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

The challenges that small businesses in South Africa face are unique and often complex. South African Payroll Association (SAPA) Executive, Arlene Leggat, says there are several things that small business owners should keep in mind regarding their payroll system, and their obligations to ensure they comply with the law, and set their businesses up for success as they grow and expand.
 
“Many times, a small business’ payroll evolves organically. When a company starts out, its payroll may consist of just a handful of employees. Only after the first person resigns or an employee gets dismissed do problematic pitfalls in a small and haphazard payroll system lead to major problems,” says Leggat.
 
Responsibility towards employees and SARS
A small business needs to register their business with SARS and all the relevant legislative bodies even if it is not yet paying tax. It may seem more efficient to simply pay employees from the company’s bank account without having to deal with all the administration involved with printing pay slips and deducting UIF, but this approach can lead to run-ins with the law.
 
“All employees are required by law to receive a payslip, and to contribute to UIF. This may be an onerous task that seems unnecessary in the beginning, but if a dismissed, retrenched or disgruntled employee tries to claim UIF and can’t, there are serious repercussions for the business owner. Business owners who neglect to do this can be served with penalties and fines,” says Leggat.
 
Small business owners also need to make sure that whatever deductions are made to employees’ salaries are paid over to SARS. It can happen that a new or growing company runs into cashflow issues and neglects to pay the tax that has been deducted from workers to the revenue authority.
 
“Ignorance will not protect you against the law and neglecting to pay an employee’s tax to SARS constitutes fraudulent activity,” says Leggat.
 
When to consider outsourcing
While she doesn’t believe that outsourcing payroll and accounting duties is a sustainable solution for all businesses, Leggat believes it does make sense for many small companies who are either just starting out or growing.
 
“If your business is still new, then outsourcing your payroll needs to an accredited and experienced professional is advisable. This way, you have the peace of mind that comes with knowing someone is dealing with the authorities on your behalf, making sure your employees’ tax certificates are completed and submitted on time, and that a knowledgeable person is staying on top of everything for you,” says Leggat.
 
Instead of entrusting your payroll to a friend or acquaintance who only has limited knowledge of payroll systems and accounting, rather enlist in a course to upskill yourself on what your responsibilities are as a new business owner.
 
“There are many one-day courses offered by government institutions that are aimed at empowering entrepreneurs with the knowledge they need to set up their businesses and comply with South African legislation. Payroll and accounting may not be your core competencies, but your business is your responsibility and you need to be driving your payroll strategy correctly from the very beginning,” concludes Leggat.
 
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 payroll professional has access to a vast repository of knowledge that can fundamentally change how employees engage with their income and the organisation.
 
While the payroll expert may innately understand how tax, medical aid and budgets fluctuate, for the employee this can be a number-filled minefield that makes little sense. By sharing knowledge and insight, the payroll practitioner could transform how employees feel valued by their organisation.
 
“People’s crises are often financial,” explains Cathie Webb, executive at the South African Payroll Association (SAPA). “They want to know why medical has gone up by 10% when their salary has only risen by a consumer price index related 5%, how to balance their budget, and how taxes impact on their finances.
 
Not all employees understand why they are taxed, who is responsible for the rules around taxation, and what impact this has on their daily lives.  Payroll should take on the role of educating and supporting employees, providing them with insight into new regulations and price hikes and how these will affect them in the future.”
 
By using foresight and planning, payroll can deliver relevant and timely advice to employees. Not when the changes hit, but in advance so everyone has time to prepare.
 
Proactive payroll pays off
“Share your knowledge through group sessions where you educate and inform people, not just one on one sessions that eat into your time,” adds Webb. “Use events such as National Payroll Week (every September!) to let people know what you do and why your expertise is invaluable.”
 
Many payroll practitioners find the idea of preparing regular training sessions outside their comfort zone, but these can really make a difference in how they engage with employees. In instances where the organisation is spread out across various branches, often those in the outlying areas have no idea what is going on. This is where payroll can shine.
 
“Payroll is the business internal shop window,” says Webb. “The information that comes out of payroll tells people a lot about how much the business cares about them. By proactively disseminating information from head office, payroll can show employees how much their needs are valued.”
 
If employees are battling with savings or budgets, perhaps introduce a savings scheme which they can access in December or when their main school fees are due. It’s an easy thing for payroll to do and it adds so much value. Another idea could be to implement a solution such as a debit card that doesn’t need each employee to FICA, but allows them to keep their cash secure.
 
“Look at how you are presenting your pay information to your employees as your payslip alone can add inordinate value,” says Webb. “Don’t have employees wait a week after payday to receive their payslip.  Consider sending an SMS to let them know they have been paid. Ensure that people are paid at the same time every month – it’s unfair to shift dates and times when they are relying on their funds.”
 
It says a lot about a company if its staff aren’t paid promptly or regularly.  Things can go wrong, though, and if they do, payroll can be the light that shines on the problem, giving people plenty of warning, explaining what has happened and giving clear timing as to when it will be resolved. Communication around payment failures is crucial and payroll should lead the charge.
 
“Finally, it is worth giving the ideas employees bring to payroll some thought, and proactively approaching management if they have value. Remember that a small thing can make a big difference to employees and their morale,” 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

Technology is changing and so is payroll software. While the advancements in payroll systems come with several benefits, these systems could also be exposing employers and their employees to online security threats, says Arlene Leggat, Director at the South African Payroll Association (SAPA).

“In the past, Human Resources and Payroll personnel would be the ones processing everything from timesheets to leave forms. If an employee’s banking details changed, they would need to notify the appropriate Payroll administrator to make sure their salary makes its way to the correct bank account. The next generation of payroll software has made it possible for employees to manage many of these tasks themselves,” says Leggat.

More sensitive information transferred electronically
Tasks that usually required paper trails and approvals, such as travelling allowances and overtime claims, can now be processed online, which leads to an increased amount of personal information being shared via web portals.

“As a Payroll company or a Payroll department, you will have a lot of employee related personal information at your fingertips. The more open and accessible your payroll system is, the more attention you need to be paying to things like firewalls, internet security, cyber threats and general information technology safety,” says Leggat.

Employers legally obliged to protect employees’ privacy
Employers now also have a legal obligation to protect their employees’ information thanks to the POPIA (Protection of Personal Information Act).  This legislation sets conditions for how personal information can lawfully be processed; it has been signed by the President and is now the law.

“Companies are responsible for making sure they are complying with this Act. It’s not only companies in the Financial Services and Healthcare sectors which need to understand their rights and responsibilities regarding personal information processing – any company who uses online payroll processing has to make sure they are protecting their people from harm as well as protecting their right to privacy,” says Leggat.

​International companies have an extra set of privacy concerns to deal with on top of the POPI Act. The GDPR (General Data Protection Regulation) was adopted by the European Parliament in early 2016 and while many of the stipulations are similar, a business will need to comply with both acts if they are transferring personnel and payroll data across borders.

“A company in South Africa may be outsourcing their Payroll function to their European counterpart. In this case, they would need to comply with both the GDPR and POPIA legislation. They are different flavours of data protection laws, but it could be necessary for you to tweak your Payroll processing strategy so that you have a global view and comply with what is common among them,” says Leggat.

Be future-ready
People are already wary of sharing their personal information, cell phone numbers, credit card numbers and addresses online. Having a future ready Payroll software solution can make your business more efficient, but it’s an employer’s responsibility to make sure that their employees are comfortable using it as well.

​“Companies need to take data protection seriously and their staff needs to know that their privacy is a top concern if you want widespread uptake in these systems,” concludes Leggat.

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

 In reviewing the South African Reserve Bank (SARB) and National Treasury’s joint consultation paper for regulatory proposals on payroll deductions, Arlene Leggat, an executive of the South African Payroll Association (SAPA) has suggested that limiting voluntary deductions would be the preferred route to follow.
 
The recently released document also posits two other mutually exclusive options for dealing with SARB’s concerns about the increase in the number of entities offering voluntary payroll deduction services. These include disallowing voluntary deductions completely or allowing unrestricted voluntary deductions with non-preferential treatment of creditors.
 
Regardless of the option adopted, certain basic requirements will apply. These include an authenticated mandate from the employee; no more than 25% of an employee’s salary being committed to deductions of any kind; statutory and legal deductions taking priority over voluntary deductions; and employers not being obliged to provide payroll deduction services for voluntary deductions.
 
However, Leggat affirms that the payroll function should be dedicated to the payment of employee salaries and earnings, and little else. “Although payroll is obliged to make statutory deductions required by law, it shouldn’t be reduced to a debt collection service,” she says.

What are voluntary payroll deductions?
Employers may be enticed by a financial services provider to offer products, like funeral plans, at a discounted rate to staff, or to collect amounts such as loan repayments, on its behalf. However, these voluntary deductions are made by the payroll department before a worker is paid and therefore fall outside the regulated financial system that comes into effect after income has been deposited into employees’ bank accounts. This is permitted by law provided an employee agrees to the deduction.
 
SARB worries that this lack of regulation exposes over-indebted workers to higher financial risk, creates the opportunity for financial crime, and gives preference to one vendor over another, fostering anti-competitiveness. Even creditors who have obtained a court order for recovery of debt are given lower priority than those enjoying payroll deductions.

SAPA’s stance
In her response, Leggat says that “since medical aid and pension are essentially voluntary, the first option would rob workers of typically accepted benefits.”
 
She also rejects the third option outright. “It’s completely unacceptable from a payroll perspective. With the sheer number of providers and services available, each with its own instructions, payroll would sink into administrative chaos.” For example, if an employer fails to deduct the correct amount for a life insurance policy and the employee subsequently dies, who will be held liable if the service provider refuses to pay out? “Now multiply this by a hundred and imagine the sheer pressure payroll will face to get each deduction just right.”
 
Ultimately, Leggat admonishes organisations to protect the integrity of the payroll function. “Payroll is meant for payroll,” she says. “Don’t overload it with alternative duties at the cost of good service.” Finally, Leggat warns that any option adopted by SARB will have a massive impact on how payroll departments are run, what resources are required, and the benefits employers decide to offer.
 
SARB has invited the public to submit their comments on the proposed remedies by 30 April 2018.
 
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

Flexi time, home based jobs and remote workforces are a growing trend in South African businesses. While this type of flexibility is a selling point for employers and something that workers are actively seeking out, companies also need to consider how this can change the way they manage their payrolls, says Arlene Leggat, Executive at the South African Payroll Association (SAPA).

“Like elsewhere in the world, the way in which we work is changing. People want a better work-life balance and they want to be able to work how, where and when they like. An increasing number of South African businesses are accommodating these needs not only to attract and retain talent, but out of necessity,” says Leggat.

The 2017 TomTom Traffic Index showed that cities such as Cape Town and Johannesburg are the most congested cities in the country and people lose days and possibly weeks each year due the time they spend in their cars travelling to and from work. This congestion also has a broader impact on the economy. According to former Johannesburg mayor, Parks Tau, the economic impact that results from congestion in South Africa is over R1-billion per year.

“Spending hours in traffic each day, whether travelling in one’s own vehicle or using public transport, is not conducive to having a good work-life balance and it’s not helping a company’s bottom line or the South African economy. The technology that we have at our disposal, such as smartphones and internet connectivity at home, means that for many roles it’s no longer necessary to work from an office every day,” says Leggat.

Switching to output-based deliverables
One way that a remote workforce impacts payroll is through the lack of work time indicators that have traditionally been drawn from access control and/ or time and attendance systems. If a company relies on security systems to track the movement of staff to determine their remuneration, then they may need to consider other ways of measuring a person’s output.

“A business that wants to enable a remote workforce can’t function as a clock watching shop. Employers need to not only be more trusting and open minded for this to work, but they will need to restructure many employees’ roles so that their remuneration is based on Key Performance Indicators and output as opposed to time spent on the premises,” says Leggat.

A solution that companies can consider is to enforce ‘core business hours’ for all employees, regardless of where they are based. A company could, for example, make their core business hours from 9am and 2pm and office-based as well as home-based workers are required to be online and available for meetings and calls during these times.

Trust, responsibility and accountability is key
Before overhauling your business structure to include remote working, companies need to fully understand how they are going to assess employees’ output and time-based work.

​“There are ways to track the time a person spent on a company’s network or systems, but instead of policing people, it’s better to create a trusting relationship with employees so that responsibility and accountability issues are understood and ironed out from the beginning,” concludes Leggat.

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, Vice Chair, South African Payroll Association (SAPA)
 
The year is rushing to an end and many South Africans are looking forward to a well-deserved break. It has been a difficult year for most companies with the unprecedented negative economic and political climate.  Companies are battling to be profitable. 
 
It is also a time of year where many employees have an expectation of receiving some reward in the form of an annual bonus. A bonus is different from a 13th cheque, as the payment of annual bonuses is not guaranteed. The employer can decide whether he wants or is able to reward his employees by paying a bonus. If it has never been the practice there is no fear that the business falls foul of the labour laws.
 
If the company has a policy of paying a guaranteed 13th cheque which is stipulated in the employee’s employment contract, it will be a transgression of the labour laws if the payments are not made.  And, if the company habitually pays out bonuses, but this year they cannot afford to do so, it has to inform its employees well in advance that it is deviating from its normal practice.
 
Ideally employees would be informed at least six months before the time that there will be no bonuses to ensure there are no expectations of getting one. People tend to over-commit themselves if they have an expectation of getting a bonus at the end of the year. Many spend the bonus long before they receive it and this can cause hardship or even greater indebtedness.
 
Performance-linked bonus
Many companies have also established a policy of “performance linked bonuses” where performance targets are set at the start of a financial year. Specific performance targets are set for individual employees, mainly those who are in senior management positions who have a direct influence in the way the company is run and perform.
 
The bonus is normally calculated as a percentage of the employee’s remuneration and the company should have a clear policy in place, which sets out the criteria that have to be met in order for the bonuses to be paid out.
 
In most instances there will be a component of business performance targets to be achieved for the company. It is quite likely that the business may have performed well, but certain individuals were unable to meet their individual performance targets, or the other way around.
 
The policy must be clear about how the bonuses will be calculated and this must be completely transparent.
 
Impact of no bonus
Despite receiving forewarning that annual bonuses will not be paid out, it certainly is demotivating. As this potentially affects productivity, it would benefit a company greatly if it is open and transparent about its financial situation and future prospects of re-introducing bonuses.
 
Furthermore, companies can find other, less expensive ways of motivating its employees if they are unable to afford bonuses. These include days off for years worked or rewarding overtime with days off. It may even include a wellness day at the office or allowing for flexible working hours in certain circumstances.
 
The fortunate ones
Employees who are in the fortunate position of receiving a bonus should be cautious not to spend it all on holidays or gifts, but rather to use it wisely to reduce debt, for instance.
 
Many companies have a policy of a 13th cheque that is paid at the end of the year.  This payment is guaranteed if it forms part of the company’s total cost to company. The employment contract will stipulate whether the employee gets a guaranteed 13th cheque, or a bonus that depends on individual performance or the performance of the company.
 
Employees must ensure that this is clearly stipulated in their employment contracts. If there is no mention of a 13th cheque, the employer is not obliged to pay it.  However, if it is clearly stipulated in the contracts, and the company does not honour this agreement with its employees, it amounts to unfair labour practice.
 
Even in tough times it is expected that the company makes provision for the payment of the 13th cheque. Companies are committed to this payment in the same way they are committed to paying salaries.
 
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

Most organisations’ biggest and most important expense is its payroll, and no business can risk this resting in the wrong hands, especially when budgets are tight and employees are under pressure.
 
A well-run payroll is the lifeblood of the organisation, as are the qualities of professional support and integrity that underpin the role itself. Ethics and a strong moral code are mandatory qualities for anyone entering the payroll profession, but how are these guaranteed and what happens when they need to be enforced?
 
“The organisation needs to know that the right person with the right ethics is sitting in the payroll hot seat,” says Cathie Webb, Director, South African Payroll Association (SAPA). “They need to know that the person handling their employee pay is dotting the I’s and crossing the T’s and not letting things slip through the proverbial cracks.”
 
Unfortunately, not all payroll practitioners are created equal and what some see as a non-negotiable ethical stance, others see rules that can be bent.
 
A professional stance
“For most professional payroll practitioners, the qualities of integrity, trustworthiness, competence and reliability uphold their own code of behaviour,” says Webb. “However, for the organisation to ensure that these are qualities ascribed to by their payroll practitioner, they need reassurance in the form of a professional body.”
 
A professional organisation is key to establishing a national code of ethics that is adhered to by members and respected by business and other organisations. Practitioners that commit to membership are more likely to follow the code outlined by the institution and will be more inclined to remain in line with the behaviour of their peers.
 
“Once you have signed on the line, you are more aware of the rules, and the consequences of not sticking to them,” adds Webb. “It makes you more careful in how you practice your role. A good reputation is everything - you don’t want things to slip through and for your reputation to become damaged in the process.”
 
Take a stand
A professional membership provides the organisation with the wherewithal to confront fraud or bad practice. It ensures that any practitioner engaging in fraudulent activities is exposed to peers and other organisations. Unfortunately, many organisations don’t take a stand when it comes to their own experiences of poor payroll practice.
 
“We have noticed that when a business asks for assistance in auditing their payroll matters,  as they’ve suspected something isn’t right, if the payroll practitioner is found guilty, 99% of companies don’t bother to take it further legally,” says Webb. “They cite cost and time, but it can be that they are embarrassed that they didn’t follow procedure.”
 
Access to a professional organisation such as SAPA will allow for the organisation to reveal poor practice and prevent it from happening to someone else. They need only report them to the board with proof in order for the practitioner’s membership to be revoked. This level of involvement by organisations will go a long way towards ensuring that ethics remain top of line and mind.
 
“Corruption is rife and companies must be careful,” concludes Webb. “Ensure your payroll practitioner is a member of the professional body (renewable annually), check their reputation with SAPA, and encourage them to become a member if they are not already. Put the right structures in place to mitigate fraud and limit temptation – and a good payroll practitioner can help you do that.”
 
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 Associatio

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 struggling South African economy has created considerable hardship, with low salary increases coupled with greater calls on disposable income. And this has resulted in a perfect storm driving people to commit fraud, says Arlene Leggat, a director of the South African Payroll Association (SAPA).
 
“People make unwise decisions when they are under sufficient pressure,” she states, adding that companies can help to combat high levels of payroll fraud by encouraging their payroll administrators to become members of a professional association.
 
“Payroll administrators manage large amounts of money. It therefore makes sense to professionalise this industry from a number of viewpoints, not the least of which is the prevention of fraud,” Leggat puts forward.
 
She states that if payroll professionals have signed up to a code of ethics, they understand the impact. Acting ethically is a conscious decision, and the more it is done, the more it becomes second nature.
 
Additional measure
“The other side of the equation is to ensure that the correct controls are in place.” Leggat advises companies to collaborate with their external auditors to design the most effective controls. Because they interact with so many organisations, auditors are best placed to advise on fraud patterns, and what controls work best. Given that payroll processes are software-driven, she adds that real-time variation reporting is emerging as a key mitigator of fraud risk.
 
“Professionalisation, with its combination of an ethical code and ongoing education, and proper controls are the two pillars payroll-fraud detection and mitigation,” she concludes. “Fraud generally, and payroll fraud in particular, are real threats, but these basic measures can really help.”
 
Drivers of professional membership
“It’s a relatively new concept in South African payroll, but the trend towards professionalisation in other disciplines, such as tax practitioners and directors, is quite marked. The drivers are very similar: to ensure that people have the right skills for the job, that they sign on to a code of ethics and are subject to the professional association’s disciplinary procedures.”
 
As a member of SAPA, a payroll administrator undertakes to adhere to its code of ethics, and to undertake structured continuous professional development to ensure his or her skills remain current. Any contravention of the code of ethics would lead to the rescinding of the professional certification.
 
Globally, payroll fraud is the number-one source of accounting fraud and employee theft, according to the Association of Certified Examiners. It occurs in 27 percent of all businesses, and the average instance lasts on average for 36 months.[1] Research by PwC shows that South African companies suffer hugely from HR fraud, of which payroll fraud of various kinds is prominent: falsification of entitlement/ employee benefits (36%), false wage claims (39%), ghost employees on the payroll (30%) and misclassification of payroll expenses (16%).[2]
ENDS
 
[1] Matthew Garrett, “Payroll Fraud—A big threat and how to avoid it”, Forbes (10 September 2013), available at https://www.forbes.com/sites/matthewgarrett/2013/09/10/payroll-fraud-a-big-threat-and-how-to-avoid-it/#40c6826c746f.
[1] PwC, Economic Crime: A South African pandemic (Global Economic Crime Survey 2016), available at https://www.pwc.co.za/en/assets/pdf/south-african-crime-survey-2016.pdf.

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Fraud—A big threat and how to avoid it”, Forbes (10 September 2013), available at https://www.forbes.com/sites/matthewgarrett/2013/09/10/payroll-fraud-a-big-threat-and-how-to-avoid-it/#40c6826c746f.

[2] PwC, Economic Crime: A South African pandemic (Global Economic Crime Survey 2016), available at https://www.pwc.co.za/en/assets/pdf/south-african-crime-survey-2016.pdf.