Determination report: Employer cannot recover money without compensation order

Muvhango Lukhaimane, Pension Funds Adjudicator.

An employer who wishes to recover stolen monies from an employee’s benefit must apply for a compensation order.

It is only when an employer is in possession of such an order, deemed to be a civil judgement, that a fund may deduct a member’s benefit and pay to such an employer.

This was the ruling by the Pension Funds Adjudicator, Muvhango Lukhaimane, in a matter in which S Ndumiso complained that he had not been paid his withdrawal benefit because his former employer Ascension Trading cc T/A Ascension Motors (second respondent) had put in a claim against the benefit with the Auto Workers Provident Fund (first respondent).

The complainant’s employment was terminated by the second respondent on 10 October 2014 following allegations of theft of money. The second respondent filed a criminal case of theft against the complainant and also requested the first respondent to withhold the complainant’s withdrawal benefit pending the finalisation of the criminal trial. When the criminal trial was completed, the complainant was subsequently convicted of theft and granted a suspended sentence of three years.

In March 2015, the complainant applied for the payment of his withdrawal benefit and was informed to wait for a period of three months. When he followed up, he was informed that the second respondent had also laid a claim on his pension money.

The first respondent confirmed that the second respondent approached it to withhold the complainant’s benefit pending the finalisation of the criminal case.

It submitted that having regard to the sentence handed down, it requested the second respondent to confirm that it had received a judgement for the payment of the amount of R21 300 which it claimed had been stolen. The second respondent failed to submit a judgement indicating that it should be paid the said amount.

The first respondent said that it informed the second respondent that failure to produce the judgement providing for compensation would result in it paying the complainant his withdrawal benefit.

In her ruling, Ms Lukhaimane said that in terms of the Pension Funds Act, “a registered fund may deduct any amount due by a member to his employer on the date of his retirement or on which he ceases to be a member of the fund, in respect of……compensation in respect of any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the member”.

However, she said there was no evidence that the second respondent had applied for an order in terms of section 300 of the Criminal Procedure Act, 55 of 1977 which provides relief for a party that suffered patrimonial loss to be compensated for the loss.

Thus, the second respondent was required to make an application before a Magistrate’s Court requesting for a compensation order stipulating that an amount R21 300 should be paid to it in terms in terms of section 300(1) and (2) of the Criminal Code.

“It is only when an employer who is in possession of such an order, deemed to be a civil judgement, that a fund may deduct a member’s benefit and pay to such an employer in terms of section 37D of the Act.

“In the current matter there is no order in terms of section 300 of the Criminal Code granted to the second respondent.

“In the event, this Tribunal finds that the first respondent cannot make a deduction from the complainant’s withdrawal benefit for purposes of paying it to the second respondent.

“As a result, the first respondent should pay the complainant his withdrawal benefit,” Ms Lukhaimane ruled.