The Financial Services Tribunal (FST) has upheld a determination requiring an employer to pay outstanding provident fund contributions for an employee, after finding that the employee had not lawfully withdrawn from the fund while still in service.
The Tribunal held that the fund’s rules govern membership and its termination, and are binding on the fund, its members and the employer, rather than any (alleged) informal understanding between the employer and employee.
The dispute arose after Gustav Oosthuizen (first respondent) complained about the non-payment of provident fund contributions in respect of his employment with Sibisi Conveyor Products (Pty) Ltd (the applicant).
The Pension Funds Adjudicator (second respondent) upheld the complaint in part and ordered the employer to pay the outstanding contributions, together with interest, to the Discovery Life Provident Umbrella Fund (third respondent).
Sibisi then applied for reconsideration.
At the heart of the case was whether Oosthuizen had ceased to be a member of the fund after March 2024, as Sibisi claimed, or whether he remained a member while still employed and was therefore subject to the employer’s ongoing obligation to pay contributions under the fund’s rules.
The decision turned on a sequence of distinct periods. The Adjudicator found that July to December 2023 fell outside its jurisdiction, because Oosthuizen was not yet a member of the fund during that time, and did not determine that period on the merits. From January 2024, however, membership commenced and contributions became payable in terms of the fund’s rules. The real dispute concerned the period after March 2024, when the employer contended that Oosthuizen had ceased to be a member while remaining in employment.
Sibisi argued that Oosthuizen had asked to be removed from the fund and relied on WhatsApp exchanges with the company’s former chief executive as evidence that the parties had agreed the deductions would stop.
The Tribunal rejected this. It held that the record did not show any valid withdrawal from membership in accordance with the fund’s rules: there was no withdrawal form, no signed election, and no communication from the fund confirming that membership had ended while Oosthuizen remained employed. The WhatsApp exchanges, at most, showed discussions about the affordability of deductions and the possibility of cancelling the provident fund, but they did not amount to a formal withdrawal.
In reaching this conclusion, the Tribunal placed particular reliance on clause 3.6 of the fund rules, which prohibits a member from withdrawing from membership while remaining in service unless the rules provide otherwise. It also relied on section 13 of the Pension Funds Act, which makes those rules binding on the fund, its members, the employer and others. On that basis, it held that membership may be terminated in accordance with, and subject to, the fund’s rules, and that an informal arrangement between employer and employee cannot override them.
The Adjudicator had noted, as part of the factual context, that provident fund contributions formed part of the employee’s remuneration structure.
Sibisi accepted that contributions had been made up to March 2024 but argued that nothing was due thereafter. The Tribunal disagreed, finding that membership had not lawfully terminated and that the obligation to contribute therefore continued.
The practical lesson for employers, fund administrators and fund members is clear: where a fund’s rules prescribe formal requirements for ending membership, those requirements must be followed. For employers in particular, the decision underscores the risk of stopping contributions without a rule-compliant withdrawal, which may expose them to liability for arrear contributions and interest.
