay silent. He also knew that he did not work for the hours that he was being paid for.

“The inescapable conclusion is that the complainant, who conceded that he became aware of the discrepancies in his salary from the outset of his permanent employment, did not bring it to the attention of the third respondent (employer Nedbank) because it benefited him and because he assumed that the double salary payments would go unnoticed due to the scale of the third respondent’s operations.”

The Deputy Adjudicator found that there was a duty to speak on the part of the complainant and that his failure to do so constituted dishonesty.

The Deputy Adjudicator stated that in several recent determinations, the requirements that must be met in order to justify the withholding of a benefit were set out. One of the main requirements for withholding a benefit is applying the principles of natural justice. However, it was important to appreciate that there is a distinction to be drawn between the “withholding” of a benefit and the “deduction” of compensation due to an employer on the grounds of fraud, theft, dishonesty or misconduct.

The Deputy Adjudicator held that in circumstances where there is no dispute that the member admitted liability in writing, and such liability arises from dishonest conduct, a deduction can be made without awaiting the outcome of civil or criminal proceedings. There is simply no point in the fund continuing to withhold the complainant’s benefit, he said.

The employer was entitled to a deduction and it follows that the complaint could not succeed because it would deprive Nedbank of the relief that it is lawfully entitled to. The complaint was dismissed.

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