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IN THE TRIBUNAL OF THE PENSION FUNDS ADJUDICATOR
CASE NO.:PFA//GA/1249/02/PM
In the complaint between:
DH Stroebel Complainant
and
South African Airlink Provident Fund Respondent
INTERIM RULING IN TERMS OF SECTION 30J OF THE PENSION FUNDS ACT OF
1956
1. This is a complaint lodged with the Office of the Pension Funds Adjudicator in terms
of section 30A(3) of the Pension Funds Act, 24 of 1956 (“the Act”). The complainant
alleges that she ought to have received an ill-health early retirement benefit, which
is a lump sum benefit from the respondent instead of a resignation benefit. The
complaint therefore relates to the interpretation and application of the rules of the
fund and alleges that a dispute of law has arisen between the complainant and the
fund.
2. No hearing was held. My assistant adjudicator, Prevanya Moodley, conducted an
investigation under my supervision. In determining this matter, I have relied
exclusively on the documentary evidence and written submissions gathered during
the course of the investigation.
3. The complainant is Dale Hilary Stroebel, an adult female, and former member of
the respondent.
4. The respondent is the South African Airlink Provident Fund, a fund falling within the
definition of a pension fund organisation in section 1 of the Act (hereafter referred
to as “the fund”). The principal officer of the fund Mr Alan Parris of the South City
Employee Benefits Consultants (Pty) Ltd, represents the fund.
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5. The complainant was employed by the Airlink Maintenance Organisation (Pty) Ltd
(“the employer”) in September 1999. On 3 March 2000, the complainant sustained
an injury to her neck and spine when a colleague pulled a chair away from her, as
she was about to sit down. As a result of this injury the complainant required
surgery to her neck and back. Her leave records show that she was absent from
work from 6 March 2000 to 4 April 2000 for the purposes of undergoing surgery.
She returned to work on 4 April 2000,however due to ongoing back and neck pain,
worked intermittently up until 17 July 2000, when she required further surgery. She
was then absent from work from 17 July 2000 to 20 August 2000, when she
returned to work. However from that point onwards her leave records reflect that
she continued to stay away from work on an on and off basis due to pain. She did
however continue to receive a salary from the employer during this time who
thereafter submitted a claim for temporary disability on her behalf to the income
security scheme with Momentum.
6. In August 2001, the complainant received a phone call while she was at home from
Jean Lubbe Human Resources manager requesting her to attend a meeting on 20
August 2001. Jean Lubbe representing the employer, the complainant and a labour
representative known only to the complainant as “BS” attended the meeting. The
meeting was minuted by “BS” and the relevant parts of the minutes read as follows:
“BS”: Not accusing you of faking………but have the best intentions of the company etc.
Have to consult to see schedule 8 – ill-health (My emphasis)
i. nature of the problem
ii. future prognosis
iii. how to accommodate you
iv. how to adapt your position
v. alternative jobs/positions
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7. The minutes go on to refer to discussions on possible alternative
employment. Although there is some confusion as to the outcome of the meeting, it
appears that the employer and the complainant agreed that the best solution would
be to terminate the employment relationship on the grounds of ill-health.
8. This then led to the signing of an agreement with the employer referred to as the
“Termination of Employment “ agreement (hereafter “the agreement”) on 27 August
2001. The relevant part of the agreement read as follows:
1. Termination of Employment
1.1. The company and the employee agree that the employment of the employee with
the company will terminate by agreement with immediate effect.
1.2. The agreement is entered into by the employee and of his/her own desire and
accord. It is recorded that the employee was not in any manner forced or coerced to
conclude this agreement.
2. Settlement
2.1. This agreement is entered into in full and final settlement of all claims of any nature
whatsoever arising from the termination of the employment of the employee with the
company.
2.2. It is further agreed that this agreement was reached in full compliance with all
procedural requirement in terms of the Labour Relations Act, 1995, and all
procedural requirements pertaining to terminations by agreement.
2.3. The employee fully understands and is aware of all the provisions of this
agreement.
3. Payment
3.1. The company undertakes to pay the employee as follows:
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One month notice pay
Pro rata bonus
Two weeks severance pay
Outstanding leave pay
3.2. Payment of the above amounts will be made to the employee upon signature of this
agreement, together with any leave pay or other statutory amount due to the
employee.
3.3. The employee will not be required to work out her notice of termination of
employment in terms of this agreement
9. In addition to one months notice pay, pro rata bonus, two weeks severance pay,
and outstanding leave pay, the complainant received a resignation benefit from the
fund on 31 August 2002 in the amount of R8592,67 calculated as follows:
Member’s deemed contributions R 8100,00
Plus interest R 770,70
Plus 20% of employer contributions in accordance with the rules R 1637,85
Gross withdrawal benefit due to member R10,508,55
Less Tax R 1915,88
Net withdrawal benefit paid to member R 8592,67
10. Upon receipt of the resignation benefit the complainant wrote to the South City
Employee Benefits Consultants on 13 September 2000 enquiring as to the ill-health
early retirement benefit and requesting that she be given forms to apply for the
benefit as she was of the opinion that this was the benefit she would receive from
the fund. It appears as though a response to this letter was never forthcoming as
the complainant followed up her enquiry with two subsequent letters: one dated 14
October 2001, and another dated 15 January. On 12 March 2002 Mr Parris
responded to the complainant. The relevant parts of this letter reads as follows:
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I am in receipt of your letter of 15 January 2002 referring to previous correspondence,
as well as your claim that you be early retired, due to ill-health from the SA Airlink Provident
Fund.
We have been advised by SA Airlink that your termination of service, as specified in your
Termination Agreement, was a normal termination of service, and did not relate to ill-health
or other conditions which would allow you to retire from the SA Airlink Provident Fund.
………
Accordingly I advise that a withdrawal benefit in the amount of R8592,67 is payable to you
from the SA Airlink Provident Fund.
11. The complainant was not happy with this response and on19 August 2002, lodged
a complaint in this office. Her complaint is essentially that she received a
resignation benefit when she should have received an early ill-health retirement
benefit, which she believed she was entitled to. Mr Parris responded to the
complaint on 30 October 2002. The relevant parts of his response reads as follows:
The termination of service agreement signed by Ms Stroebel indicates that the termination of
service was voluntary and was entered into by the employee of her own desire and accord.
The employee was not in any way or in any manner coerced to conclude this agreement. No
action has been taken (or is being taken) by the employee against her former employer that
relates to her termination of employment (i.e she is not entertaining action for wrongful
dismissal).
Prior to the drafting of the termination agreement I was asked to review the records at the
employer to establish that the previous disability claim had an impact on the benefit paid on
termination of service, and on the disability claim which had at that stage not been settled by
Momentum as medical evidence supporting total disability was outstanding…..
Consequently the trustees did not need to consider whether Ms Stroebel was a retirement
on the grounds of ill-health as the termination of service agreement did not indicate this.
…………
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Ms Stroebel is aware of the benefits of the SA Airlink Provident Fund prior to her
termination of service. She was provided with a comprehensive pamphlet about the benefit
provided by the fund and has each year received a detailed benefit statement setting out all
benefits payable to her. Consequently, it is my opinion that at her date of termination, had
this been on grounds of ill-health, that she would have been aware that an ill-health benefit
was payable and that she would have claimed and had been paid this benefit then.
It is therefore still my view that Ms Stroebel is not entitled to receive a benefit higher that the
withdrawal benefit payable in terms of the rules of this fund determined at her date of
termination of service.
12. Quite clearly the parties are at variance in respect of the benefit that the
complainant was entitled to from the fund upon the termination of the employment
relationship. The question for determination therefore is whether the circumstances
giving rise to the termination of employment on the grounds of ill-health indicated
that the complainant had retired on the grounds of ill-health.
13. Unfortunately the minutes of the meeting, which took place on 20 August 2001, are
silent in respect of the benefits that the complainant would receive upon termination
of her employment. The agreement is also silent on the matter. What is clear is that
the employment relationship ended on the grounds of ill-health with the agreement
of the employer and the complainant. However there is no indication as to whether
the complainant resigned on the basis of ill-health, was dismissed on the grounds
of ill-health or retired on the grounds of ill-health. Mr Parris clearly argued that the
complainant resigned on the grounds of ill-health hence the resignation benefit she
received. The complainant claims that she retired on the grounds of ill-health, and
should have received an ill-health early retirement benefit. The rule governing ill-
health early retirement is rule A3.4.0 which reads as follows:
A member who is unable to continue working due to ill-health or disability may, on the
production of medical evidence acceptable to the employer retire from service at any time
before his normal retirement date and be paid the benefit specified in the schedule.
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14. The requirement of the above rule is that the complainant be unable to continue
working due to ill-health and that upon the production of medical evidence, which is
acceptable to the employer, she may retire. Clearly the complainant’s employer
agreed that she was unable to continue working due to ill-health, hence the
decision to terminate the employment relationship on those grounds. Further the
fact that the employer made a claim for temporary disability in terms of its own
income continuation scheme also suggests that there was medical evidence which
was acceptable to it. Hence the evidence suggests that the circumstances
surrounding the termination of the employment relationship indicate that the
complainant retired on the grounds of ill-health. Accordingly an ill-health early
retirement benefit is payable to her. However no hearing was held in this matter and
the parties should be afforded an opportunity to advance further evidence and
submissions on the merits of the case in a hearing, or alternatively, the parties may
wish to settle this matter on the basis of this ruling.
15.Accordingly a rule nisi is hereby issued, in terms of which, the parties are called
upon to show cause, if any, on or before 28 February 2003 why the following order
should not be made final:
15.1. The respondent is directed to pay the complainant an ill-health early
retirement benefit as at 31 August 2001, less any benefit already paid,
together with interest thereon at the rate prescribed in the Prescribed Rate
of Interest Act, 1975 from 31 August 2001 to date of payment within 6 weeks
of the date of this ruling.
Dated at CAPE TOWN this 31st day of January 2003
John Murphy
PENSION FUNDS ADJUDICATOR
