In reviewing the South African Reserve Bank (SARB) and National Treasury’s joint consultation paper for regulatory proposals on payroll deductions, Arlene Leggat, an executive of the South African Payroll Association (SAPA) has suggested that limiting voluntary deductions would be the preferred route to follow.
 
The recently released document also posits two other mutually exclusive options for dealing with SARB’s concerns about the increase in the number of entities offering voluntary payroll deduction services. These include disallowing voluntary deductions completely or allowing unrestricted voluntary deductions with non-preferential treatment of creditors.
 
Regardless of the option adopted, certain basic requirements will apply. These include an authenticated mandate from the employee; no more than 25% of an employee’s salary being committed to deductions of any kind; statutory and legal deductions taking priority over voluntary deductions; and employers not being obliged to provide payroll deduction services for voluntary deductions.
 
However, Leggat affirms that the payroll function should be dedicated to the payment of employee salaries and earnings, and little else. “Although payroll is obliged to make statutory deductions required by law, it shouldn’t be reduced to a debt collection service,” she says.

What are voluntary payroll deductions?
Employers may be enticed by a financial services provider to offer products, like funeral plans, at a discounted rate to staff, or to collect amounts such as loan repayments, on its behalf. However, these voluntary deductions are made by the payroll department before a worker is paid and therefore fall outside the regulated financial system that comes into effect after income has been deposited into employees’ bank accounts. This is permitted by law provided an employee agrees to the deduction.
 
SARB worries that this lack of regulation exposes over-indebted workers to higher financial risk, creates the opportunity for financial crime, and gives preference to one vendor over another, fostering anti-competitiveness. Even creditors who have obtained a court order for recovery of debt are given lower priority than those enjoying payroll deductions.

SAPA’s stance
In her response, Leggat says that “since medical aid and pension are essentially voluntary, the first option would rob workers of typically accepted benefits.”
 
She also rejects the third option outright. “It’s completely unacceptable from a payroll perspective. With the sheer number of providers and services available, each with its own instructions, payroll would sink into administrative chaos.” For example, if an employer fails to deduct the correct amount for a life insurance policy and the employee subsequently dies, who will be held liable if the service provider refuses to pay out? “Now multiply this by a hundred and imagine the sheer pressure payroll will face to get each deduction just right.”
 
Ultimately, Leggat admonishes organisations to protect the integrity of the payroll function. “Payroll is meant for payroll,” she says. “Don’t overload it with alternative duties at the cost of good service.” Finally, Leggat warns that any option adopted by SARB will have a massive impact on how payroll departments are run, what resources are required, and the benefits employers decide to offer.
 
SARB has invited the public to submit their comments on the proposed remedies by 30 April 2018.
 
ENDS
 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, [email protected], www.atthatpoint.co.za 
 
For more information on SAPA please visit:
Website: http://www.sapayroll.co.za/
Twitter: @SAPayroll
LinkedIn: The South African Payroll Association

During the recent Budget Speech, former Finance Minister Malusi Gigaba announced that an additional R4.2-billion has been allocated to National Health Insurance (NHI) over the medium term. Cathie Webb, executive at the South Africa Payroll Association, questions what has been done with the money that has already been allocated to the plan and how will the new funds will be used.

“The NHI isn’t operational and government still has a way to go before it will come into effect. As the NHI seems still to be in a conceptual and planning phase, it’s time to question what infrastructure is being implemented – even if this infrastructure is only in administrative terms – to bring the programme to life,” says Webb.

The NHI funding gap
An additional R700-million has been set aside for the NHI for the 2018/19 period, R1.4-billion for the 2019.20 period and R2.1-billion for the 2020/21 period – all to be funded through amendments to the medical tax subsidy. These funds, however, are far from what the NHI will cost.

A White Paper by economics consultancy Econex estimates that the cost of healthcare under the NHI by 2025 will be R256-billion, which is almost as large as the estimated revenue collected from South Africans in the 2015/16 fiscal year. The White Paper also estimates that the NHI expenditure in the 2020/2021 will be R185-billion.

“The cost projections of the NHI leaves massive funding gaps, making it hard to envision how the plan will be rolled out and how government will be able to pay for a national health care initiative. Even if the money somehow materialised, how exactly the NHI is going to work remains vague. Adding money to a system that isn’t working now won’t solve the problem,” says Webb.

Will our hospitals be adequate?
Many existing public hospitals are understaffed and there is an underinvestment in key medical infrastructure and equipment. With the goal of making a package of essential healthcare free to all citizens, the Department of Health will not only have financial concerns, but also operational concerns about how they are going to provide healthcare to the masses.

“The NHI has very high, noble ideals, namely that everyone should have access to quality healthcare and that this care should be free, equitable and efficient. If the current general hospitals can’t meet these needs now, what will happen when millions of people are added to the mix?” asks Webb.

National healthcare schemes where essential healthcare is free to citizens isn’t uncommon, but it’s not necessarily working in other parts of the world. In Britain, for example, government is currently looking at alternatives to their universal healthcare plan, is riddled with challenges including hours-long waits in the emergency unit, patients being treated in corridors during intense flu season and cancelled elective surgeries.

“Perhaps a starting point to ensuring that citizens have access to medical care would be to insist that every business ensure that their employees are covered by a medical aid.  A country’s ability to supply care is rarely able to meet the demand of its citizens. In South Africa, where the population is growing faster than we can fund and where approximately two-thirds of the country’s revenue is already being allocated to social security matters, we need to question whether this is the right option for South Africa and be realistic about the funding that it will require,” concludes Webb.
​
ENDS

MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, [email protected], www.atthatpoint.co.za  
 
For more information on SAPA please visit:
Website: http://www.sapayroll.co.za/
Twitter: @SAPayroll
LinkedIn: The South African Payroll Association

Flexi time, home based jobs and remote workforces are a growing trend in South African businesses. While this type of flexibility is a selling point for employers and something that workers are actively seeking out, companies also need to consider how this can change the way they manage their payrolls, says Arlene Leggat, Executive at the South African Payroll Association (SAPA).

“Like elsewhere in the world, the way in which we work is changing. People want a better work-life balance and they want to be able to work how, where and when they like. An increasing number of South African businesses are accommodating these needs not only to attract and retain talent, but out of necessity,” says Leggat.

The 2017 TomTom Traffic Index showed that cities such as Cape Town and Johannesburg are the most congested cities in the country and people lose days and possibly weeks each year due the time they spend in their cars travelling to and from work. This congestion also has a broader impact on the economy. According to former Johannesburg mayor, Parks Tau, the economic impact that results from congestion in South Africa is over R1-billion per year.

“Spending hours in traffic each day, whether travelling in one’s own vehicle or using public transport, is not conducive to having a good work-life balance and it’s not helping a company’s bottom line or the South African economy. The technology that we have at our disposal, such as smartphones and internet connectivity at home, means that for many roles it’s no longer necessary to work from an office every day,” says Leggat.

Switching to output-based deliverables
One way that a remote workforce impacts payroll is through the lack of work time indicators that have traditionally been drawn from access control and/ or time and attendance systems. If a company relies on security systems to track the movement of staff to determine their remuneration, then they may need to consider other ways of measuring a person’s output.

“A business that wants to enable a remote workforce can’t function as a clock watching shop. Employers need to not only be more trusting and open minded for this to work, but they will need to restructure many employees’ roles so that their remuneration is based on Key Performance Indicators and output as opposed to time spent on the premises,” says Leggat.

A solution that companies can consider is to enforce ‘core business hours’ for all employees, regardless of where they are based. A company could, for example, make their core business hours from 9am and 2pm and office-based as well as home-based workers are required to be online and available for meetings and calls during these times.

Trust, responsibility and accountability is key
Before overhauling your business structure to include remote working, companies need to fully understand how they are going to assess employees’ output and time-based work.

​“There are ways to track the time a person spent on a company’s network or systems, but instead of policing people, it’s better to create a trusting relationship with employees so that responsibility and accountability issues are understood and ironed out from the beginning,” concludes Leggat.

ENDS

MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, [email protected], www.atthatpoint.co.za  
 
For more information on SAPA please visit:
Website: http://www.sapayroll.co.za/
Twitter: @SAPayroll
LinkedIn: The South African Payroll Association