There are steps that can be taken to ensure that company Chief Financial Officers (CFO’s), who already have heavy workloads, can be assured of a fully compliant payroll without having to immerse themselves in the daily details.
 
As the stewards of financial health, this will enable them to fulfil their role to mitigate risk, manage compliance, deliver assurance to the Board and ensure that payroll is operating in a robust, automated and highly controlled environment.
 
“To create a payroll environment that doesn’t need constant oversight and review, the CFO should implement an annual external audit of the full payroll process and controls,” says Lavine Haripersad, a director at the South African Payroll Association (SAPA). “In addition, the payroll department requires a structure that supports this control framework. These two working in tandem deliver a robust and highly controlled environment within which payroll thrives.”
 
Alongside the annual external audit, the CFO should implement regular compliance audits. These will help keep the system fully compliant and minimise the risk of exposure. This can be further enhanced by a regular review of payroll codes to ensure they are compliant from an income tax perspective.
 
A wall of protection
“The recruitment process also supports the CFO in building a reliable payroll department,” adds Haripersad. “Talent management and recruitment can ensure that the right level of employee is hired - the role of Payroll Manager should be filled by someone who is multi-skilled, capable of handling pressure, and with extensive financial systems, analytical and technical expertise. Ethical and well-trained employees are crucial to the effective and sustainable management of the payroll department.”
 
In addition, the CFO should work with the CIO (Chief Information Officer) or IT department to develop a robust IT strategy around data security and payroll system access. This is not only relevant in terms of the Protection of Personal Information Act (POPI) and its compliance requirements, but to ensure that confidential data remains that way. Currently the cyber security landscape is too volatile, and cyber criminals too successful, to not ensure that the highest possible controls are in place.
 
Effective measures
“Finally, introduce reporting and accounting controls into the payroll department as these add value to the CFO reporting process and keep them fully informed,” concludes Lavine. “An important indicator to the CFO that these systems are working well is when the payroll control accounts are clean.”
 
To add further controls, the payroll department should implement good housekeeping, especially in complex economic times. Employees regularly leave or enter a company so records must be kept scrupulously up to date. If someone leaves, all company property must be removed and system access blocked immediately. Ticking these boxes at the outset will go a long way towards keeping system access to those who warrant it, and removing the risk of the disgruntled employee.
 
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

The gig economy (also known as the ‘sharing’ economy) has been in the media quite recently. Issues related to Uber drivers in the United Kingdom, for example, is just one example of how the digitisation of services, globalisation and the rise of independent contractors are changing the way we differentiate between ‘employees’, ‘service providers’ and ‘contractors’.

Cathie Webb, Director of the South African Payroll Association, says owing to available business models today varying greatly, it would be nearly impossible to create a one-size-fits-all approach that would apply to all workers. Despite this, the focus should be on ensuring that people are compensated fairly and legally protected in our changing, increasingly flexible economy.

Why payment and accountability becomes a complex issue
“The reason why it’s difficult to create a clear-cut payment strategy for gig workers is because there are different types of working situations. A worker could be using an international app to find work and deliver products or services and there wouldn’t necessarily be a local intermediary company involved, which would make payment accountability a more complex legal issue,” says Webb.

The United Kingdom recently ruled that Uber drivers aren’t ‘self-employed’ and should earn the national living wage. This decision has been appealed and negotiations are ongoing, but it highlights the way that many businesses may need to change their models and definitions regarding ‘employee’ vs ‘contract worker’.

Other examples of the gig economy are running smoothly. Etsy allows craftsmen to market their products to an audience that they wouldn’t normally be exposed to and Fiverr.com enables professionals to share their skills in an international marketplace.

“These are easier gig economy scenarios because an invoice is sent to a customer and the intermediary or website takes a cut. This is like paying rent for a shop floor space,” says Webb.

Clarity in work contracts are needed
In South Africa, the national Income Tax Act has guidelines to establish whether a person is in standard or non-standard employment, along with guidelines as to how these workers should be compensated and taxed. One of the key elements is ensuring that the employment contract is correctly formulated.

“Essentially, if someone is giving one’s capacity to serve at the disposal of the company, that person is an employee.  If the person is producing a product or providing a service for a company, then the person is a private contractor.  This detail should be clearly defined in the contract between the two parties,” says Webb.

There are also many other guidelines by the South African Revenue Service that can be used to test whether a person is an independent contractor or an employee. The number of hours spent on the company’s premises, the amount of supervision that is required by the company, and whether the contractor employs additional people, for example, can indicate whether a worker should be submitting invoices each month or should be paying to Pay As You Earn (PAYE) tax. 

​“This is a complex issue and there will undoubtedly be many more conversations around the compensation and benefits that apply to gig economy workers.  What needs to be determined is whether the gig economy worker is as free is we believe to manage their own output, deliverables, and earnings,” 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

Government has been enmeshed in the process of establishing a new National Minimum Wage (NMW) for many years and finally the numbers have landed on the table and it is causing consternation across country and company. Pressing questions remain around the still low amount, and its viability in the current economy, the history of oppression that surrounds the current wage structure, and the hackles of industry rising around the impact of the cost to bottom lines.
 
Perhaps the most important point to raise before discussing budgets and costs, is that the this proposed minimum wage of R3,464 a month for a 40-hour week at R20/hour would still be significantly less than the R5,544 that research shows would be the Minimum Living Level- in 2016. While the proposed increase will positively impact the quality of life for millions of South Africans, it is still not enough.
 
“The current proposed minimum wage is R20 per hour and many would argue it is enough, but the reality is that South Africans in the unskilled job spectrum can barely make ends meet,” says Nicolette Nicholson, South African Payroll Association, Exco. “Enterprise or business may argue it is enough, but this NMW won’t break the poverty and inequality barriers.”
 
However, it is a start towards promoting economic growth.
 
Change is one small step
Currently, the minimum wage is set at the sectoral level and the urban/rural level and is done in consultation with the Employment Conditions Commission. The new NMW will apply across all sectors.  The Commission has to consider the ability of the employer to carry on business successfully and examines issues such as: the operation of the small, medium and micro enterprise, the cost of living, conditions of employment, income differentials and equality, and the impact of the increase to the enterprise.
 
“The National Union of Metal Workers of South Africa remains opposed to NMW in its current form and Cosatu has pointed out that it is far from solving the challenges of inequality, poverty and unemployment,” says Nicholson. “They have, however, said it is a good start.”
 
Enterprises not regulated under a wage regulating measure, such as the mining industry, are indicating that they will be unable to afford the increase. This view confirms the concerns raised by trade unions and analysts – that the NMW may escalate the unemployment crisis.
 
“The NMW could have a further negative impact on the decline of job losses in the SME market,” concludes Nicholson. “The mines have already said they can’t afford it and may be retrenching staff. It is approximately a R7 difference from the average of R13 minimum wage if one compares rates across different industries and for most organisations the rise will make a significant impact on the bottom line.”
 
There is no clear-cut path through the minefield that the NMW has opened up, but one fact does shine out – millions of people could see a necessary shift in their quality of life.  The issues must be addressed to ensure that there is engagement on the NMW across all levels of business and that there is proper support for its success. The long-term sustainability of South Africa depends on it.
 
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

The South African Payroll Association (SAPA), in partnership with the South African Board for People Practices (SABPP), has launched the country’s first Payroll Standard. James McKerrell, Chairman of SAPA, will officially announce its implementation at a special SABPP conference to be held on October 26th.

Purpose
Like the King IV Report on Corporate Governance, the Payroll Practice Standard strives to codify the requirements for good governance, focusing solely on the payroll function. “Until now,” says McKerrell, “neither employers nor payroll personnel had a concrete reference against which to measure the correctness of their systems and practices. The new standard provides just such a yardstick.” The specification complements the existing SAPA code of conduct.
 
SAPA worked closely with SABPP, the professional body for HR practitioners in South Africa, to develop the document. “SABPP has extensive experience in creating HR standards so they were the ideal partner for this project,” reports McKerrell. The collaboration will also help SAPA establish the standard in HR structures as it will be included and referenced in SABPP’s own HR Standards framework.

Overview
The standard covers a broad range of requirements to which employers and payroll practitioners must adhere. These include:

• the structure of the payroll function;
• the qualifications and professional obligations of the payroll practitioner;
• the obligations of employers regarding payroll;
• the integration and interaction of the payroll function with other offices, such as HR and finance;
• compliance with governance standards; adherence to applicable laws;
• adherence to payroll policies and procedures, as well as HR, finance and corporate policies and procedures;
• service delivery standards; reporting and analysis of payroll data; and various other elements.

Benefits
McKerrell foresees that the standard will be eagerly accepted by payroll practitioners. “They are at times asked to take actions that are not conducive to good governance, or are legally or ethically problematic. With this definitive source, they can offer an authoritative response.”
 
By referring to the standard, employers can satisfy themselves that their payroll department and processes comply with legal and governance requirements. It also gives them the ability to audit the payroll function more effectively.

Implementation
As with King IV, the Payroll Practice Standard is not legally binding. However, McKerrell believes it will see rapid adoption by both employers and practitioners. “Corruption is more easily exposed these days, leading society to call for greater accountability from leaders and business. When an organisation adopts and enforces a progressive standard like ours, they show they are serious about being a good corporate citizen. This is especially true of payroll, where workers’ rights are one of the public’s greatest concerns.”
 
In addition, McKerrell says that SAPA will most likely make familiarity with the standard a requirement for attaining any of its professional designations and include it in its continuous professional development (CPD) programme. “As the profession’s official regulatory body, it is SAPA’s duty to encourage the highest level of professional conduct and service delivery. The Payroll Practice Standard embodies that ideal.”
 
McKerrell looks forward to seeing employers and practitioners embrace the standard and invites them to contact SAPA for more information.
 
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