Auto Workers’ and Motor Industry Provident Funds – Where does my obligation as an Employer end during the COVID-19 Lockdown?

AUTO WORKERS’ AND MOTOR INDUSTRY PROVIDENT FUNDS – WHERE DOES MY OBLIGATION AS AN EMPLOYER END DURING THE COVID-19 LOCKDOWN?

The obligation to deduct employee contributions (7,5% of wages), add the employer’s contributions (8% of wages) and remit payment of Auto Workers’ and Motor Industry Provident Funds contributions to the Motor Industry Bargaining Council (MIBCO), lies with the employer.

During the COVID-19 lockdown, announced by the President of the Republic of South Africa on 23 March 2020, many, if not all of the employees working in non-essential services in the country will either be placed on short time by their employers, or work significantly fewer hours than the normal 45 hours per week.

Must employers still deduct employee contributions, add the employer’s contributions and remit payment of Autoworkers and Motor Industry Provident Fund contributions to MIBCO?

• In terms clause 6(1), read with the definition of ‘pensionable remuneration’ in the Auto Workers’ Provident Fund and Motor Industry Provident Fund Agreements, an employer is not obligated to deduct employee contributions, add the employer’s contributions and remit payment to the Auto Workers‘ and Motor Industry Provident Fund via MIBCO if the employee works for less than 23 hours in that week. However, if an employee makes additional voluntary contributions to the funds, this must still be paid over to the funds.
• If an employer has implemented short time in respect of its employees during the lockdown period, and its employees have worked less than the prescribed 23 hours in that week, the employer is not obliged to remit provident fund contributions in respect of such employees. This also applies to employees on comprehensive short time i.e. where the employees do not report for work at all.
• An employer is also not obliged to remit only its portion (8%) of the contribution, in the absence of the employee having enough earnings to contribute its portion (7,5%) of the full contribution. In the instances mentioned above, an employer is not required to pay provident fund contributions to the funds.

These provisions do not apply to other retirement funds, which are not mentioned in this letter, and employers must ensure that they acquaint themselves with the provisions of the Rules of such alternative Funds, for which MIBCO must have granted an exemption from participation to the employer.

The funds will continue to operate in terms of their rules and they, together with the administrator MIFA, will continue to deliver service to members as far as possible, using electronic communication as their offices will be closed in compliance with the President’s decree.