Employers who feel they cannot afford to pay their workers the national minimum wage should not simply sit back and pay what they can afford.

They have to apply for an exemption with the Department of Labour through the National Minimum Wage online service, advises Jetro Malapane, executive committee member of the South African Payroll Association.

The National Minimum Wage Act stipulates a minimum national rate of R20 per hour, or R3,500 per month, depending on the number of hours worked.

The R20 an hour rate will be phased in slowly in the agriculture and domestic work sectors, with workers earning R18 and R15 per hour respectively.

The maximum discount in terms of an exemption will be 10% of the hourly rate.

Malapane says the department has given the assurance that their systems are up and running and that the exemption process is live, meaning employers can expect quick turnaround times.

Exemption applications
The department has received 385 exemption applications since the introduction of the minimum wage rates in January this year.

Most of the entities who submitted applications were non-profit organisations and companies in the manufacturing sector.

More than 240 exemptions were granted, 102 were declined and two were revoked because of fraud and misrepresentation of the exemption.

The remainder of the applications are still in the audit process.

In terms of the process a business must provide the department with the income statement of the past two years and the forecast for the current year, balance sheets, the number of employees, their working hours and wage information.

The company must be able to proof that it consulted with the union representatives or affected workers if there is no union.

According to Malapane a company may apply the reduced rates only from the date the exemption was granted.
The exemption will be applicable for the next 12 months, and employers will have to re-apply on an annual basis.

Focus on compliance
“My advice is to focus on compliance. If there are any uncertainties or if there is any need for more clarity on issues, it is best to approach the department timeously.”

He warns that the exemption can be revoked during the exemption period if there is evidence that the employer has given false information, or that the company’s financial position has changed in the course of the year.

A trade union representative or an employee may approach the department with information that may cause the exemption to be revoked.

The impact
Concerns have been raised about the impact of a minimum wage on South Africa’s already dire unemployment situation.

“An employer who cannot afford to pay the prescribed rate obviously may reduce employees which will affect the unemployment rate,” acknowledges Malapane.

However, he refers to the partnership between the Department of Labour and Productivity SA to assist companies who are facing challenges.

A company with more than 50 employees can approach Productivity SA to assess problem areas, develop strategies to better market the company, improve operations and to formulate financial plans.

It can provide employees training on basic business principles, operations, and improved productivity.

When the company is already in crisis it can assist with immediate actions to avert the closure of the business and job losses. 

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

Working time including overtime is regulated by the Basic Conditions of Employment Act, but many workers are not familiar with the technicalities of these laws and many employers do not adhere to the rules, says Arlene Leggat, President of the South African Payroll Association (SAPA).

One of the first things that employees should know is whether they can claim overtime according to the law.
“The earnings threshold to be able to earn overtime is currently R205 433.30 per year.

Companies aren’t legally required to pay overtime to employees who earn over this threshold.
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Overtime compensation also doesn’t apply to senior management, employees engaged as sales staff who travel to the premises of customers and regulate their own hours or employees who work less than 24 hours a month for an employer,” says Leggat.

What if your employment contract says you can claim overtime?
Leggat advises workers to fine-comb their employment contracts before they join a new company, as the wording in contracts that reference the Employment Act is often misleading.

“Do not assume that you will be compensated for overtime if the contract says that you will be paid for the hours according to the Basic Conditions of Employment Act. If your earnings are over the threshold or you are exempt from overtime compensation due to your role, you might not be compensated,” says Leggat.

In a 2010 lawsuit between packaging and paper group, Mondi, and its employees, Mondi argued that if employees were paid overtime and it pushed their salaries above the R205 433.30 per year earnings threshold, they weren’t obliged to pay overtime.

Mondi lost the case and had to reimburse employees for the hours they worked.

“People earning below the threshold aren’t high-income earners and unfortunately, the relationship between employees and employers regarding overtime often sways between beneficial towards workers and abusive,” says Leggat.

Working extra hours: a double-edged sword
Employees in the retail sector and food industry, for example, are often offered overtime shifts. According to the Employment Act, workers are not allowed to work more than 10 hours of overtime a week (collective agreement may increase this to 15 hours per week for up to 2 months a year) or more than 12 hours on any day.

“While the law stipulates that workers aren’t allowed to work more than 10 hours overtime a week, they may be compelled to take on more work if they need the money. On one hand, employees benefit from the increased earning ability, but they need to make sure that they aren’t getting stuck in an abusive situation,” says Leggat.

She concludes by saying that no employee can be forced to work unreasonable hours.

“Most employment contracts imply that occasional overtime is expected as part of the role, but an employer can’t threaten you to work unreasonable hours. Reach out to the Department of Labour if you are working unfair hours or you are not being compensated for your extra work,” concludes Leggat

ENDS
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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

The increase in the tax return threshold
On the 6th of June this year, the head of SARS, Edward Kieswetter, announced that the threshold for submission of tax returns has been increased from R350 000 to R500 000. 

​This means that if you earned less than R500 000 in the 2019 tax year, you do not have to file a tax return.  This is however subject to certain conditions.

What is important to know about the tax return threshold
It seems that there is a lot of confusion under taxpayers about the tax return threshold.  “Some taxpayers are under the wrong impression that if they earn less than R500 000, they don’t have to pay tax”, says Jetro Malapane, Executive Committee member of the South African Payroll Association. 

There is however a difference between the tax threshold and the tax return submission threshold.  The tax threshold means that if you earn less than the tax threshold amount, you won’t have to pay tax.  This amount for the 2019 tax year was R78 150.

Conditions under which you still need to file a tax return

• If you were not employed for the full tax year.
• If you received income from more than one employer or source during the tax year.
• If you contributed to a registered medical scheme.
• If you contributed to a retirement annuity.
• If you received a travel allowance or use of a company car.

“It is important that taxpayers understand the conditions under which they still need to file tax returns, and if they are unsure about any of the conditions, it is always safer to just submit your return” says Jetro Malapane.

The importance of keeping your tax affairs up to date
It is of great importance that taxpayers keep their tax affairs up to date, even if they don’t have to file a return.  Although SARS keeps track of which taxpayers don’t have to submit their returns, mistakes can still be made, so even if you do not submit, make sure you keep all your records just in case.

Outstanding tax returns can have a negative impact in the following cases:
When selling a property, SARS will verify whether your tax obligations have been met.  If this is not the case, the process can be delayed significantly, and SARS can also recoup your outstanding debt from the proceeds of the sale.

Your tax affairs must also be up to date if you are planning on financial emigration.  You need a financial emigration tax clearance certificate from SARS before you can receive clearance from the Reserve Bank to move your retirement annuities or other funds out of the country. 

Important dates to remember
Tax season for taxpayers using e-filing opened on the 1st of July and will close on the 4th of December.  For taxpayers filing their returns at branches, it opens on the 1st of August and closed on the 31st of October.
Taxpayers should make sure that they keep to the deadlines, or they could face penalties and interest.
 
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