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Freddie Lombard
Freddie Lombard, Attorney
Category: South Africa Law
Satisfied Customers: 2606
Experience:  Practicing attorney and conveyancer with 16 years post article experience.
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I need assistance with provident funds : Provident fund : I

Customer Question

Good day I need assistance with provident funds
JA: OK. To minimize me, please click the down arrow at the top right corner of this box. OK. To minimize me, please click the down arrow at the top right corner of this box. The Lawyer will need to help you with this. Have you consulted a lawyer yet?
Customer: Provident fund
JA: Please give me a bit more information, so we can help you best.
Customer: I am an employer and I fall under the cleaning sectorial determination. I've had the contract since 2013. It came to my attention now that I need to me a member of a provident fund. Is this compulsory? And do I need to contribute for the past two years without the employees contributing? Can I be exempted from the previous payments?
JA: Because employment law varies from place to place, can you tell me what state this is in?
Customer: South Africa
JA: Is there anything else the Lawyer should be aware of?
Customer: I was being audited by dept of labour in the past two years and this never came up as a deviation. Can I be expected to pay for 120 employees for the past two years. I was not informed of this.
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Submitted: 1 year ago.
Category: South Africa Law
Expert:  Freddie Lombard replied 1 year ago.

Good morning,

Thank you for your question. I will try to assist you in answering it today but please feel free to ask as many follow up questions as you like until you are 100% satisfied.

The Sectoral Determination you are referring to was implemented in 2001 already (in other words long before you obtained the contact in 2013). It is required/expected of any person who enters into the business world to have the knowledge and understanding of the legislation and requirements that is applicable to the specific business and sector.

Section 3.1 of the determination clearly makes the membership to the Provident Fund compulsory to all employers in the sector. As you can see here:

3.1 Employer Participation

a) Subject to (b)below, any Employer in the Contract Cleaning Sector shall participate in the Fund with effect from the commencement of the Fund or the commencement of the Employer's business in the Contract Cleaning Sector, whichever is the later.

So, unfortunately, unless you fall within the category covered by 3.1(b) (in other words you are a member to a different Provident fund that offers at least the same benefits to your employees as the Contract Cleaning National Provident Fund) then you will have to become a member of the Provident Fund with effect from either the commencement of the Fund (2001) or the commencement of the business (whichever is the latest). You will have to make contributions from such date.

I hope this answered your question.

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Customer: replied 1 year ago.
Thanks for the response. Are the employees also expected to pay their contributions since 2013? What is they cannot afford to pay? What if I cannot afford to pay regions contributions? What are the implications?
What happens to the employees that have resigned? Can they come and claim?
Expert:  Freddie Lombard replied 1 year ago.

No, the employees will not be forced to pay the "arrears" contributions, but they can do so if they wish to.

If you cannot afford to pay the employer contributions it is quite possible that your business could be liquidated - as with any other debt that is due.

Yes, those employees who have resigned will have a claim.

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