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

The recent downgrade of South African government debt increases economic uncertainty, with unpredictable effects. “While many of the outcomes of the downgrade have been surprising, one thing is clear: government debt is going to be more expensive. That will almost certainly mean that both local interest rates and taxes will continue to rise,” says Cathie Webb, Director, South African Payroll Association.
 
“Payroll departments need to be taking proactive action to help employees negotiate these difficult economic conditions, which our current political turmoil is exacerbating.”
 
The Reserve Bank has indicated that further downgrades remain a possibility, further affecting the cost at which the government can finance its escalating debt.
 
How to help
Webb argues that Payroll needs to understand the pressures that employees face during tough economic times, and where they are spending their take-home pay. While this may seem beyond the department’s remit, in fact financial insecurity has a direct impact on employee motivation and engagement, and thus on productivity.
 
The likely rise in interest rates will have an immediate impact on disposable income, she says. Employees who already have debt need to be educated about how to manage it in the event of an interest-rate hike—and those who are not in debt should be encouraged to remain debt-free.
 
Other financial pressures would include increased taxes, be it VAT or personal tax, or both, as well as higher petrol prices. Fuel costs increase food inflation, creating sustained pressure on household budgets.
 
The economic pressures caused by the downgrade will also impact the ability of employees to save. The country already lacks a savings culture, with the savings rate having declined from around 24 percent between 1960 and 1990, to 16.5 percent between 1991 and 2014. This deprives the local economy of investment capital for growth and development. At a personal level, a lack of savings means that a majority of South Africans will not retire on sufficient capital.
 
“The only real solution is proper budgeting—and then sticking to it. Too few South Africans actually do the exercise of understanding how they spend their money, and how they should be spending it,” Ms Webb says. “But if your personal finances are in disarray, there is a knock-on effect across everything, including performance at work. Payroll simply has to see its role more broadly in the quest to attract and retain the best talent for the company. That will include helping them to manage money better in tough times.”

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

Why you should avoid misusing sick leave
 
When it comes to the issue of leave, one of the biggest challenges facing both employer and employee is the misuse of sick leave. A recent study by Occupational Care South Africa and Statistics South Africa found that an average of 15% of employees are absent on any given day, and that only one in three of those absent are actually sick.
 
This is costing the South African economy an estimated R16-billion a year.
 
“The pressure on the organisation isn’t letting up and employees need to remember that they have a job because their employer needs them to fulfil a function,” says Cathie Webb, Director, South African Payroll Association. “If you aren’t there, someone else has to stand in for you so it is important to take your employer into consideration when using your leave, especially sick leave. Some people see their sick leave allowance as a target, rather than something to be taken when absolutely essential.”
 
Not only does the abuse of sick leave cost the organisation in terms of productivity, but the employee will have to use their annual leave should they suddenly need extended leave to recover from an operation, for example. Once that is used up, they will then be on unpaid leave, which will affect them financially.
 
“Employers are much more likely to be approachable in terms of alternative ideas in an emergency if an employee doesn’t have a history of abusing leave,” says Webb, adding that the wisest course of action is for employees to remain within the rules around sick leave.
 
Also important to note is that companies are not legally required to offer the benefits of additional leave elements, such as study or religious leave. On the contrary, many companies are reducing leave allowances due to the current poor economic climate.
 
Employee Responsibility
While some companies do not stipulate leave in their contracts, others have very precise regulations and it is up to the employee to know how their company handles the issue of leave.
 
“It is common practise, and legally required, for companies to detail the number of leave days  to which an employee is entitled in their employment contract,” says Webb. “While it is good practice to reflect the leave balance due to an employee on payslips, this is not a legal requirement.”
 
In cases where a company does not provide leave information in their contract, the Basic Conditions of Employment Act applies. This is broken down into three distinct categories namely, annual, sick and family responsibility. Employees are entitled to 15 working days per year for annual leave, 30 working days over a three-year period for sick leave and three days per year for family responsibility leave, if they work a 5-day week.  A six day working week accrues accordingly.
 
Webb conclude that as an employee of a company the onus thus falls on you to understand exactly what your rights are when it comes to leave. Know what you are entitled to, how it is structured and the rules which dictate 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