What May Be Taken Off Your Pay, and Out of Your Pension

Money leaves your pay in two directions, and different rules govern each.

Some of it goes where you expect: tax, UIF, your medical aid, your pension or provident fund contribution. Some of it goes because a debt, a shortfall or an accusation attached itself to you — and that is where the law is far more restrictive than most employers behave as though it is.

There are two protected pools here. Your monthly pay is governed by the Basic Conditions of Employment Act. Your retirement benefit is governed by the Pension Funds Act, and it is protected considerably more tightly than your salary is.

Nothing comes off your pay without one of two things

The starting position is a prohibition, not a permission.

An employer may not make any deduction from your remuneration unless either:

• you agreed in writing to the deduction, in respect of a debt specified in that agreement; or
• the deduction is required or permitted by a law, a collective agreement, a court order or an arbitration award.

That is the whole gateway. PAYE and UIF come through the second route because statute requires them. A retirement fund or medical aid contribution comes through the first, because you agreed to it in writing when you joined.

Two things follow that people miss. A general clause in a contract saying the employer may deduct "any amounts owing" is not obviously an agreement "in respect of a debt specified in the agreement" — the section contemplates a specified debt, not an open licence. And a verbal agreement, however genuine, does not meet a requirement of writing.

Deducting for breakage, shortfalls and losses: four conditions, all of them

This is the situation that generates most disputes — the till came up short, the delivery was damaged, the company phone was lost — and the Act sets four conditions that must all be satisfied before the amount may come off your pay.

1. The loss or damage occurred in the course of employment and was due to your fault. Both limbs. Something that went wrong without fault on your part does not qualify, however real the loss to the business.
2. The employer followed a fair procedure and gave you a reasonable opportunity to show why the deduction should not be made. You are entitled to be heard before it happens, not after.
3. The total amount of the debt does not exceed the actual amount of the loss or damage. No round-number penalty, no mark-up.
4. The total of such deductions does not exceed one-quarter of your remuneration in money.

That last figure is the one worth memorising: a quarter. Even where every other condition is met, deductions of this kind may not take more than 25% of your pay in money.

Read together, the four conditions mean that a deduction announced on payday, without a hearing, for an amount nobody has quantified, fails the section on at least two grounds before anyone argues about fault.

Where the deduction is for goods you bought from the employer, the agreement must specify the nature and quantity of the goods — so a running "staff account" line with no detail does not satisfy it.

Overpayments, and the one thing an employer may claw back

The Act also limits when you can be required to hand money back.

An employer may not require or permit you to repay any remuneration — with one exception: overpayments previously made by the employer resulting from an error in calculating your remuneration.

So a genuine payroll miscalculation can be recovered. A change of mind about a bonus, a discretionary payment the employer now regrets, or a "you were overpaid because you underperformed" argument is not an error in calculation.

An employer also may not require you to acknowledge receipt of an amount greater than you actually received — a provision aimed squarely at signed-for pay that was never handed over in full.

Where deducted money must go, and by when

Deducting is only half the duty. Paying it over is the other half, and this is where employees are most often quietly harmed.

Money deducted for payment to another person must be paid over in accordance with the time period and other requirements specified in the agreement, law, court order or award.

And for a benefit fund — defined as a pension, provident, retirement, medical aid or similar fund — the Act is specific. An employer that deducts an amount from your remuneration for such a fund must pay it to the fund within seven days of making the deduction. Where the employer owes its own contribution that was not deducted from your pay, that too must reach the fund within seven days of the end of the period it relates to. If the fund's own rules require faster payment, the rules win.

This is the section behind a familiar disaster: contributions shown on payslips for months or years, and a fund that never received them. The deduction being reflected is not evidence that the money arrived. If you are in any doubt, ask the fund directly for a benefit statement and compare it against your payslips.

Your pay itself must also arrive on time: remuneration is payable no later than seven days after the end of the period it relates to, or after your employment ends.

Your payslip must show it

Every deduction has to be visible. On each day you are paid, you must be given, in writing, your employer's name and address, your name and occupation, the period the payment covers, your remuneration in money, the amount and purpose of any deduction, and the actual amount paid — plus your rate and hours, including overtime, Sunday and public holiday hours, where those are relevant to the calculation.

"The amount and purpose" is the operative phrase. A deduction line labelled "sundry" or "other" does not comply with the section, and asking for the purpose in writing is a reasonable and answerable request. If you are checking your own figures, our payslip generator sets out the same fields, and the UIF calculator covers that specific line.

Nobody may charge you for a job

A short provision, widely broken, and worth knowing in its own right.

An employer must not require or accept any payment by or on behalf of an employee or potential employee in respect of the employment of, or the allocation of work to, any employee.

Paying for a job, paying for a shift, paying to be kept on the roster — none of it is lawful, whether the money is demanded by the employer or offered by the worker. An employer also may not require you to buy goods or services from it, or from a business it nominates, outside the narrow scheme exception the Act allows.

Your retirement benefit is protected far more strongly

Now the second pool, and the protection here is much harder.

A benefit in a registered fund — or the right to it — may not be reduced, transferred, ceded, pledged or hypothecated, and may not be attached or subjected to any form of execution under a judgment or order of a court of law. That applies notwithstanding anything to the contrary in the fund's own rules, and it is subject only to what the Pension Funds Act, the Income Tax Act, the Tax Administration Act and the Maintenance Act allow.

The practical meaning is blunt: an ordinary creditor who has taken judgment against you cannot attach your retirement savings. A retirement benefit is not an asset your judgment creditors can reach in the way a bank balance is.

There is a narrow qualification — only a limited annual amount may be taken into account in assessing your financial position in the debt-enquiry procedure under section 65 of the Magistrates' Courts Act — but the substantive protection against attachment stands.

The closed list of what a fund may deduct

Against that background, the Act then names the specific deductions a registered fund may make. They are:

• Tax, and amounts due to the fund for a housing loan granted under section 19(5), or an amount the fund became liable for under a guarantee it gave for such a loan. Where you have defaulted but remain a member, that deduction may be made only as a last resort, after the board is satisfied that no other repayment arrangement can be made.
• Compensation to your employer for damage caused by theft, dishonesty, fraud or misconduct — including legal costs — but only under the conditions in the next section.
• Amounts the fund has paid on your behalf by arrangement for a medical scheme subscription, a life insurance premium, or a purpose approved by the Authority.
• A divorce order's assignment of pension interest to a non-member spouse, a maintenance order under the Maintenance Act, and interim maintenance granted under High Court rule 43 or Magistrates' Court rule 58.

Two limits apply across all of them. The aggregate of every such deduction may not exceed your individual account or minimum individual reserve. And a divorce or maintenance deduction may only be made after the account has first been reduced by any housing loan or guarantee granted before the court order — so the order attaches to what is left, not to the gross.

The employer needs an admission or a judgment

This is the protection to hold onto if you are ever accused of causing a loss, because it is the difference between an allegation and a deduction.

A fund may pay your employer compensation for damage caused by theft, dishonesty, fraud or misconduct only where either:

• you have admitted liability to the employer in writing; or
• judgment has been obtained against you in any court — including a magistrate's court, and including a compensation order made under section 300 of the Criminal Procedure Act.

An accusation is not enough. An internal disciplinary finding, on its own, is not a judgment. A resignation is not an admission.

Which makes one piece of practical advice unusually important: do not sign an acknowledgement of debt, a repayment undertaking or an admission of liability under pressure at a disciplinary meeting. That signature is one of the two keys to your retirement savings. Take the document away, read it, and get advice before signing anything that concedes liability.

The two-pot rules interact with this. Where an unexecuted judgment or written admission exists, a fund may still allow a savings withdrawal provided enough remains to satisfy it; and where the employer has not yet obtained judgment but a withdrawal would leave too little, the fund may suspend that withdrawal for up to twelve months pending the court's decision.

What to do if a deduction looks wrong

1. Get the payslip line in writing, with the amount and the stated purpose. The Act requires both.
2. Ask which route the deduction comes through — your written agreement to a specified debt, or a law, collective agreement, court order or award. There is no third answer.
3. If it is for loss or damage, test all four conditions: your fault, a fair procedure and a hearing, the actual amount, and the quarter-of-pay ceiling.
4. If contributions are involved, check with the fund, not the payslip. Deducted money must reach a benefit fund within seven days.
5. If your retirement benefit is being withheld, ask to see the written admission or the court judgment. Those are the only two bases for an employer's damages claim against it.
6. Sign nothing under pressure. Especially not an acknowledgement of liability.
7. Escalate. Pay deductions go to the Department of Employment and Labour or the CCMA; a dispute with a fund goes to the Pension Funds Adjudicator, which is free.

Our guides to retrenchment and severance and claiming from UIF cover the money side of leaving a job, and how the two-pot retirement system works explains the savings and retirement components referred to above.

For everything else, start at our money guides.

Frequently asked questions

Can my employer deduct money from my salary without asking me? Only where the deduction is required or permitted by a law, collective agreement, court order or arbitration award. Otherwise it needs your written agreement in respect of a debt specified in that agreement.

Can my employer deduct for a till shortfall or damaged stock? Only if the loss occurred in the course of employment and was due to your fault, the employer followed a fair procedure and gave you a reasonable opportunity to show why it should not be made, the amount does not exceed the actual loss, and the total does not exceed one-quarter of your remuneration in money.

How much can be deducted for loss or damage? Not more than one-quarter of your remuneration in money, and never more than the actual loss.

My employer overpaid me. Must I pay it back? An employer may require repayment of remuneration only for overpayments resulting from an error in calculating your remuneration. Other clawbacks are not permitted by the section.

My payslip shows pension contributions but the fund has no record. What does the law say? An amount deducted for a pension, provident, retirement or medical aid fund must be paid to the fund within seven days of the deduction being made, and the employer's own contribution within seven days of the end of the relevant period.

What must appear on my payslip? The employer's name and address, your name and occupation, the period covered, your remuneration in money, the amount and purpose of every deduction, the actual amount paid, and where relevant your rate, overtime rate and ordinary, overtime, Sunday and public holiday hours.

Can a creditor attach my retirement fund benefit? No. A benefit in a registered fund may not be reduced, ceded, pledged or attached under a court judgment, except to the extent the Pension Funds Act, the Income Tax Act, the Tax Administration Act and the Maintenance Act allow.

Can my employer take money from my pension for damage I caused? Only for damage arising from theft, dishonesty, fraud or misconduct, and only where you have admitted liability in writing or judgment has been obtained against you in a court, including a compensation order under section 300 of the Criminal Procedure Act.

Should I sign an acknowledgement of debt at a disciplinary hearing? Not without advice. A written admission of liability is one of only two routes by which an employer can reach your retirement benefit for damages.

Can a fund deduct a housing loan from my benefit? Yes. A fund may deduct amounts due to it for a loan granted under section 19(5), or which it became liable for under a guarantee for such a loan — and where you have defaulted but remain a member, only as a last resort once the board is satisfied no other repayment arrangement can be made.

Is it legal to pay someone to get a job? No. An employer must not require or accept any payment by or on behalf of an employee or potential employee in respect of the employment of, or the allocation of work to, any employee.