If you have signed an employment contract that specifies something different to the Basic Conditions of Employment Act (BCEA), this will supersede what’s outlined in the Act provided that there is agreement between the parties and the conditions specified are not less favourable than the BCEA, warns Cathie Webb, member (and prior executive) of the South African Payroll Association (SAPA).
 
The BCEA is committed to regulating fair labour practice for both employers and employees in South Africa. It clearly explains what needs to be done when notifying an employer that you are leaving and what the employer needs to do when it comes to final salary payments. The Act also covers a multitude of additional issues and challenges that could face the business or the employee in the workplace, providing clear guidelines that are upheld by law.
 
However, when it comes to calculating remuneration during termination periods, there are some complexities that need to be addressed, which may not be covered by the BCEA.
 
The BCEA states that the notice period must be four weeks (for someone who has worked for more than 6 months with the company).  Many companies, though, require a calendar months’ notice. If the signed contract is for a calendar month, then the employee and payroll have to adhere to this timeline. Generally, the terms and conditions outlined in a signed contract will trump those outlined by the BCEA and employees need to be aware of this from the outset.
 
“That said, an employment contract may not offer working conditions worse than the basic conditions specified in the BCEA,” says Webb. “Employees do need to check their contracts before signing them to avoid unpleasantness. It is exciting to have a new job lined up, but the time to negotiate your employment terms is before you start, not after.”
 
Payroll needs to know
“It is critical that payroll be aware of what’s outlined in an employees’ contract to avoid any confusion when the person resigns,” adds Webb. “For example, many companies do not allow you to take annual leave in your resignation period, but situations may arise that make taking leave during this period a necessity.  This possibility needs to be planned for, so that both the employer and the employee know how this would be dealt with, and what is to be paid out in the final payslip.  Clarity from both sides is essential.”
 
Payroll needs to know and understand the rules of the 3rd parties who are paid from employee deductions / contributions.  Medical aids run from calendar month to calendar month, and contributions are usually made in arrears.  This means that the final deduction from payroll pays for their final contribution to the medical aid.  Pension and provident funds may work differently, with their month running from the 16th of one month to the 15th of the next.  This may mean that, in a company where a 30 day notice period applies and an employee resigns before the 16th of the month, they do not contribute to the fund in their final month, while if they resign after the 16th, there will still be a deduction.
 
Other pay elements like final commissions, travel claims and re-imbursements, shift allowances, etc., should also follow what has been stipulated in the contract of employment. 
 
Employees are also not aware that quite often they are not paid on the 25th of their last month.  Companies have been burned by employees leaving the moment they receive their final salary, and not working the last 5 or so days of their final month.  So companies may have a policy to pay employees who are leaving on first day of the following month. This must be outlined in the contract and will affect the employee if not clearly communicated when they resign.  This may result in an employee having to make special banking arrangements to deal with debit orders which may be set to be processed towards the end of the month.  Payroll can make this process a lot smoother.
 
“The BCEA also outlines how much notice is required according to how long a person has worked at a company,” says Webb. “If you have worked for less than six months it is one week’s notice, if for more than six months it is two weeks’ notice, and if it is more than a year it becomes four weeks’ notice.”
 
Webb emphasises that payroll plays a vital part in ensuring that both employee and employer finish their last month amicably.  
 
“Things need to be maintained by both payroll and HR so that when a person leaves all elements are calculated correctly and comply with the conditions outlined by the BCEA,” 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

Companies need to rethink payroll services and follow the international trend of investing more in mobile self-service solutions, advises Lavine Haripersad, a director at the South African Payroll Association (SAPA). “It’s time to put payroll in your employees’ pockets or purses. Mobile devices are having a huge impact on our lives,” she adds.

The mobile experience
According to industry experts, mobile penetration in South Africa is around 37% to 45% of the population. This is due to the introduction of cheaper smartphones as well as a growing dependency on mobile communications for everyday life and business. South Africans use their devices for a myriad of personal activities.
 
At work, however, employees often face the frustration of lengthy processes to complete simple tasks - like leave applications - or access their personnel information. This is in direct contrast to their typical online experience.
 
“We need to see workers as consumers and find ways to provide the experience they’re used to. That means going mobile,” states Haripersad.

What’s available?
Many reputable software vendors, such as Accsys, Intuit, Oracle, Sage and SAP offer employee self-service products for small, medium and large businesses, although their features vary. Also, managed services companies providing outsourced payroll services may use a self-service app to make information accessible and reduce costly interactions.
 
“While many apps exist,” advises Haripersad, “companies are usually restricted to the one produced by their business system’s developer.” The following are the most popular features:
 
·         View and update personal information
Payroll staff spend a lot of time reviewing records. It’s more efficient to allow employees to do it themselves. Their changes can be approved by their manager before updating the payroll database, depending on the workflow structured into the system.
 
·         View payslips
Notify staff when their payslips are ready through their mobile device and let them download a digital copy. This could save companies millions annually in printing and distribution costs.  These are also fast becoming acceptable to retailers who require proof of income.
 
·         PAYE & IRP5
Allow employees access to their tax data to keep track of their tax obligations, answer tax queries and submit their returns easily with the information on hand.
 
·         Managing leave
Reduce manual processing by letting staff submit leave requests through the self-service app. They’ll also be able to check their remaining leave, reducing your payroll administrator’s workload.
 
·         Travel & expense claims
Employees can submit their travel claims together with other expenses. These can be automatically forwarded to their manager for approval before being submitted to the payroll administrator.
 
·         Time & attendance
Depending on the app, employees could clock in or out with their smartphones, enter the time they worked on a task, or even be reminded of when their next shift will start.
 
·         Employee benefits
Staff could, at any time, check their benefits to see their current status, such as the value of their pension plan or available funds in their medical aid scheme.

·         Manager benefits
Using a mobile application for items like leave, payroll input or training application approvals saves a line manager a lot of time, as it can be done “on the go”, while being able to be assured that your staff are at work when they should be is also useful.
 
Ultimately, using mobile applications which allow employees to participate in what used to be traditional payroll processing, will allow payroll staff to spend less time servicing common requests and focus more on strategic activities.
 
In conclusion, Haripersad encourages every organisation to investigate the benefits of a mobile self-service app. “Technology is evolving fast and payroll must keep up if companies want employees to be happy and productive. This means making information and services available to them in a way they’ve come to expect.”
 
SAPA will be hosting its annual conference this year titled Portraits of Success as follows:

• Johannesburg, 6 to 7 September
• Cape Town, 12 September
• Durban, 14 September

 
To register visit http://www.sapayroll.co.za/Events/Conference.aspx
 
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

Author: Lavine Haripersad, director, South African Payroll Association
 
It may be necessary for the South African Revenue Service (SARS) to review some of the binding conditions related to the Employment Tax Incentive (ETI) that it introduced in January 2014 to stimulate employment for work seekers with little work experience and in the age bracket of 18 to 29 Years.
 
This would aid in reducing the administrative burden associated with ETI for the extended period to 28th February 2019.
 
Through the ETI employers are incentivised by way of a reduction in PAYE according to the prescribed ETI guidelines, provided that the employer is fully compliant for all registered taxes. Supporting the ETI program is a no brainer as our youth unemployment is in the range of 52% and there is an urgency to change this situation.
 
It’s good, but…
In so much as the effect has been partially positive in seeming to boost employment for young work seekers and providing them with a platform to launch their careers, it lacked administration consideration for payroll departments.  It seems that it has been manipulated by some employers who are claiming the incentive for workers they would have employed in any case, without creating new jobs.
 
The payroll department has to contend with multiple issues resulting from a set of prescribed guidelines in the Act which do not appear to take the actual work and business environment realities into account, as well as payroll systems’ inflexibility to have robust programming to accommodate the ETI prescribed rules. This has been a major reason that has made business shun away from implementing ETI. Ultimately the noncompliance resulting from this becomes payrolls’ accountability.
 
The difficulty experienced with lack of clarity about implementation of the new (and changing rules) and the slow rate of some payroll systems to program the complex rules has resulted in noncompliance as well as additional manual intervention by the payroll department to verify the calculations.
 
Some of the issues
It is known that companies have had problems with the payroll system programing where it is unable to manage the exclusion of non-qualifying employees when they turn 29.11 years, resulting in claims being made for employees who do not qualify.
 
The value of the remuneration must be based on 160 ordinary hours per month, excluding overtime and unpaid hours. This means that if less than 160 hours is worked, the system must gross up the remuneration to 160 hours per month to calculate the value of the ETI which must then be grossed down on the same basis. This means that hours worked must be recorded and tracked for the correct claim calculation to be made. The calculation needs to be rules based to avoid manual intervention. This adds complexity with system programming and as a result is often managed manually.
 
Employers must ensure that they adhere to the qualifying period of 24 months claim for each individual. The 24 months need not be consecutive. Here again it is critical to have systems in place to manage this as non-adherence will be penalized.
 
In addition, one of the ETI requirements is that an employer must remain tax compliant for all registered taxes to be able to claim the tax incentive. If at any stage the Employer is found to be non-compliant, all ETI previously claimed may be subject to reversal. The implications are that interest and penalties are imposed on arrear taxes. To rectify the process can take up to 21 working days as there is no ETI dedicated contact at SARS.  This becomes administratively burdensome.
 
To avoid this situation, the payroll department must be proactive and add an additional control function in their already busy schedules. A monthly statement of account must be requested from SARS (or can be obtained from e-filing through the person who is accountable for this in the Company). This must be reviewed and any abnormal item reflected must immediately be raised as a query with SARS and rectified to ensure that the ETI claim is processed by SARS.
 
SARS have issued a Draft Binding General Ruling on the ETI Act 28 of 2013 for which comments must be submitted by the 24 July 2017. This clarifies the definition of remuneration which states that overtime is excluded from the calculation of remuneration for the 160 hours in the month. Previously variable pay that was paid was included in the calculation of remuneration. Although welcome, the question is when implemented, do we recalculate the history based on the new ruling?  The South African Payroll Association welcomes input from business, so that ideas regarding the General Ruling can be submitted.
 
Given all of the above employers are still required to be fully compliant and to ensure incentives are claimed correctly as SARS applies strict measures for the utilization of the incentive by employers.
 
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