There used to be a stigma attached to those who hop from job to job, raising their salaries and expectations along with their restless move from organisation to organisation. Considered flighty and a risk to the company, job hoppers were perceived as less reliable than those who set down roots and reputation.
 
However, the millennial generation sees job hopping as leaping towards new opportunities, and research is showing that they aren’t “flaky escapees”, but stronger recruits because of this trend. Still, whether flaky and fanciable or building a serious career trajectory, job hoppers of any age should keep their financial future and security top of mind.
 
“Job hopping can be a double-edged sword and it is important to consider factors such as UIF, savings and pension as you move,” advises Arlene Leggat, Director, South African Payroll Association.
 
UIF stands for the Unemployment Insurance Fund and it is an emergency savings account designed to support individuals when they are between jobs and battling to find work. If job hoppers tap into these funds while they look for the next big thing, then they are running the risk of not having a safety net in times of real hardship.
 
“UIF works on a credit basis,” adds Leggat. “The more you contribute, the more credits you build. If you are unemployed you can claim those credits, but ideally you should save them for a real emergency.”
 
A professional stance
It is also worth remembering that many organisations still work on a ‘last in, first out’ policy when times are tough and retrenchments are in the pipeline. Job hoppers are more likely to be in the firing line and their short time at the company will mean a small severance pay and financial risk.
 
“Another consideration is your pension,” says Leggat. “If you take out one third of your pension every time you leave a job, that’s money you are lopping off your retirement package. Many of the younger generation of job hoppers don’t think about this and it is important. Keep that that money sitting there and growing until you hit retirement age rather than spending it on a new car when you change jobs.”
 
To ensure your pension remains stable, never take the funds out when moving company unless you absolutely must. Then open a preservation fund that can move with you – transfer your pension from one company policy to the next, but use the interest gained in the preservation fund to bolster it.
 
Leggat also advises that you have at least six months of salary put aside before job hopping. If you are retrenched with one week’s salary, you will then have something substantial to support you. She also recommends putting a percentage of your salary into a savings fund each month.
 
“It doesn’t have to be a massive amount, around 7-10% of your gross income,” she concludes. “You then have a nest egg to keep you going when times get tough. Rather follow this strategy than tap into your pension or UIF as those funds are vital for your long-term financial security.”
 
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 in South Africa must meet their legal obligation to ensure that their employees are paid fairly, or prepare themselves for the consequences. This is the advice offered by Arlene Leggat, a Director at the South African Payroll Association (SAPA). “Specifically, they must have a documented system for determining the value of an employee’s job and it must be applied consistently across their workforce,” she urges.

Unfair discrimination and pay
As per the Constitution of South Africa, the Employment Equity Act 55 of 1998 as amended prohibits any person from unfairly discriminating, directly or indirectly, against an employee, in any employment policy or practice, on one or more grounds, including race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language or birth.
 
According to Leggat, “Although the legislation covers a broad range of issues, such as recruitment practices or career development, pay is a core concern because it’s why people work in the first place. Discrimination in this basic area means they’re being unjustly deprived of a better way of life.”
 
Employers are obliged under the Act to eliminate unfair discrimination in respect of pay. They must also ensure that differences in terms and conditions of employment between their employees who are performing work that is the ‘same, substantially the same or of equal value’, do not arise because of the above factors. However, where those factors are considered in terms of an affirmative action programme, it is not unfair discrimination.

Auditing inequality
The Code of Good Practice on Equal Pay/Remuneration for Work of Equal Value (Government Gazette No. 38837 of 2015) sets out practical guidelines for employers to audit their pay policies on an annual basis to identify inequalities.
 
Using this companion to the Act, they must determine which jobs should be audited and if:
a) jobs being compared are the same, substantially the same or of equal value;
b) if there are differences in the terms and conditions of employment regarding pay for these jobs; and
c) if these differences are non-discriminatory and can be justified.
 
When evaluating jobs, employers should consider the responsibilities demanded of the work; the skills, qualifications (including prior learning) and experience required; the physical, mental and emotional effort needed; and the working conditions of the job. They should also take special precautions not to evaluate female-dominated jobs using the same criteria as male-dominated jobs.
 
However, the law doesn’t demand that all employees doing similar work should be paid the same. Certain factors must be considered, like seniority, above-average capability, personal performance (provided the same evaluations are applied  equally), freezing an employee’s pay after demotion until it aligns with fellow workers, shortage of a particular skill, or any other non-discriminatory factor.
 
Employers should familiarise themselves with the Act and the Code of Good Practice to ensure that they satisfy all requirements. “Although they’ll receive ample opportunity to get their houses in order,” warns Leggat, “non-compliance will eventually amount to legal woes which are better avoided.”
 
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