The Department of Labour has issued draft regulations that will eventually open the door for refugees and asylum seekers to claim benefits from the Unemployment Insurance Fund (UIF).

Jethro Malapane, executive committee member of the South African Payroll Association, says since 2009 the regulations that govern UIF were updated to include "non-RSA" identity documents and "valid foreign identity documents and passports.

​Yet it continued seeing the asylum seekers still barred from payouts they were eligible for.

In order to obtain a South African identity, they first have to be granted asylum. This process should not take longer than 180 days, but in reality this often takes several years.

The draft regulations have been the result of successful litigation by Werksmans Attorneys’ pro bono team. The current policy has been declared unconstitutional in February this year, and the draft regulations for consideration have now been published.

If someone has fled their country and fear prosecution because of race, religion, politics or being a member of a specific social group they are considered to be an asylum seeker and once they have been granted asylum they are considered to be a refugee in South Africa.

Once they receive an asylum seekers permit (a section 22 permit), which is valid for six months, they have the right to work and study in SA and is protected against deportation to their country of origin, the Department of Home Affairs explains on their website.

The asylum seeker has to undergo a second round of interviews in order to obtain written recognition of refugee status (a section 24 permit) which is valid for two years and is renewable.

Malapane says the draft regulations have been released for stakeholder input, and once the comments have been considered the final regulations will be published.

“It is possible that the final regulations will be published this year still, but there may be a delay with the updating of the systems at the Department of Labour and the UIF.”

Malapane emphasis that people who do not have a valid work permit, or who has entered the country illegally will not be entitled to work in SA, and therefore could not be eligible to contribute to or benefit from the UIF.

“It is my understanding that those who were not able to claim in the past because of the current regulations, may be in a position to backdate their claims.”

He explains that they may be given a window in which to resubmit claims that have been rejected. However, there is no indication how long it will be backdated in order to assist people who lost their jobs and were not entitled to their contributions to the fund.

The UIF will have to increase its capacity to deal with the registrations and potential increase in the number of claims going forward, Malapane says.

ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux , 060 995 6277, rosa-mari@thatpoint.co.za, 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

President Cyril Ramaphosa says that all South Africans will be covered by the National Health Insurance (NHI) by 2025, but there is still little clarity as to how the NHI will be funded.

Arlene Leggat, Executive Committee Member of the South African Payroll Association (SAPA), says that payroll departments will need to prepare for the ripple effect that this will have on a company’s payroll.

“Logistically, payroll departments can easily implement a method to deduct money from employees’ salaries for the NHI, which is a likely scenario considering that government is yet to determine how the NHI will be funded. The challenge is that payroll coffers aren’t limitless. Additional deductions from employees’ salaries can result in financial pressure on employers and their employees,” says Leggat.

Cost of the NHI still undetermined
The NHI Bill was tabled in Parliament in August 2019, but there isn’t clarity on what the scheme is going to cost each year.

The original NHI white paper, which was published by the Department of Health in 2010, estimated it would cost the economy around R256-billion per year.

Economists have said that this number is grossly underestimated and the former health minister Aaron Motsaoeldi admitted this number was only a “guestimate”.

Besides the cost of the NHI being undetermined, a pilot project that government implemented to test the preparedness of health care facilities for the NHI showed that most facilities failed on a governance level and that there aren’t sufficiently resourced.

“Hospitals will need to ensure that they can offer the services that are needed and implement a financial management structure that can accommodate the NHI,” says Leggat.

Crunching the numbers of potential funding scenarios
The white paper proposes a number of scenarios as to how the NHI could potentially be funded, such as increasing UIF or VAT, using money from the Road Accident Fund (RAF), or utilising what is currently the Medical Tax Credit given to taxpayers towards NHI contributions, among other options.

Many of these scenarios, says Leggat, won’t amount to the sum that is needed for the NHI.

“According to the 2017/2018 SARS report, medical tax credits equalled approximately R20-billion, which is a far cry from the alleged R256-billion that will be needed per year.

If the RAF fund is used, the NHI could receive a once-off injection of around R55-billion.

With tax revenue being R1.2-trillion, VAT would have to be doubled to meet the required target, which will be unaffordable to the public.

It is expected that the funding for the NHI will have to come from the South African workforce. Exactly how this will impact the public and payroll departments is not yet known,” says Leggat.

In order for the NHI to be effective and functional, it is imperative that the number-crunching is done accurately. Failure to do this will result in a system that cannot be sustainable.

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, 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
 

Authored by; Rob Bothma, Exco member of the South African Payroll Association (SAPA)

Last month I spent some time speaking at the various South African Payroll Association’s regional annual conferences, focusing on fraud in payroll. In my preparation for these talks I decided that I would focus my talk around the impact emerging technologies are currently having with regards to compliance in the payroll department.

During my research on this topic one of the scariest things I found was that, although on the one hand technology can be used to assist the HR and Payroll teams in fighting fraud, it was also being used to assist employees in committing fraud.

One of the scariest facts coming out while gathering information for this talk was the amount of fraud being committed with regards to “ghost employees”, in both the private and public sectors.

When looking at what technologies are available to fight this and other acts of fraud within payroll, the newest and probably the most powerful is no doubt the use of Artificial Intelligence (AI), which includes various technologies such as:

Machine Learning, which provides the ability for systems to learn and improve from experience without being explicitly programmed to do so. This process starts with analysing large amounts of historical data, to provide the input required to create the relevant algorithms, which once created can then be utilised against the organisation’s current data to start providing predictive analysis results.

Analytics, which can be utilised for the creation of real-time dash-boarding, presenting data in an easy to view visual representation, which can be extremely informative, in standard pie and bar charts format, which are easy for users to interpret.

Blockchain, which utilises distributed ledger technology, which is essentially a system of record where many copies of a record are stored across various servers, ensuring that no one individual can edit a record without the “approval” of all other parties. Think of an individual’s education record, which is essentially co-owned by all parties but cannot be manipulated by the individual themselves, thus providing a record that can be trusted by all parties who have access to it.

Another area which I raised in these talks was the whole issue of Audit Trails. Being involved with software vendors for the past 30 odd years, I never ever came across an organisation that did not specify that any payroll solution they would use, needed to have full audit trail facilities which at a minimum would record details such as before and after images after every transaction, who initiated the transaction as well as the usual date and time stamping.

Two challenges:

1. Did any of the payroll managers present actually know which staff members had administrator access to the Audit Function?
   By having the capability to switch auditing off and on, creates an ideal environment for fraud. In the past I have come across organisations where this loophole was successfully used by a payroll staff member who unknowingly to management, had the system authority to turn auditing off, where they were able to reinstate a resigned employee, change the banking details to their own, and then run a payroll payment through the system before switching auditing back on again.
2. When last did anybody in the organisation actually analyse any of the payroll audit trail data?
   My research found that the average time it takes to identify fraud in payroll was 18 months, as reported by the Chartered Institute of Payroll Professionals, which in itself a scary thought. But when understanding that the bulk of payroll administrator never bother to look at payroll audit trails, it’s easy to understand why it takes so long.

The detail of much of the payroll fraud being conducted today actually resided in the audit trails, the organisation really just needs automated and intelligent tools to be able to analyse this data and alert the relevant staff members when anomalies are encountered.

And this is where Analytics can play a big role. Have real time data being displayed, can help with not only detecting fraud but also empowering management to take immediate steps in stopping fraudulent transactions before they can be completely processed.

With the power of emerging technologies having the ability to “learn”, this makes them extremely powerful when it comes to analysing data, providing both analytical results and predictive indicators, empowering HR and management with true decision support capabilities.

By taking this learning capability and applying it to fraud prevention, it is easy to see how new-age systems are able to create patterns of behavior based on historical data, and then quickly being able to identify when a change in pattern or an anomaly is encountered.

For example, a payroll user who suddenly starts editing employees’ bank account details or starts creating new employee records in numbers that are way above the norm. It’s not to say that these are not valid transactions, but by being alerted by a change in behavior empowers the organisation’s risk team to investigate the relevant transactional detail, enabling them to assess the situation to determine the probability of fraud being committed.

One of the downsides of using sophisticated technology is that sometimes areas of risk can be hidden within the configuration of the system, and as such, can often be overlooked, and in this example, who has been assigned the administrator rights to controlling the Auditing function.

Another big contribution to fraud is the lack of visibility regarding segregation of duties
It is very difficult to manually monitor each and every user’s access rights on a continual basis, as new users are continuously being added and while other being deleted, making this a cumbersome task that eventually gets ignored. This is the ideal breeding ground for the ghost employee phenomenon.

If an unauthorised user can create a ghost employee and then have the ability to execute a payroll run for them, this is a fraudster’s paradise. No wonder my research uncovered so many examples where millions of Rand were being lost through payments made to non-existent ghost employees! In each of the cases, there was either no control on the segregation of duties or collaboration between staff members to overcome this control.

In summary, the tools to both fight and prevent fraud in payroll have become extremely sophisticated and are now available to organisations of any size.

Payroll managers need to take an urgent look at the limitations of their current systems and ensure that these are mitigated through either replacing the current payroll solution or at the very least ensuring that the payroll is upgraded to a version where these AI capabilities are available, to ensure that fraud in your payroll is eliminated in its entirety.

ENDS

MEDIA CONTACT: Rosa-Mari, 060 995 6277, rosa-mari@thatpoint.co.za, 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