Companies are uncertain whether they are legally compelled to maintain pension contributions on behalf of striking workers, a labour lawyer said on Friday (11/07/2014).
“The gap between two key pieces of legislation on this issue has been brought into focus by the recent wave of strikes in the mining, metal and engineering industries,” said Rebecca Jansch, attorney at pan-African law firm Bowman Gilfillan.
“The Labour Relations Act allows employers to discontinue the payment of salaries to striking workers during protected strikes,” Jansch said.
“However, the Pension Funds Act does not provide for a suspension of pension fund contributions in a situation like a strike where workers are not being paid, despite remaining employed.”
Labour expert Andrew Levy said the employer must continue to pay the striking employees’ contribution.
“I see no reason they should not continue to pay,” he said.
Jansch said there were serious legal consequences when a company stopped paying pension fund contributions without having a legitimate basis for non-payment.
“The company would be subject to penalty interest on late payments, and the directors of the company can be held financially and criminally liable for outstanding contributions in their personal capacity.”
She said there were also serious financial consequences for the members of the pension fund.
“The loss of contributions reduces their retirement benefit; they may lose their group risk cover; and the non-payment of salaries could cause them to default on their home loans, prompting banks to call upon guarantees provided by the pension fund.”
She said in order to bridge the legislative gap, pension fund rules should make explicit provision for the legitimate suspension of contributions during strikes and other applicable scenarios.
“Where the rule is correctly drafted, the aforementioned undesirable consequences can be averted,” Jansch said. – Sapa