The payroll environment is not for the faint-hearted. It is demanding, exacting and driven by deadlines. It is a career where mistakes can be expensive and missing a deadline potentially catastrophic. For those who work in this industry it is essential that they possess a strong work ethic, a commitment to quality and the ability to deliver measurable and reliable outcomes.
Keeping pace with the monthly deadline and the daily checks can be challenging, but those who have the determination can provide organisations with essential and relevant insight and value. “The critical factor is to have the right knowledge and skills as these will ensure success in the payroll environment,” says Lavine Haripersad, Payroll Manager, South African Payroll Association (SAPA). “There are several training milestones that have to be achieved in order to build the knowledge required to become a comprehensive and reliable payroll professional.” Payroll professionals should be up to date with the latest payroll legislative requirements, understand best practice and governance, and be aware of industry trends impacting on the payroll environment. This understanding will allow them to make informed decisions about their role, the work they do and driving business growth. It is a challenging environment, but it is also a rewarding one, especially if the practitioner is committed to education and training. Connecting the dots “Conferences and events are incredibly valuable for professionals who want to expand their knowledge base and their career opportunities,” says Haripersad. “In addition to attending sessions that offer insight and education, there is the chance to network with other practitioners in the industry. Most events offer attendees a forum where they can connect directly with thought leaders, partners and leads.” The weight of knowledge that is traditionally borne by the payroll professional has not previously been recognised as much as it is today. As compliance and legislation continue to impact on mandate and deliverable, the role has become increasingly important. It is vital that practitioners understand how their skills influence organisations and people, and how to capitalise on this to improve performance and engagement. “It is essential that every practitioner map their road to success and have a clear understanding of issues around legislation impacting payroll, labour laws affecting payroll, governance, employee benefits, payroll education and technology,” adds Haripersad. Conference In September, the South African Payroll Association will be hosting the SAPA Annual Conference. It is set to run from 6th -7th September in Johannesburg with two half-day regional conferences scheduled to run on 12th September in Cape Town and 14th September in Durban. The theme of the conference is ‘Portraits of Success’ and it has a clear mandate to focus on how the payroll practitioner can drive personal and professional success through knowledge and understanding. “It is our objective as an organisation to promote excellence in the payroll profession and ultimately create our own ‘Portraits of Success’,” concludes Haripersad. “It is an opportunity for payroll practitioners to learn from the smartest minds in our industry while connecting with their peers and building their careers.” ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, 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
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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:
To register visit http://www.sapayroll.co.za/Events/Conference.aspx ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, 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 personal tax season again and millions of South Africans are busy filling out their tax returns. To avoid any delays in this widescale process, payroll departments across the nation must work quickly and in strict compliance with the law. Failure to do so could result in heavy penalties for their organisations. Arlene Leggat, a director at the South African Payroll Association (SAPA), says that, to satisfy all statutory obligations, not just tax regulations, payroll practitioners need to be suitably qualified. “Payroll plays a leading role in any organisation’s governance and compliance efforts. To reduce risk, employers must ensure their administrators are competent.” But how can they guarantee that this is the case? Practitioners and good governance Payroll practitioners should be driven by good governance practices and must stay abreast of current legal requirements. For example, the recent Protection of Personal Information (POPI) Act places an additional burden on businesses to carefully manage and protect any personal information they store or process about their workers. Practitioners must be aware of such developments and understand how to remain compliant with them in the course of their duties. According to Leggat, as compliance requirements increase, more companies are realising the importance of a professional designation. “SAPA is the recognised regulatory body for payroll practitioners in South Africa,” she says. “When companies hire outsiders, there’s no guarantee they’ll get someone who is competent in their field, and the risk of falling short in their legal obligations is growing year by year.” To be awarded one of SAPA’s professional designations, applicants must have the relevant qualifications and experience needed to perform their duties at junior, mid or senior levels. But even after becoming a member, they’re required to continually improve their payroll skills and knowledge. CPDs A core component of ensuring SAPA members understand good governance practices and compliance with legislation is the association’s continuous professional development (CPD) programme. Members must accumulate a set number of CPD points every 2 years to retain their SAPA title. This can be achieved by attending SAPA-approved courses, each carrying a predetermined number of points. Code of ethics In addition, members are bound to a code of ethics and any breach could result in their membership being revoked. This gives employers the assurance that their payroll officer strives to conduct themselves in a manner befitting their legal and moral responsibilities. In addition, organisations have in SAPA a channel through which to voice any grievances. Hiring for compliance Leggat advises companies to avoid the dangers of non-compliance and promote good governance by hiring SAPA approved payroll practitioners. “We sometimes read of incidents of payroll fraud or noncompliance, and this is usually the result of employing unregulated administrators. For members of a professional body, there are too many controls in place, so poor conduct puts their careers at risk. Therefore, our designations alone promise a high level of compliance and governance.” Employers and unregistered practitioners are invited to enquire about the benefits of SAPA membership. SAPA will be hosting its annual conference this year titled Portraits of Success as follows:
To register visit http://www.sapayroll.co.za/Events/Conference.aspx ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, 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: Nicolette Nicholson, director at the South African Payroll Association With a sluggish economy, low growth and our recent downgrade to junk status, South Africans now find themselves in a new national recession. At times like these, enterprises want a healthy workforce but are hard-pressed to fund it. However, employees, facing a higher cost of living, may feel it’s time to ask for a raise. Below is my advice to each party. Demanding or begging for an increase without warning is never a good idea, especially when times are tough. For the best chance of success, try the following strategy: Determine your worth Requesting a raise because you’re adding value is always better than simply asking for more money. If you don’t already have copies, ask HR for your employee history and performance reviews, and list how you’ve contributed to the company. Add anything you can remember and keep your information sources as evidence. Do an online salary survey of your position to determine what market related remuneration seems to be, and to arrive at a reasonable figure or percentage you can ask for. Remember that benchmarking your salary in the market is very important in order to understand whether you in fact are remunerated under your worth. Remember to take into account benefits such as pension / provident fund, medical aid, study assistance, or any other items provided by your company. Imagine the conversation that might take place and think of any possible objections to your request. Then come up with a logical, non-defensive response for each. You’ll be less flustered if you’re prepared, and it will build your confidence. Do not promote your hard work as a reason for a raise, rather highlight ways you engineered to work smarter and how this increases your value as an employee. Schedule a meeting Don’t ambush your manager. Rather schedule a meeting and let them know it’s about your salary to allow them time to prepare. At the meeting, be assertive but not combative as you state your position and provide your assessment. If they disagree, point to your evidence. While negotiating, never threaten to leave if you’re not willing and able to do so, as your bluff might be called. At the appropriate point, state your desired increase and be prepared to justify it. Also indicate if you’d be willing to settle for any perks that will save you money, such as working from home, working flexi-time or being allowed to bring your child to the office. If your manager needs approval for your raise, set a follow-up date with them and check back promptly. Be mindful to make an appointment with a line manager that has the mandate to motivate or reject your application. Don’t get caught up in a musical chair situation and by the time your application is placed on the table for discussion, it is no longer what you initially negotiated. The result If you win your increase, congratulations. However, if it’s denied, that doesn’t mean defeat. Keep adding value, while keeping an eye on the company financials and when profits start improving, ask again. If you feel strongly that you deserve better now, you could use your research to fill out your CV and begin looking further afield. While your employer may no longer have the funds to offer top financial compensation or benefits, other ways exist to reward and motivate employees. When considering alternative compensation, always strive to add value to your situation. Any benefits should be tangible and immediate to provide motivation on a daily basis. From a Business Perspective - Saving money Help employees get more from their earnings. Consider engaging a lifestyle coach or financial advisor to teach staff to achieve similar comforts from a more frugal budget, reduce waste, or focus on healthier, more mindful living. This illustrates your commitment to their wellbeing and motivates them to stay productive, while it shows that the business recognises the financial difficulties that tough economic times bring. Investing in a wellness programme can actually save money. They’ve been proven to reduce absenteeism, increase motivation and productivity, promote a sense of self-worth, reduce workplace stress, and make employees feel valued by the company. If possible, let staff work from home to reduce their travel costs and enjoy a sense of freedom. This can be one day a week, alternating days or any other scheme, but have measures in place to ensure strong communication and task tracking. Consider allowing staff to come to work and leave when they want to, as long as they’re present for an agreed number of hours. They can miss traffic to or from work and have greater control of their time, which is often more appreciated than extra pay. With new millennium technology, many office-based staff can easily schedule specific workdays to work from home. One may find that staff is more disciplined than anticipated and will appreciate this gesture as a benefit. This arrangement gives employees the opportunity to set a schedule that best works for them both personally and professionally. Children might not need to go to afterschool care if one parent can work from home. Productivity and quality of work is a given if this is agreed and managed properly. An employer can also save on workspace and equipment. SAPA will be hosting its annual conference this year titled Portraits of Success as follows:
To register visit http://www.sapayroll.co.za/Events/Conference.aspx Photo caption: Nicolette Nicholson, Director at the South African Payroll Association ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, 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 SARS must revise Employment Tax Incentive to reduce administration factor and boost jobs for youth22/6/2017 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, idele@thatpoint.co.za, 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: Arlene Leggat, Director at the South African Payroll Association (SAPA) The Minister of Labour announced an amendment to the “scale of benefits” described in the Unemployment Insurance Act, 2001 (Act No. 63 of 2001) on March 17th this year, to be implemented from April 1st. The statement has caused much confusion across the payroll function, affecting employers, payroll departments, payroll consultants and payroll software vendors. The question on everyone’s lips is: if the benefits have changed, should the contributions payable by employees increase in step with the new targets? In this article, I’ll deal with the problem, its cause and the solution. The problem Firstly, the wording is misleading. The announcement uses the term: “scale of benefits”. However, the figures mentioned are actually the limits of benefits to which UIF applicants are entitled, i.e. they can’t claim amounts above this ceiling. The scale of benefits refers to brackets of income previously earned by a beneficiary and the corresponding percentage of that income they may claim at each level. These brackets might not even be affected, and the articulation of the change could have been clearer. Secondly, UIF benefits are perceived to be closely associated with UIF contributions. So, payroll practitioners assume that changes to the first will have a direct impact on the latter. To compound the confusion, changes to both have historically been implemented together on 1st April, and the updating of payroll systems is a given. Therefore, many practitioners were led to believe that contributions must be included when, in fact, payroll is not affected at all. Contributions fall within the ambit of the National Treasury and are governed by the Unemployment Insurance Contributions Act of 2002. Benefits, however, are distributed by the Department of Labour and are regulated by the Unemployment Insurance Act of 2001. While each law sets brackets against which contributions must be deducted or benefits paid, these tables need not correlate. This can be seen in a 2015 draft bill raised by then Finance Minister, Nhlanhla Nene, which proposed a reduction in UIF contributions. Government Notice 187 of March 2015 assures the reader that “The proposed contributions reduction would not reduce the unemployment insurance benefits payable to beneficiaries.” Although the bill never passed, the notice highlights that contributions ceilings need not match benefits ceilings. Thirdly, since each function is managed by a different Minister, an amendment by one Minister does not constitute an amendment by the other. By law, each Minister must announce any changes separately by way of government gazette. Still, amendments by the Minister of Finance regarding UIF contributions must be made in consultation with the Minister of Labour and the UIF Commissioner, and vice versa. This suggests a high level of collaboration and correspondence between the two offices. Surely, at such close quarters, consideration should be given to communicating the status of each law in regards to the other. In other words, the confusion should have been anticipated and addressed as part of the legislative roll-out. The source of confusion It’s the payroll practitioner’s duty to understand the laws governing their function. However, by the number of queries received by SAPA from parties across the industry, it’s obvious that the change was not communicated effectively enough to clarify its scope and implications. SAPA representatives contacted the UIF in an attempt to offer our members an official response. Surprisingly, the UIF representatives with whom we corresponded assured us that the amendment was applicable to both contributions and benefits. But when pressed to provide a gazetted announcement by the Minister of Finance, they were unable to do so. Currently, the matter is under investigation with the UIF and we’ve received no further information. It seems obvious that the source of confusion is a lack of coordination between the relevant lawmakers and their departments, and poor communication to the public in general. What should you do? First, don’t jump to any conclusions. Last year it was reported that the UIF had amassed a R99-billion surplus. Therefore, they might be in no hurry to increase contributions until they have to. SARS seems to confirm our thinking, with the existing limits still displayed on their UIF web page at the time of writing. Next, obey the law. Until the Minister of Finance gazettes any changes to the UIF contribution structure in accordance with the Act, it should be business as usual. Do not update your payroll software’s tables or deduct higher contributions from employees because, without official notification, this could prove illegal. SAPA will continue to pursue this matter and keep its members abreast of developments. Photo caption: Arlene Leggat, Director at SAPA ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za For more information on SAPA please visit: Website: http://www.sapayroll.co.za/ Twitter: @SAPayroll LinkedIn: The South African Payroll Association The recent downgrade of South African government debt increases economic uncertainty, with unpredictable effects. “While many of the outcomes of the downgrade have been surprising, one thing is clear: government debt is going to be more expensive. That will almost certainly mean that both local interest rates and taxes will continue to rise,” says Cathie Webb, Director, South African Payroll Association.
“Payroll departments need to be taking proactive action to help employees negotiate these difficult economic conditions, which our current political turmoil is exacerbating.” The Reserve Bank has indicated that further downgrades remain a possibility, further affecting the cost at which the government can finance its escalating debt. How to help Webb argues that Payroll needs to understand the pressures that employees face during tough economic times, and where they are spending their take-home pay. While this may seem beyond the department’s remit, in fact financial insecurity has a direct impact on employee motivation and engagement, and thus on productivity. The likely rise in interest rates will have an immediate impact on disposable income, she says. Employees who already have debt need to be educated about how to manage it in the event of an interest-rate hike—and those who are not in debt should be encouraged to remain debt-free. Other financial pressures would include increased taxes, be it VAT or personal tax, or both, as well as higher petrol prices. Fuel costs increase food inflation, creating sustained pressure on household budgets. The economic pressures caused by the downgrade will also impact the ability of employees to save. The country already lacks a savings culture, with the savings rate having declined from around 24 percent between 1960 and 1990, to 16.5 percent between 1991 and 2014. This deprives the local economy of investment capital for growth and development. At a personal level, a lack of savings means that a majority of South Africans will not retire on sufficient capital. “The only real solution is proper budgeting—and then sticking to it. Too few South Africans actually do the exercise of understanding how they spend their money, and how they should be spending it,” Ms Webb says. “But if your personal finances are in disarray, there is a knock-on effect across everything, including performance at work. Payroll simply has to see its role more broadly in the quest to attract and retain the best talent for the company. That will include helping them to manage money better in tough times.” ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, 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 of the South African Payroll Association (SAPA)
Wage overpayments can have a significant impact on the corporate bottom line, employee and business taxation, and also employee relations. It is a complex issue which requires that payroll management and HR work together to ensure that systems and controls are put in place to prevent this type of error from happening. There are numerous reasons why overpayments occur. These include errors in administration and capturing, late terminations, non-adherence to policies and procedures, ineffective time recording administration and duplicate records. Each of these issues can be addressed through systems process, individual accountability, operating in a highly-controlled environment and regular payroll audits. Addressing the challenges Robust internal controls within the payroll department must be implemented and documented to mitigate employee record duplications and payroll errors from occurring. These should include regular payroll audits, run monthly, which pick up any new or residual issues throughout the year. Not only will this dramatically reduce or remove duplication issues, but it will also put payroll ahead of the tax year end process. Time recording is potentially one of the most challenging of the issues impacting on wage overpayments, especially if the organisation has numerous employees paid by the hour. Without accurate time recording, overpayment and subsequent recovery of funds become a problem. Often, the individuals responsible for reviewing the time records are not doing it timeously, which results in incorrect data capture and payments. This can also be addressed through more stringent system controls and exacting processes and procedures, and by reviewing time records regularly. This ties into overtime overpayments – if people are working overtime without authorisation, or if their hours are not monitored correctly, it can cost the business a pretty penny. Often, when these errors are found, it is too late to recover the funds. To address both of these concerns the organisation should implement clearly defined rules and a system that prevents manual intervention. It is also important to ensure that there is a segregation between the person administering the time and attendance records, and the person who is authorising them. In other words, these tasks should not be undertaken by the same person. Of course, as with any rule-based system, there must be exceptions. The business needs effective tools which allow for exceptions to be addressed in the system to prevent incorrect payments and tax issues at year end, while operations which conform to the rules can be automated. Reports all the way as Preventative Control It is by running monthly tax validation reports that the business can find and address issues in the system, as well as preventing year end issues around tax and income corrections. Best practice calls for reports to be run monthly to avoid tax year end corrections. . It is also important to have a set of payroll reports which examine elements such as variances on net pay. This will ensure that when there is excessive net pay, it is instantly picked up, investigated and corrected. Termination policies are also vital in mitigating overpayments. If a late termination comes through, an employee can receive a full salary for a month they didn’t work and there are complexities in recovering that amount. Not only is the money almost impossible to recover, but medical aid and other similar schemes will be affected as they need a month’s notice to withdraw. This particular challenge indicates a disconnect between HR and payroll, or between line management and payroll. It is critical that line managers understand the impact on the business of late notification of terminations. Departments need to work closely together to ensure payroll is notified as soon as an employee is terminated. It will prevent them from being overpaid in periods they have not worked and ensure the final payment is accurate.. Communication is key Communication is essential in reducing many of the challenges around wage overpayments. A lean internal communication process between departments, HR and payroll can minimise these significantly. In addition, payroll must ensure that there are processes, procedures and controls in place, do regular checks and correct errors on time. Avoidance is always better than correction as the latter can become a logistical nightmare. While it is common for staff to bring underpayments to management / payroll attention, it is rare for them to notify these departments when they are overpaid! With these boxes ticked and reports run, both payroll and business will be ready when the times comes to roll over into the next pay period, and tax period. Nothing is missing, everything is correct, and payroll is in the perfect place for the tax year end process. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, 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: Arlene Leggat, a director at the South African Payroll Association (SAPA) South Africa has a higher than average rate of overtime fraud owing to limited prevention and detection systems, and a workforce which has become dependent on the financial advantage it offers them. Every year another story revealing extensive overtime fraud hits the media, exposing how easy it is for employees to defraud companies. In February 2017, 283 employees were implicated in the Merafong municipality for committing fraud estimated to be valued at millions of Rands. Overtime fraud is a lot more prevalent than we want to believe. The challenge is that most companies tend to not take the case further than a rap over the knuckles - dismissing the person and making them another company’s problem. The right thing to do is charge them and ensure they get a criminal record. Alongside a clearly defined policy around overtime fraud, or theft of any kind, the threat of criminal action will go a long way towards making anyone think twice before they lie about the hours they’ve worked. It isn’t, however, the only step that must be taken towards effective prevention. Measures of prevention Employees need to realise that overtime fraud can be as little as claiming one or two extra hours a month, not just 200. A lot of people don’t see those little hours here and there as fraud. It is. And it should net them a criminal record. Organisations must educate employees on overtime hours, what constitutes fraud, and what will happen should they be caught committing it. Then, they need to invest in systems which can mitigate fraud overall. One such solution would be to implement an automated clocking-in system. It isn’t infallible, but it does allow for improved control over hours spent working versus hours put down on billing. Another option is to implement controls within payroll, making it the last line of defence. The business must put its overtime policy into play from the start and it must ensure that it is strictly adhered to. It also needs to comply with overtime legislation as outlined in the Employment Act. Two sides to the story The Basic Conditions of Employment Act states that employees are not allowed to work more than three to four hours of overtime per day. The number of hours is dependent on the length of the standard work day, and the role of the employee. Collectively, within a seven-day period, you are not allowed to work more than 10 hours of overtime – it is legislated and companies cannot change this at will. Unfortunately, this is largely ignored by most companies in South Africa due to several factors, including a lack of skilled staff. So, if overtime policy isn’t being adhered to and the company isn’t enforcing it, then it opens the door for employees to commit fraud. Consequences count There must be someone monitoring overtime, checking it against systems and legislative parameters and enforcing its adherence rigorously. Not only will this limit the employee’s ability to commit fraud, but it will ensure that an eye is always on the overtime ball. If employees believe that there are no consequences and that they can push boundaries, they do. This then leads to a weakened moral culture within the business, and that can have far reaching effects on morale, productivity and, of course, fraud. To limit the potential for overtime fraud and to ensure that employees are also protected against working more hours than they should, the organisation must actively develop policy to monitor it. Payroll has a pivotal role to play in balancing overtime requested against internal policy and legislation, ensuring that hours are kept within legal limits from the outset. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, 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: Cathie Webb, Director, South African Payroll Association We encourage all employers, employees and payroll departments to prepare themselves for an income tax increase that will likely be announced during Finance Minister Pravin Gordhan's upcoming National Budget Speech. Too much tax South Africans already contribute multiple taxes. Therefore, the government is faced with a difficult decision - how to bring in much-needed revenues to run the country effectively without overburdening the man or woman in the street. In tax theory, there’s a level at which taxation can become so high that the average person stops aspiring to a better lifestyle and becomes less economically active. At this point, working any harder seems fruitless. In light of this, the government strives to meet its budgetary requirements without crossing that threshold. However, if people are still left with less disposable income, this can lead to a lower aggregate demand for goods, which puts deflationary pressure on the economy. The result is loss of business profits, lower output and therefore fewer jobs. Limited options However, government’s options are limited. In his 2016 budget speech, Minister Gordhan clearly indicated that R28 billion would have to be raised over the next two years, consisting of R13 billion in 2017 and R15 billion in 2018. There are only three main paths to acquiring the funds, namely by increasing value-added tax (VAT), company tax and/or personal income tax. Because a VAT increase would place a uniform burden on all members of the population, the greatest impact would be felt by the poor. Therefore, it’s less desirable to increase VAT, as opposed to company or personal tax. Despite this, it should be noted that South Africans enjoy the lowest VAT rate in the world, so an increase would not be unwarranted and some even expect it. However, taking into account all taxes levied on South Africans, it’s quite possible the country has one of the highest taxations globally with fewer benefits than nations paying more VAT. It would appear then that an increase in personal and company tax is highly likely, with a lower probability of an increase in VAT. Commentators point to several other taxes the government may levy, including proposed increases on consumption goods, such as alcohol, tobacco, soft drinks, fuel, as well as the much publicised sugar tax. However, these will not be enough to cover the deficit. Bracket creep Certain income ranges may also be exposed to bracket creep. This happens when workers receive their annual pay increase to offset inflation. They haven’t gained extra purchasing power but, from a tax perspective, they appear to be earning more and in some cases, may enter a higher tax bracket. The effect could be that the higher taxation reduces their take-home pay below previous earnings. Historically, tax brackets have been adjusted to match inflation-based pay increases. In the years ending February 2016 and February 2017, the top 2 tax tiers remained essentially unchanged. But the marginal rate in these brackets increased from 40% to 41%. This year, government might leave selected tax brackets as is, or raise them at a lower rate than inflation-adjusted increases. If this happens, it will have an added effect to higher income tax and employees should be prepared to adapt their lifestyles accordingly. Payroll preparation If an income tax increase proves true, payroll departments should move as swiftly as possible to update their tax tables, and to ensure that the staff in the organisation are aware of the changes, and how it will impact them. It’s not unusual for larger organisations to take longer because of their complexity and size. But delaying implementation until April or May could mean that employees will pay more tax due to accumulated PAYE from March. Seeing a lower take-home figure on one’s payslip is never appreciated. Looking to the future Although South Africans have no reason to celebrate, it’s important to realise that our current economy is more the result of the global financial crisis than our own doing. We’re a great nation with the highest gross per capita income (GDP) in Africa and we have a lot going for us. We can regain our momentum by rolling up our sleeves, pulling together and working hard together to improve our nation. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, 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 |
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