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

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

It’s not uncommon for a payroll to be consistently managed so poorly that workers threaten to strike over incorrectly administered pay. Often, the person administering the payroll is not adequately qualified for the job.
 
Lavine Haripersad, a Director of the South African Payroll Association (SAPA), says such risks are why hiring accredited payroll practitioners is so important. Yet, many employers don’t realise how much skill it takes to run a payroll. “There are literally hundreds of legal requirements and specialised procedures to follow,” she says. “It’s therefore critical that organisations have professional payroll administrators who know, understand and can practically implement them.”
 
So what do the top payroll administrators know (that business managers sometimes don’t)?
 
Correct Procedure
Payroll consists of various processes that must be correctly executed. “Qualified payroll administrators know these processes intimately,” says Haripersad. “These processes include record keeping, employee take-on, month-end procedures, year-end procedures, and more.”
 
Calculations
There are many complex payroll calculations related to tax, medical aid, pension funds, provident funds, allowances, reimbursements, deductions or bonuses. A payroll administrator knows how to perform them in accordance with the latest legislative requirements.
 
The law
Payroll is governed by an extensive set of legal and regulatory requirements. Payroll administrators are trained in the law and ethical governance, and keep themselves updated on new standards as part of their duties. “So they act as advisors to their organisations, guiding them in the right direction to avoid legal problems,” says Haripersad.
 
Information management
Payroll information and data must be collected, stored, secured, destroyed and used in accordance with various laws and accepted procedures. “The safeguarding of employee data must adhere to the Protection of Personal Information Act,” warns Haripersad. The proper information must also be submitted to the government at defined intervals. And correctly calculated payroll aggregates must be reported to accounting for recording in the general ledger. “Payroll administrators are well versed in the function of information inside and outside the organisation.”
 
Tax
Employee tax is so critical it demands special attention and skills only a professional payroll administrator can provide. This is especially true of larger organisations where the taxable portion of intricate remuneration, allowances, expense claims, deductions, bonuses or perks schemes is difficult to determine.
 
Ethical practices
Accredited payroll administrators are specifically disciplined in ethics and bound to the association’s Code of Professional Conduct. Not only do payroll administrators have an authoritative standard to work to; employers also have in SAPA a means to resolve unethical or unprofessional behaviour. The same can’t be said for non-certified administrators.
 
Project management
Payroll administrators are also trained to work in dynamic environments like project management where each payroll project might be different from the last. They therefore have project management training and can often act as project administrators.
 
Strategic advisors
Overseas companies see payroll for what it is - a key business enabler. International payroll administrators can work towards a Master's Degree in payroll management and provide direction to national and global payroll initiatives. But even a single organisation can derive such value from a well-trained payroll administrator.
 
Payroll administrators offer a wealth of knowledge that an employer can leverage to their benefit. Says Haripersad: “If organisations see payroll administrators as managers rather than workers, they will appreciate the strategic value they stand to gain from their input.”

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 Association of Certified Fraud Examiners says that payroll fraud is the No. 1 source of accounting fraud and employee threat globally. It affects 27% of all businesses and lasts, on average, 36 months.
 
South African statistics are scarce, mostly because payroll fraud is under-reported by companies jealous of their reputations.

A rare public case was the arrest in 2014 of two Eskom employees for tampering with the corporation’s payroll network system in a scheme that could have costed the company billions.  Research by Alexander Forbes in 2011 showed that payroll fraud was costing South African business more than R100-million a year.
 
“Payroll fraud is very much a reality and, in South Africa, my experience is that it’s most prevalent in medium to large companies that run electronic payroll systems, and where the number of employees makes manual checking difficult,” says Nicolette Nicholson, director at the South African Payroll Association.
 
She adds that payroll fraud is an occupation, “The books will be balanced legally on the system, because it has applied legislation. But typically, the fraud takes place when new data is entered onto the system, and that’s why it’s not easily picked up by financial audits.”
 
Nicholson explains that payroll fraud usually requires collusion between colleagues, and small transactions that do not trigger alerts are preferred—one reason fraud schemes go on for so long. Most payroll fraud hinges on overtime claims, the payment of salaries to ghost employees whose bank accounts are controlled by the fraudster, dishonest expense claims and the payment of an extra month’s salary when an employee resigns or dies.
 
Causes for payroll fraud include intent and character, as well as peer pressure – where a person’s financial circumstances make them vulnerable to syndicates.
 
Nicholson advises that the best defence is to make a company a low-risk candidate by following these tips:
 
- Put controls in place from the beginning. Duties related to payroll processes should be rigorously segregated, with different people responsible for input, approval and release as a minimum. Frequent spot audits should be performed in addition to external audits, which do not cover segregation of duties. 

- Use external fraud examiners, as most fraud is committed by managers, an external agency should be used to undertake fraud checks. 

- Ethics management is a pillar of King III for very good reason: if the company’s code of ethics is truly embedded into the corporate culture, the occasional rotten apple will find it harder to identify accomplices. 

- Achieve process stability. Pay day is an emotive issue, so small issues tend to get ignored in favour of getting the payroll run underway. It is critical to keep to payroll procedures and cycles, or controls will be abandoned. 

- Empower employees. Very often, blue-collar workers may be barely literate or may have a culture of not questioning payment. Work with union or employee representatives to educate employees about what information should appear on their payslips, and encourage them to check that information for accuracy. It should also help nurture a culture of trust that is likely to impact positively on productivity generally. 

- Leverage the power of data. Put basic business intelligence capabilities in place to enable exception reporting and trend analysis to spot anomalies in overtime, PAYE, tax on bonuses and so on. Early detection is critical. 

- Stern consequences. Criminal action should be taken against an employee caught committing payroll fraud, if the consequences are kept to a mere human resources disciplinary or suspension, the guilty party can go onto work for the next company where he/she can continue their misconduct. This is because the Labour Law does not allow unwarranted reference, in other words, if the guilty person’s potential new employer calls the previous employer for a reference, they cannot divulge anything about the person’s fraudulent activities. However, if the person is pursued criminally, the previous employer is allowed to do so. 

“Fraud can have serious consequences for any company, both financial and in terms of the corporate culture,” concludes Nicholson. “Making it hard to commit it in the first place makes good business sense in every way.”
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

Payslips are among the most important documents people receive, yet few pay enough attention to them, says Nicolette Nicholson, director at the South African Payroll Association (SAPA).
 
“Too many people just see their payslip as confirmation that their salary has been paid and they can relax,” she says. “In fact, it’s an extremely important document and it’s worth checking it carefully to make sure it is accurate. Mistakes could cost you dearly in the long run and you are responsible for making sure the payslip is accurate.
 
“Everybody should file all the payslips they ever receive and keep them forever!”
 
Nicholson continues that a payslip is first and foremost the irrefutable record of a person’s work service for any employer. It provides factual proof of the jobs he/she have held and what they were paid. It’s also the receipt for work performed and should be carefully compared with the letter of appointment, contract or other official documents to ensure that a person’s work is being properly rewarded. Also confirm that the correct employer name and address appears on the payslip.
 
Payslips typically have four main types of information: the fixed salary or contract of employment; the variable income for things like overtime; the deductions area, which would include statutory and personal deductions; and the statistical area, which includes annual and sick leave, job description and so on. Job descriptions are often omitted to avoid potential conflict between employees, Nicholson notes, but this is not good practice.
 
Deductions
A particular point to notice is that personal deductions cannot exceed 25% of a person’s gross pay, and businesses have the responsibility of protecting their workers’ interests here. This means, for instance, that a company’s payroll department has the obligation to act on statutory deductions and in the case of an emolument order to contact the attorney if the garnishee exceeds this ceiling and guide the employee to make arrangements to lower the repayment value on the court order. However, the onus still falls on employees to check these deductions carefully.
 
Staying with deductions, Nicholson says that it is also critical to check that contributions to pension or provident funds, among others, have been properly made. If the incorrect deductions have been made, it will affect retirement income and pay-outs, as well as death benefits.
 
Another important figure to check is tax and unemployment insurance deductions. The employee should also ensure that these deductions have actually been paid over to the taxman and Department of Labour respectively on the IRP5 certificate issued at the end of the tax year.
 
“These authorities will hold the employee liable alongside the employer if the right taxes are not paid,” she adds.
 
Structuring
Payslips will also reflect how an individual’s pay is structured and it’s prudent to make sure that this structuring is legal and harmonises with the job description. For example, travel benefits that are simply there to help reduce the tax liability are not advisable. Tax evasion, or actions aimed at not paying tax, is a very serious offence and carries jail time; while tax avoidance that refer to using legal ways to reduce tax, is less serious, but can attract a fine of up to 200%.
 
Nicholson puts forward that it is good practice to ask for a dummy payslip before accepting a job. This will enable a person to determine whether the deductions are fair and that take-home pay is at the expected level.
 
“If there’s something on your payslip you don’t understand or don’t agree with, take it up with your immediate boss, who will escalate to the payroll department,” Nicholson concludes. “If you don’t get satisfactory answers, your union representative should be able to help.”

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