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A sectoral determination (SD) makes it compulsory for all employees who fall under its jurisdiction to join and pay dues in respect of a specifically prescribed retirement fund. The employees notify the employer that they refuse to join the prescribed fund and that the employer is to pay their dues to another (non-statutory) retirement fund identified by them.
Is the employer legally obligated to register the employees on the fund prescribed by the SD or is it first required to apply on the employees’ behalf to the DOEL for a ministerial variation in terms of section 50 of the BCEA or for an exemption from becoming members of the SD prescribed fund?The decision in Gerhard Potgieter Maintenance Services (Witbank) (Pty) (Ltd) v Contract Cleaning National Provident Fund and others [2020] 9 BLLR 889 (LAC) is instructive particularly the following paragrraph:
“The compulsory nature of membership of the fund ……… serves a rational purpose, ie to secure a critical mass of contributors in one pool. Indeed, the pooling of risk is the fundamental element of any provident fund, a commonplace example of collective sharing of risk. If a member could join and leave at will for better schemes the risk that the residue would be diminished to a point where the scheme would be unviable is plain. Imposing a compulsion to belong serves to eliminate that risk. It serves the interests of the most vulnerable employees.@
I therefore suggest that employers would have to apply for an exemption.
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