Authored by: Rob Bothma, Exco member of the South African Payroll Association

Over the past year we have had many discussions with organisations as to where they see their performance management processes going in the future, in light of all the new advanced HCM technologies brought about by the various cloud solutions available.

The good news is that many of these organisations are starting to take a serious look at their current processes and how these can be redefined into more value adding processes for both the organisation and the employee.

A clear result of these discussions is that having two performance review sessions over a twelve-month period is just nowhere near sufficient enough to have an effective or positive performance management process.

Organisations are finally starting to both look at what their overall goal is for conducting performance reviews and what benefits this process has actually realised the organisation, as for too many years now all it has ever really been is a salary increase indicator.

And therein lies the problem. Both employees and managers only really looked at the respective objectives and related scores with only one goal in mind – what increase will I give and what increase will I receive- without any real focus on the ongoing improvement of performance, continual employee development or even career and succession planning.

Staff members need a solid career plan to give them stability and confidence in their future in the organisation.

Although some managers can often be threatened by hard headed or stubborn people, strong independent thinkers are required at all levels in life, and an environment and culture need to be created, where these attributes are encouraged and grown, as this helps many people to grow and thrive.

Innovation is the name of the game today. With technology starting to run riot in our lives, people who seek out innovation will become very successful, whether at work or at home.

With cloud based applications now becoming one of the preferred options for HCM solutions, they bring with them a whole host of new and exciting innovations.

One good example is having an integrated social forum as part and parcel of the solution, enabling employees to both request and provide feedback as and when required. Employees and managers are thus able to build up portfolios of evidence on a regular basis, ensuring that the regular performance discussions become more relevant and meaningful.

And of course, having a connected workforce, employees’ performance agreements become a living document.

Objectives are no longer set and measured over a fixed period, normally the financial year, but rather objective can be loaded and assessed each with their own start and end dates, breaking the traditional link with the meaningless financial period.

In addition, as and when the employees’ work circumstances change so too can their performance agreements be updated, there and then, affording both the employee and the manager the opportunity of continually reviewing objectives, thus ensuring that they are 100% relevant to the actual tasks the employees have been assigned. 

As mentioned earlier, there is a total inadequacy in having the normal mid-year and full year review for a staff member.
The employee’s performance contract should be a living document, with the management and accountability equally shared between both parties.

Both employee and manager should be equal partners in the creation of goals as well as all the resultant processes that lie therein, such as planning and execution of ongoing skills development, forward focusing career planning and of course how reward and recognition will be measured and awarded.

In summary, employees thrive in an environment where they feel they are appreciated and valued for the contributions they make towards the overall success of the organisation. When the focus of performance is centred around the development of skills and competencies towards their future, a healthy environment is created for managing performance as opposed to those dreaded reviews whose sole purpose is for determining what increase percentage will be awarded. 

ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux , 060 995 6277, [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

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Companies have been adjusting the remuneration packages of their employees who are working abroad and who will be affected by the change in tax legislation that became effective on 1 March 2020.

The foreign employment income tax exemption is limited to R1,25m per annum. The amount in excess of this threshold will be taxed in SA according to existing tax tables.

People who are affected most are those who are working temporarily in tax free or low tax jurisdictions and intend coming home to SA, says Arlene Leggat, president of the South African Payroll Association.

Payroll specialists need to do the proper tests to see who will be affected by the change and to ensure that their payroll systems – whether in SA or in the foreign country – are running properly.

Know the rules
“Companies and their payroll administrators must be sure they know what the rules are, and how to apply them. Make sure you know which of your employees may be impacted, communicate with them and do not leave them in the dark.”

She says it should not be the responsibility of the employee to decipher the law to understand how the changes will impact them.

It would be smart (for payroll administrators) to calculate the annual income to determine the amount of tax payable above the R1,25 m threshold and to ensure their system is able to calculate it.

Leggat says people who are on temporary assignments or work contracts abroad need to consider whether they remain tax resident in SA.

The South African Revenue Service (SARS) applies two tests to determine tax status.

The one is the ordinary tax resident test and the other is the physical presence (or days) test.

South Africans are ordinarily tax resident in SA if they have a permanent home in the country and intend returning there when the secondment or contract abroad comes to an end.

If they have a permanent home in the foreign jurisdiction and they have no intention of ever returning to SA, they are not tax resident in SA.

Therefore, their foreign income will not be subject to tax in SA.

In terms of the physical presence test they are not considered tax resident if they have been outside the country for 91 days in aggregate during the year of assessment and 915 days (183 days per annum) in aggregate during the five preceding years of assessment.

Tax credits
In most instances South Africans who are working abroad are being taxed on their foreign income in the host country.
SA has entered into double tax agreements with a multitude of countries to avoid double taxation.

This means a SA tax resident will receive credit in SA for the tax already paid on the income earned in the foreign jurisdiction.

Leggat explains that a package of R1,25m - converted into either British Pounds or US Dollars – comes to approximately £63,518 and $81,818 (at current exchange rates).

“It is not an impossible salary to earn, but it is certainly more than the average income (in those countries),” says Leggat.

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux , 060 995 6277, [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

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