Nazlie Seegers, Chief Experience Officer at Salt Employee Benefits
Salt Employee Benefits (Salt EB) welcomes the withdrawal of the 2003 determination by the Minister of Employment and Labour, which had exempted employers from the application of section 34A of the Basic Conditions of Employment Act (BCEA) in respect of benefit fund contributions.
As one of South Africa’s leading privately owned retirement fund administrators, Salt EB views this development as a significant step towards strengthening enforcement against employers who fail to pay benefit fund contributions despite deducting such amounts from employees’ remuneration. The 2003 determination had the unintended effect of limiting labour law enforcement, leaving regulatory oversight primarily within the ambit of the Pension Funds Act (PFA) and the Financial Sector Conduct Authority (FSCA). As a result, employers who failed to meet their contribution obligations were often able to evade timely consequences under labour legislation.
As the administrator of funds that have experienced persistent non-payment of contributions, particularly within the private security sector, Salt EB believes the withdrawal of the exemption will materially improve the protection of members and deter ongoing non-compliance.
The withdrawal of the determination issued in 2003 removes the exemption that shielded employers from compliance with section 34A of the BCEA, which governs the payment of contributions to benefit funds, including pension and provident funds. Employers are now subject to enforcement under both labour legislation and the Pension Funds Act, resulting in dual regulatory oversight by the Department of Employment and Labour and the FSCA.
Section 34A of the BCEA prescribes strict payment timeframes. Any deduction made from an employee’s remuneration for payment to a benefit fund must be paid over to the fund within seven (7) days of the deduction being made. In addition, employer contributions that are not deducted from an employee’s salary must be paid to the fund within seven days after the end of the period to which the contribution relates.
By comparison, section 13A (3) of the Pension Funds Act requires that contributions be paid to the fund no later than seven days after the end of the month for which the contribution is payable. The practical implication of section 34A of the BCEA is that payment deadlines are now linked to an employer’s payroll cycle. For example, where payroll is processed on the 25th of the month, contributions must be paid to the fund within seven days of that date.
Employers are warned that failure to comply with contribution payment obligations constitutes a serious offence. Non-compliance may result in criminal prosecution, with penalties including fines of up to R10 million, imprisonment for up to 10 years, or both. Directors and senior management may also be held personally liable under the Pension Funds Act. In addition, labour inspectors are empowered under the BCEA to issue compliance orders and impose administrative penalties for contraventions of section 34A. Employers who fail to pay benefit fund contributions, or who pay contributions late, now face concurrent enforcement action by labour authorities and the FSCA, with potentially overlapping sanctions.
Salt EB urges all employers to urgently review their payroll and contribution payment processes to ensure compliance with the seven-day payment requirements. Particular attention must be paid to the different trigger dates applicable to employee deductions and employer contributions.
All employers participating in Funds administered by Salt EB are required to comply with applicable legislative requirements as Salt EB will work closely with regulatory and law-enforcement authorities to ensure that employers who persistently disregard these requirements are held accountable.
ENDS
Ed’s note: Nazlie recently chatted to EBnet.Stream in our Industry Insights series, where she explained Conduct Standard 2 of 2025 for pension benefit administrators. You can watch that episode here.
