Employee Dishonesty and Pension Deductions: What Employers Should Know

Many employees assume that pension benefits remain untouchable when employment ends. A recent High Court judgment shows that this is not always the case.

What happened?

A branch manager at an engineering supply company was accused of colluding with an outside supplier to inflate prices and pocket the difference. He denied the allegations, resigned when called to a disciplinary hearing, and did not participate in the hearing.

The hearing proceeded in his absence. He was found guilty and dismissed. The employer then issued a civil summons for more than R1 million.

Why it matters

Before the civil case was finalised, the employee tried to access his pension benefits. The former employer successfully approached the court to stop the payout.

The court confirmed that section 37D of the Pension Funds Act allows benefits to be withheld where there are credible allegations of fraud, dishonesty or misconduct causing an employer financial loss, even before final judgment.

Key takeaway

Workplace dishonesty can follow an employee beyond dismissal. Where misconduct has allegedly caused financial loss, pension benefits may be at risk.