A compensation order is a requirement before employers can garnish employee’s wages.
We had an interesting scenario and query raised with us last week.
It was an inquiry from an employer whose employee had helped himself to money that was due to him.
Clearly this amounted to both fraud and theft but the query to us was; can we be compensated for our losses from the employee’s retirement savings?
If you are a business owner and wish to be compensated for money or goods an employee of yours has stolen from you by deducting money from his wages, salary or especially his retirement savings; there is a process to be followed and a strict one when you want payment from a retirement fund; which will not do so without due process.
If it is only a small amount involved the employees can consent to deductions form his wages or salary.
If you want to garnish retirement savings a strict protocol should be followed.
Firstly you will need proof of the employee’s guilt and then you need to apply to a court for a compensation order. This is clearly a formal legal process.
It is only when you are in possession of such an order that a retirement fund may deduct what is owed to you from a members benefit.
In a case before the Pension funds Adjudicator, a certain S Ndumiso complained that he had not been paid his withdrawal benefit from the Auto Workers Provident Fund because his former employer Ascension Trading CC trading as Ascension motors had submitted a claim against the benefit with the fund.
According to the adjudicator’s ruling, Ascension Motors terminated Ndumiso’ s employment contract in October 2014 following allegations of theft. The company filed a criminal case against Ndumiso and requested the Auto Workers Provident Fund to withhold his pay-out pending the outcome of the criminal investigation and trial. Ndumiso in due course was convicted of theft and given a suspended three year jail sentence.
In March of the following year Ndumiso applied for his benefit and was told to wait for three months because his former employer had laid a claim against his savings benefit.
In responding to Ndumiso’s complaint, the Auto Workers Provident Fund told the adjudicator’s office that, in the light of Ndumiso’s guilty verdict and the sentence handed down by the court that it had asked ascension Motors to confirm that it had received a judgment ordering the payment of the R 21300.00 being the amount of it had claimed had been stolen from it by him. Ascension Motors did not submit such an order to the fund and the fund told them that if they failed to produce one within 30 days that it would pay Ndumiso his entire benefit.
In her ruling Muvhango Lukhaimane, the Pension Fund Adjudicator, stated that in terms of the Pension Funds Act, a fund may deduct an amount due by a member to his employer in respect of compensation for “any damage caused to the employer by reasons of ant theft, dishonesty, fraud or misconduct by a member.” However, she went on to say that there was no evidence that Ascension Motors had followed the correct legal procedure to obtain compensation in terms of the Criminal procedure Act and had not obtained a compensation order from the court at the time of the criminal trial of Ndumiso. She went on to note that “ it is only when an employer is in possession of such an order, deemed to be of itself a civil judgment that a fund may then deduct what is owed to an employer by an employee and pay such amount directly to the employer.
She therefore order that Ndumiso be paid his full withdrawal benefit by the Provident Fund.
Her conclusion is correct in our view.
You would also submit that the obtaining by Ascension Motors of a simultaneous civil judgment at the time of the criminal trial by Ascension motors would have entitled them in terms of that civil judgment to execute against Ndumiso’s benefit up to the amount of the judgment and its costs aspect.
Once again; we must stress that it is always advisable for you to seek prompt, proper and professional legal advice and legal services when dealing with factual and legal issues as we reiterate the law and legal issues can sometimes can be confusing and complicated, especially in its correct interpretation and process and needs a trained experienced and legal mind to interpret it correctly and as accurately as possible in any given circumstances.
If you have experienced difficulties with enforcing your legal rights; contact us at The Legal Advice Office at www.legaladviceoffice.co.za or send an email to one of our email addresses; either email@example.com or firstname.lastname@example.org
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The Legal Advice Office Team.