Why is my work telling me to pay a penalty fee to draw my provident fund if I resign without notice?

The long answer

First, the Basic Conditions of Employment Act (BCEA) lays down the notice period required when you resign:

• In the first six months of employment, it’s one week.
• In the second six months, it is two weeks. 
• After that four weeks’ notice is required.

Basically, the BCEA doesn’t permit any resignation with immediate effect, unless the employer has created intolerable working conditions in your workplace and you have registered a dispute of constructive dismissal with the CCMA. 

In a recent case (Standard Bank of South Africa Limited v Nombulelo Cynthia Chiloane), which involved an employee who resigned with immediate effect after being notified that she would face a disciplinary enquiry, the Labour Appeal Court found that the employer is entitled to enforce the applicable notice period. In this particular case, the employer had the right to hold the disciplinary enquiry whether the employee attended or not.

If it is specifically stated in your employment contract that if you resign without giving the required notice, the employer may deduct from your final payment an amount equal to the period of notice not given, then that is a binding legal agreement. But if it is not specifically stated in your employment contract, then the employer may not deduct anything from your final payment. In that case, his only option is to sue you for breach of contract if you resign with immediate effect, though that would obviously involve legal fees for him. But your employer cannot simply demand a penalty fee of R2,500 from you. 

In terms of your provident fund, you should receive your provident fund payout within 21 days if your tax affairs are in order and all the required documents (such as a copy of your ID, a completed instruction form stating where the money should go, and proof of banking details) have been sent to the fund by your employer. 

Your employer is legally obliged under the Pensions Act to submit the completed claim forms to the fund administrator. You should ask the HR person for the name of the fund and the contact details of the fund administrator. You should also ask for a copy of the fund rules so that you know your rights. You can contact the fund administrator with your details and check whether the claim form has been submitted. 

The Pension Funds Act allows an employer to contact the provident fund and ask them to deduct an amount of money from an employee’s benefits, but this request can only be granted under these very specific circumstances, namely, if you have made a written signed confession that you have been guilty of specific acts of dishonesty, fraud or misconduct that cost your employer a specific amount of money, or if you have been found guilty of fraud, dishonesty or misconduct by any court.

If your employer has not submitted your forms to the provident fund, you should send a registered letter to the Trustees of the Fund informing them that your employer has not submitted your claim form and they need to take it up. It is the duty of the Trustees of the provident fund to ensure that employers comply with the rules. If they do not do so, they are in breach of the fund rules themselves. You could send a copy of the letter to the employer and the HR person.

If you do not get a satisfactory answer from the provident fund within 30 days, you can complain to the Pension Funds Adjudicator, including your letter to the fund and their reply. The Adjudicator’s office will first refer the complaint back to the provident fund to try and settle the dispute internally, because it can take up to 15 months to get the case formally heard by the Adjudicator’s office. If they don’t settle it, the Adjudicator will take it up and make her decision.

You can contact the Adjudicator here: enquiries@pfa.org.za

Wishing you the best,
Athalie