The Department of Employment and Labour is in the process of restoring labour inspectors’ power to enforce compliance with the requirement that employers pay retirement contributions to funds within seven days of deduction from employees’ salaries.
This was disclosed last month by the Minister of Employment and Labour, Nomakhosazana Meth (pictured), in response to a question by Economic Freedom Fighters MP Omphile Maotwe.
Maotwe referred to the Financial Sector Conduct Authority’s report in November last year that about 7 770 employers had failed to pay over retirement fund contributions as at the end of December 2023. She wanted to know whether the Department of Employment and Labour has investigated the employers on the list published by the FSCA.
Read: Arrear contributions: FSCA publishes third list of defaulting employers
Section 34A of the Basic Conditions of Employment Act (BCEA) mirrors section 13A(3)(a) of the Pension Funds Act (PFA) by requiring employers to pay fund contributions within seven days of deduction. Labour inspectors are currently unable to enforce section 34A because of a ministerial determination made 22 years ago.
In December 2003, the Minister of Labour issued Government Notice R1827 under section 50(1)(a) of the BCEA that excluded the application of section 34A to retirement funds governed by the PFA.
Meth said the 2003 ministerial determination was introduced to prevent regulatory overlap with the PFA. “This was based on the understanding that the PFA already had its own enforcement and compliance mechanisms in place, including oversight by the FSCA and dispute resolution by the Office of the Pension Funds Adjudicator (OPFA). The intention was to ensure regulatory clarity and avoid conflicting responsibilities between labour inspectors and financial sector regulators.”
Meth said she was aware of the FSCA’s report. The failure by employers to pay over contributions is particularly evident in the private security sector, where membership of the Private Security Sector Provident Fund (PSSPF) is compulsory.
“Despite the regulatory measures to ensure the proper management of the PSSPF, many employers continue to miss deadlines for paying employees’ contributions. Additionally, the PSSPF has struggled to disburse benefits to retrenched or retired members. It has therefore become sensible for my department to consider how best to protect these workers, and the possibility could be to use the monitoring and enforcement provisions regulated by section 34A of the BCEA,” the minister said.
Meth said her department is in the process of withdrawing the 2003 determination, to restore labour inspectors’ powers. The proposal has the support of all the constituencies in Nedlac’s Labour Law Reform Task Team.
In addition, she said the department has introduced amendments to the BCEA aimed at clarifying the enforcement of unpaid contributions and eliminating jurisdictional duplication with the OPFA, the Commission for Conciliation, Mediation and Arbitration, and Labour Court. The department has also engaged with the FSCA, OPFA, and National Treasury to align efforts and avoid regulatory overlap.
