The Motor Industry Bargaining Council (MIBCO) has issued a stern, formal warning to employers across the automotive sector following a landmark ruling by the Financial Services Tribunal (FST). The judgment carries severe financial ramifications for any business failing to remit employee retirement fund contributions on time.
The FST ruling arose from a case involving a participating motor industry employer that had fallen significantly into arrears with its payments to the Motor Industry Retirement Funds (MIRF). Crucially, the Tribunal ruled that when an employer fails to remit retirement contributions timeously, the employer—and not the retirement fund—becomes directly liable for the financial payout of critical risk benefits, such as death and ill-health disability cover, should an incident occur while the accounts are in arrears.
Under normal compliance standards, MIRF members are fully covered by insurance policies that guarantee dependents a risk benefit equal to three times the worker’s pensionable remuneration, alongside their accumulated fund credits. However, once an employer defaults on payments, the underlying insurance protection lapses automatically. The FST has now codified that the defaulting employer must bridge this multi-million Rand gap out of their own corporate pocket.
MIBCO General Secretary Paulos Masemola emphasized that the ruling sends an unequivocal message regarding compliance. “This judgment makes it clear that employers carry the absolute financial and legal risk when contributions are not paid over,” Masemola stated. He warned that retirement contributions must be prioritized with the exact same urgency as monthly wages. MIBCO has urged all motor industry businesses to urgently audit their payroll and compliance software to prevent devastating financial liabilities that could trigger corporate bankruptcy.
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