Payroll News

Leave and Bonus Processing with Batch Transactions

It’s that time of the year where annual leave and bonuses need to be processed. Use Batch Transactions to make life simpler. The Batch Transaction Manager allows you to to put the entire company on leave by only using one screen. Over shutdown periods, putting your entire workforce on leave has never been this quick and easy. This feature allows you to make global updates to any transaction within the Payroll system to all, or a selection of employees. These transactions can include leave, bonuses, travel allowances, commission, to name a few.

No more tedious scrolling between payslips!

OR

Processing and capturing leave information has always been a strenuous task. Fortunately it’s made easy by Sage Pastel Payroll & HR. Attend our leave workshop for a complete and detailed understanding of leave legislation, calculations and processing.

• Leave legislation.
• Leave in employment contracts.
• Wage and remuneration.
• Calculating leave pay.
• Setup and processing of leave in Sage Pastel Payroll & HR.
• Adjustment of leave in Sage Pastel Payroll & HR.
• Processing and calculation of leave pay for hourly paid employees.

Automated Payroll Software makes leave pay a breeze

With the end of the year in sight, companies need to do the complex calculations necessary to determine their employees’ correct leave pay.

Getting it right means following the dictates of the Basic Conditions of Employment Act (BCEA), which outline the rights of employees around annual leave and severance or notice pay.

Doing the sums manually or on spreadsheets is a time-consuming exercise, and getting them wrong could mean breaching the BCEA. Under terms of the BCEA, employers must ensure that leave pay is fully representative of employees’ actual earnings, he adds.

As such, the calculations must take into account variable income types and be based on the average earnings of each employee over the 13 weeks preceding the date upon which leave becomes effective. There are many factors that affect the calculations, including overtime, commissions, allowances and other payments. For example, in the construction industry, workers may have worked overtime to ensure contracts are completed before the December shut-down, affecting leave pay calculations.

These complexities mean that each employee’s income has to be calculated individually. Automated payroll and HR software streamlines this onerous task by retaining electronic records of the variable income paid to each employee. Doing accurate sums to calculate an employee’s average income over the 13 weeks preceding leave is a matter of a few clicks and key strokes.

And today, with the advent of cloud computing, it is quick and easy for an organisation of any size to roll out a modern payroll and HR solution that meets its needs. Cloud apps are convenient, powerful and flexible enough to support your needs, irrespective of the size of business or industry you are in. With no annual license fees or upfront costs, they make HR and payroll solutions affordable even to the smallest businesses.

Developers of automated payroll and HR software monitor amendments to the BCEA and provide updated versions whenever new legal requirements arise.

“Automated payroll and HR software always operates in full compliance with the Act, ensuring that the BCEA leave payments are not subject to finger trouble, interpretation or even fraud”

In addition, software solutions offer functionality that enables the user to give the entire company an increase, based on either a set value or a specific percentage. This not only saves time, it allows global changes to be made to any transaction within the payroll or HR system for all, or a selection of employees.

This time of year is also synonymous with annual bonuses as many employees expect to receive something extra in their bank accounts in time for the holiday season. Bonuses, whether annual or performance based, are almost always discretionary unless an employer stated clearly in the letter of employment that a 13th cheque is guaranteed in December. A bonus should be seen as a reward for good performance and high productivity therefore it is important to conduct regular performance reviews to ensure that when the bonus value is determined and communicated to the employee, the decision can justly be based on the results the employee produced during the year.

Payroll software solutions with an HR component will help to record and maintain performance appraisal records. It helps to have the ability to process bonus payments on a separate payslip to indicate exactly how much tax is taken before the net amount is paid.

Next year will see a shift towards greater levels of connectivity and mobility in the payroll and HR environment, enabled by cloud computing. For example, more and more companies are using these solutions for employee self-service. Good payroll solutions today have mobile apps that allow your employees to access payslips and leave balances from a secure online environment, and to even apply for leave.

Connected Services lightens the workload of HR and payroll managers

14 May 2014

If you are an HR manager or payroll administrator at an SME, you can now ease your ever-increasing workload with Connected Services from Sage Pastel Payroll & HR.

Work more smartly and efficiently

Connected Services gives you a web-based self-service tool that enables your employees to manage and maintain their own information online, relieving you of some of your HR
administrative burden. Your employees can apply online for leave, loans, bursaries and travel claims, view their payslips and update personal information – wherever they are.
All they need is an internet connection.

As soon as an employee applies for leave online and it is approved by management, your payroll & HR systems are updated automatically. The software also allows you to schedule leave,
a particularly useful feature during December holidays when you need “skeleton staff” and where system warnings help you to manage minimum staff levels.

Your data is safe and secure

The self-service tool enforces stringent, internationally-accepted standards of access control to authenticate your employees, letting the right people in and the wrong people out.

Hosting gives you fast access at low cost

For a Connected Services application such as Self Service, you should consider a hosted solution. This guarantees you quick deployment at low implementation cost, so you don’t have to invest in additional infrastructure to host the online application. All you need is an internet connection and a computer.

Connected Services helps to bridge the gap between online software solutions and traditional desktop applications and provides you with a seamless upgrade path to a completely
cloud-based model should you require it in the future.

Connected Services give you more time to focus on growing your business

Frictionless or automated updates of payroll legislation are also part of Connected Services. They enable traditional desktop applications to update seamlessly over the internet
with minimal intervention from you.

So you no longer need to visit a website to download and install updates or CD versions manually. The Connected Services functionality does it all for you, directly from your payroll software, giving you more time to concentrate on the important issues such as achieving your business goals.

RSS Feeds keep you up to speed

With Connected Services you receive RSS feeds to your desktop, giving you the latest legislative and tax changes and new system-software releases. So you’re always on track
and up to date.

Mobile app gives access anywhere, any time

Connected Services enables your payroll administrator to set up each of your employees with a mobile profile to which payslip and leave details can be published.
Your employees simply download the mobile application from a mobi-site, log in and view their information.

Free tax calculator puts even more power in your employees’ hands

The mobile app includes a free salary tax calculator. The app itself is not exclusive to Sage Pastel Payroll & HR, but if your company uses this software solution, your employees enjoy both the calculator and mobile access to their salary and leave details.

2014 SARS Employer Filing season now open

As a South African employer, you are required to reconcile and submit PAYE, UIF and SDL contributions for the period 01 March 2013 to 28 February 2014.
You need to submit accurate and complete employee tax certificates and a reconciliation of contributions for the year.

To ensure you meet all the requirements, follow these guidelines:

Download the latest version of e@syFile™ Employer system
To Download the latest easyfile please click on the following link and your download will start

easyfile

It’s critical that companies download and install this software before conducting their PAYE, SDL and UIF reconciliations to ensure accuracy and
compliance with SARS requirements.
Should you use a previous version of the e@syFile™ Employer system, your submission will not be accepted by SARS.

Claim your Employee Tax IncI)

If your company is claiming ETI, remember to include SIC codes and the value of the ETI you have claimed for the first two months of the ETI year.
Also, you will need to include a new deduction source code and comply with new validations specific to ETI.

If you are using an automated Payroll Solution, it will generate tax certificates with the new ETI source code already consolidated and included in the CSV export for e@syFile™.

During the year-end procedures, the electronic tax certificates are generated automatically in the IRP5.14 file format if you make use of automated payroll solutions.
This file can be imported directly into the e@syFile™ Employer system and the payroll EMP501 Reconciliation Report to complete the PAYE, SDL and UIF reconciliations.

Companies are advised to submit sooner than later, to provide them with ample time to rectify any reconciliation problems.

Submit your reconciliations before 31 May 2014

New Tax Rates & Legislation

The Rates of Tax in respect of the 2013/2014 Tax Year are set out in the new tax tables, shown below.

Rates of Tax:

0 – 165,600                              18% of taxable income
165,601 – 258,750                   R29,808 + 25% of taxable income above R165,600
258,751 – 358,110                   R53,096 + 30% of taxable income above R258,750
358,111 – 500,940                   R82,904 + 35% of taxable income above R358,110
500,941 – 638,600                   R132,894 + 38% of taxable income above R500,940
638,601 and above                  R185,205 + 40% of taxable income above R638,600

Rebates:
Tax Thresholds:

Below age 65:         Age 65 and below 75:         Age 75 and over:
R12,080                    R6,750                              R2,250
R67,111                    R104,611                          R117,111


Monthly Medical Aid Tax Credits:

Principal Member R242
First Dependent R242
Each Additional Dependent R162

Medical Tax Credits:

Effective from 1 March 2012 the capping system was replaced with a medical aid tax credit, bringing in equality for all taxpayers under the age of 65 and improved benefits for lower earners, a move in line with international best practice. The medical aid capping system is also used in the 2013/14 tax year, commencing 01 March 2013. The medical aid tax credit is R242 a month for the first two beneficiaries (including the principal member) and R162 for each additional dependent thereafter.

4 steps to meet the SARS Submissions deadline

South African employers have until 29 May 2015 to file their annual PAYE reconciliation returns for the 2015 tax year (1 March 2014 to 28 February 2015). Since that deadline is just around the corner, if you haven’t yet made your SARS submissions, here is a checklist that should quickly and efficiently guide you through the process so that you don’t end up missing the deadline, receiving a warning, or paying late penalties.

1. Ensure all employees have tax registration numbers

Even though it’s your employees’ responsibility to register for PAYE tax, their registration numbers have to be reflected on their tax certificates and should also reconcile with the PAYE tax that you, as the employer, are paying to SARS on their behalf. If staff members’ tax registration numbers don’t appear on their tax certificates, you may be the one who ends up paying penalties. Some employers insist that they cannot issue tax certificates without employees’ tax numbers, and the SARS e@syFile Employer system also generates a warning when tax registration numbers are missing. Whatever you do, ensure that all your employees are registered for tax with SARS in order to be compliant.

2. Download SARS e@syFile employer software

In order to submit employer tax, you will need the latest version of SARS e@syFile Employer, which can be downloaded from the SARS eFiling website. If you have an outdated version of e@syFile Employer, SARS will not accept your submission. Please remember that when downloading and installing the latest version, it’s possible that you may lose your current data, so back-up your data before installing the new version.

3. Use payroll automation software to simplify your submission

With so little time left to submit employer tax, it won’t make any sense to do manual payroll processing. It’s not necessary to immediately implement a complete payroll solution that costs an arm and a leg and requires intense training, when you have access to a basic payroll solution on a monthly subscription (such as our Flex subscription options), which provides an easy-to-use system that is compliant with SARS’s requirements.

4. Make the following submissions:

EMP201 declarations: It’s compulsory for all employers to reconcile and submit their PAYE, SDL and UIF contributions for the period 1 March 2014 to 28 February 2015. These PAYE, SDL and UIF reconciliations need to match the monthly payments made to SARS.
EMP501 returns: Similarly, employers’ EMP501 returns submissions need to reconcile to the copies of employees’ tax certificates sent to SARS.
This is where the benefit of an automated payroll solution really pays off. Your payroll system will do all of your PAYE, SDL and UIF calculations, which means no more hassle and time spent on manual reconciliations. Your payroll solution will also be able to generate a tax certificate export file, which is easily uploaded to SARS’s e@syFile Employer system and you can rest assured that your employer tax submission will be accurate and compliant.

If there is any demographic information missing from the tax certificates you want to submit, your payroll solution system will indicate these omissions, which you can eliminate before submitting. Complete submissions mean that you won’t face any rejections from SARS, which can result in administrative warnings and penalties.

5 time-saving tools for SMEs

Entrepreneurs and small to medium enterprise owners have likely started their businesses because they are passionate about a particular industry and want to provide that sector with profitable innovation and jobs. The downside to entrepreneurship is the mountain of administrative tasks that can put a dampener on any business owner’s entrepreneurial spirit. Fortunately, there are useful business practices as well as technological solutions for saving time and being more efficient.

If you’re the owner/manager of a small to medium business, frustrated by how much time you seem to be frittering away with admin, then you’ll appreciate these five time-and money-saving tools. They won’t take long to implement and once you’ve incorporated them into your daily workflow, you’ll have more time to focus on the things that are important to your business, such as client relationship management, product development, customer service, and procurement:

1. Social networking

Managed properly, social networking websites have the potential to grow your professional network and establish a reputation that people in your network will automatically associate with your personal name and company name. Customised for professional users, LinkedIn is a great business tool to grow your work network, attract the right partners and employee candidates, and to get your business name out there.

Using LinkedIn: Compile a profile for your personal identity as well as one for your business. People who are interested in doing business with you or working for you will be able to find you through industry, location, and any keywords associated with what you do. To increase your power to attract quality connections for your network and to engage in healthy debate, you can also create original, inspiring content to post on LinkedIn. Repost this content on your business page to increase its reach and to get your personal and business brands into your network.

Word of warning: Only sign up to those social networking sites that will foster progression for your company and personal reputation. Everything else is a waste of time.

2. Stay hungry for knowledge

It’s easy to sign up for this blog and that speaker’s podcasts, but how often do you actually get the time to go through all of this valuable information that lands in your inbox? Don’t let that stop you from learning and being motivated by your favourite authors. Be time-efficient by signing up to a site like Audible, where you can download the best business audiobooks and listen to them in the car while driving. Also, instead of listening to every podcast as you receive it, rather download them and listen to them while you’re stuck in traffic or in queues or waiting for meetings.

3. Get from A to B more efficiently

There’s nothing quite like the sinking feeling of regret when you’re in a hurry to get somewhere and drive into the slow back-end of a traffic jam or the rubbernecking that happens within the three kilometer radius of an accident. This is where community-based traffic apps like Waze come in really handy. Road users in and around your area provide real-time information about where the traffic jams and road problems are; information you can use to get to your destination quicker.

4. Share large files between users and devices

There’s only so much you can share via email, the rest will need to be distributed via file-sharing software like Dropbox (there are many, but Dropbox is one of the most common file sharing locations/programmes). Instead of trying to email 15 MB worth of images or design documents, rather upload them to Dropbox and share the file link with the person you want to send the data to. When these files are uploaded to Dropbox, you will also be able to access them on your other devices (on which Dropbox is installed), which makes it easier to work with across a range of devices like your smartphone, laptop, or tablet.

5. Automate your payroll solution

We’re too far into the 21st century for entrepreneurs and small business owners to still be processing their payroll manually. Payroll automation is one of the best investments you can make early on in the life of your business, as it will enable you to work more efficiently when generating payslips, calculating leave periods, submitting tax returns and declarations, as well as any other HR functions related to payroll. Forget trying to keep track of payroll spreadsheets and other localised systems. Automated payroll processing will mean your HR and payroll employees spend less time and money on repetitive admin tasks, and spend more time on solving people problems.

5 Ways to Detect and Prevent Payroll Fraud

Payroll fraud is the unfortunate result of entrusting financial responsibilities to untrustworthy people. It includes such practices as:

a payroll manager manipulating the system to pay him/herself through the profile of a ghost employee or a contractor
the adjustment of expense claims, leave days, and overtime hours on behalf of employees in exchange for bribes
employees selling payslips to fraudsters for the purpose of identity theft

Since payroll fraud can take a long time to detect, it can become a very expensive oversight, especially for small to medium enterprises. SMEs are also the most likely to suffer from payroll fraud, which will ultimately negatively affect the longevity of the business. This is why it’s important to take proactive steps to identify payroll fraud and prevent it before it impacts your business’s ability to function profitably, or at all.

The most efficient way to mitigate payroll fraud is with an impenetrable series of internal controls, which need to be constantly monitored and consistently applied. Here are some methods to implement to reduce the likelihood of payroll fraud happening in your business:

Automate payroll processing

By implementing a payroll solution, you will have an automated paper trail of payroll processing. You’ll be able to review financial transactions and approvals and have more control compared to a manually processed payroll. Payroll systems also have functionality that could double up as checks and controls, such as automated ID number and bank account validations for payments; employee credit checks, and secure EFT salary payments. These controls will specifically prevent the incidence of ghost employee profiles being created and used for fraud.

Separate payroll duties

Short of being suspicious of every payroll employee, rather reduce the likelihood of fraud happening by giving different payroll employees different duties. For instance, the people who perform calculations should be different to the people who process payments. Even if your SME finance team consists of two people, segregate their roles and even then, monitor their performance and insist on a final sign-off before releasing payments. Access to payroll systems should be limited, to ensure that any errors can be easily detected and traced back to the employee who was working on the system at the time of the error.

Monitor financial processes

Business managers need to implement a monthly review process that gives them access to complete payroll reporting, to ensure there are no discrepancies between gross pay, net pay, and the per-income line for all employees. The auditing manager should ideally be from a different department to ensure complete autonomy and no conflict of interests.

Screen payroll and finance employees

Since payroll employees will be working with the financial lifeblood of your business, they should be screened even more meticulously than your other employees. It will be a worthwhile investment to pay for detailed background checks through a business that specialises in candidate screening, as their report will indicate any red flags you should be aware of. Go the extra mile to thoroughly interview your payroll candidates’ former employers, as well as to check their credit history. A poor credit rating will, firstly, suggest that the candidate may not be the most ideal person to entrust with business finances. And secondly, a candidate with badly managed personal finances may be motivated to skim from your business through payroll fraud.

Monitor employees for suspicious behaviour

An employee that insists on working all the time, who doesn’t take leave, and who arrives before everyone else and leaves after everyone else, may have something to hide. Once you have ruled out other motives, their over-commitment to the job may be that they are covering their tracks, something that would be exposed if they took leave and a payroll substitute stood in while they were away. An employee who also insists on working from home may be susceptible to committing fraud, which is easier if they are working in private.

If you are alerted to payroll fraud being committed in your business, pursue legal counsel and ensure that, if caught, the guilty employee/s is prosecuted and acquires a criminal record so that they are prevented from simply moving onto their next victim.

Budget 2015 - 10 things you need to know

By Madelein van der Watt, Development Manager at Sage Pastel Payroll & HR.

This article covers ten things you should know concerning the 2015 budget as per the budget speech by Minister Nene on 25 February 2015

1. Personal Income Tax Rate Increase

For the first time since 1995, some South African taxpayers will have to pay more tax than the previous year. Effective 01 March 2015, the marginal income tax rates have increased with 1% from the second lowest to the highest brackets. The highest rate used to calculate personal income tax is now set at 41% (previously 40%).

2. Proposed UIF contribution limited to R10 per month

A proposal to decrease the earnings threshold for UIF calculations to R1000 per month is awaiting confirmation. If this proposal is implemented, it means that the maximum UIF contribution paid by the employee and the employer each month will decrease from R148.72 each  to R10.00 each.

3. Fuel levy increases totalling 80.5c per liter

The general fuel levy will increase by 30.5c per liter and the Road Accident Fund levy will increase by 50c per liter. This increase becomes effective 01 April 2015. This is in addition to the general price increase taking place on 04 March 2015.

4. Less tax for start-ups and micro business

Turnover tax has been reduced massively by reducing the highest rate of 6% down to 3%. The turnover threshold has also more than doubled from R150 000 to R335 000. Small business with up to R1 million rand turnover per annum will pay less tax this year.

5. Subsistence allowance adjustments

The limit on non-taxable subsistence payments for local business travel will be at least R109.00 per day if the allowance should cover incidental expenses only. If the allowance includes provision for meals as well than the non-taxable limit is R353.00 per day. Payments made with regards to travel abroad will be subject to the daily limits set per country (available on http://www.sars.gov.za).

6. Proposed electricity levy increase

To assist with managing the demand of electricity, a temporary increase of 2c/kWh will be implemented. This will set the electricity levy at 5.5c/kWh until the current electricity shortage has been addressed.

7. Employment Tax Incentive – amended ‘gross up’ calculations

Effective 01 March 2015,  ETI claims for employees not employed for a full month must be subject to a ‘time worked’ test. Anyone who is employed to work part-time or for a period less than a full month can only qualify to be included in an ETI claim calculation after the actual earnings have been ‘grossed up’ to the earnings equivalent of 160 hours per month.

8. Postponement of Retirement Reform

The widely discussed and much anticipated amendments to the taxation of retirement fund contributions and payouts have been postponed to 01 March 2016. The only change that is effective 01 March 2015 is the elimination of the tax deductibility of income protection policy contributions.

9. Transfer duty relief

Properties of up to R750 000 will no longer attract any transfer duties while in previous years properties up to R600 000 were exempt. The new rates will also decrease the duties payable on properties valued up to R2,25 million.

10. Tax free travel reimbursements

The rate per kilometer used to pay out tax free travel reimbursements has been lowered to R3.18 per km (previously R3.30).

Employer Tax 101

As an entrepreneur and business owner in South Africa, you are in the exciting position of generating employment opportunities for other South Africans and contributing towards skills development and even inspiring and supporting future entrepreneurs. From the outset, you’re encouraged to ensure that your accounting and taxes are in order so that you don’t incur any problems or penalties later on, especially during an audit. This article serves as an introduction to employer tax and what you need to know about filing employer returns to stay in SARS’s good books, so to speak.

What is it?

As an employer, you need to submit the relevant PAYE reconciliation declarations to the South African Revenue Services (SARS) and pay the taxes deducted from your employees’ salaries, as well as supply your employees with their IRP5 certificates, which they will also submit to SARS. You are also required to register your employees for income tax, everyone who is formally employed needs to be registered with SARS.

What needs to be submitted?

Employers are required to submit the following declarations/forms:

  • Monthly Employer Declaration (EMP201) – this covers the amounts deducted by the employer from his/her employees’ salaries, which need to be paid to SARS. It includes PAYE (Pay As You Earn), SDL (Skills Development Levy) and UIF (Unemployment Insurance Fund) contributions.
  • Employers Reconciliation Declaration (EMP501) – this form is a reconciliation of all amounts paid on behalf of employees, declared twice a year.
  • Employee Tax Certificates (IRP5/IT3(a)) – these are your employees’ tax certificates they receive from you, which they will in turn submit to SARS.
  • Cancellation of Tax Certificates (EMP601).
  • Adjustment to Annual Reconciliation (EMP701) – where you need to make adjustments to past reconciliation and declarations, this is the relevant form.


When to do it

Employers are required to submit their Monthly Employer Declaration (EMP201) by the 7th of each month. There is an interim submission of the Annual Employer Declaration (EMP501) in the months of September and October, which covers the six month period from 1 March to 31 August. The second EMP501 submission is done during April and May and covers the 12 month financial year from 1 March to 28/29 February. Employee tax certificates are to be issued annually for individual tax return submissions.

SARS announces the relevant submission dates each year after the financial year has ended on 28/29 February, so itís important that you keep up to date with SARS announcements to prevent missing the deadline for PAYE reconciliations. The PAYE reconciliation declaration for the 2014/2015 tax year is due between 1 April and 29 May 2015.

How to do it

Since 25 August 2014, SARS no longer accepts paper based declarations completed manually. The majority of PAYE reconciliations and tax certificates must be completed electronically via the e@syFile software or eFiling website (up to 20 employees). Employers who have 5 or less employees may still visit their local SARS office to manually complete their reconciliations and tax certificates. All employers with more than 20 employees are required to download the e@syFile software from www.sarsefiling.co.za to generate employee tax certificates or import them in CSV format from their payroll software applications. The individual tax certificate data is then collated by the e@syFile system and used for completion of the EMP501 which requires a reconciliation of monthly EMP201 values submitted to monthly payments.

On completion of the reconciliation, the final documents may be uploaded electronically via the eFiling website hosted by SARS. Alternatively, the electronic documents can be stored on disk and handed in at your local SARS branch (along with signed hard copies of the EMP501).

Take note that SARS will NOT accept CSV files generated from payroll software applications – these files must be processed and transformed into PDF format through e@syFile first.

Reminder: SARS reminds all employers:

Always use the latest version of e@syFile. Data submitted to SARS using an old version will not be accepted. Keep your software up to date.
Before installing an upgrade of e@syFile, remember to back-up any information due to the risk of possible data loss during the upgrade process.

Conclusion

Compiling the PAYE data and submitting employersí tax reconciliation declarations is in theory a complicated process, but practically it is made simple through the various tools available. You can easily submit successfully before the deadline by:

  • Investing in a reliable and efficient payroll software system, and
  • taking the time to keep track of new SARS requirements and legislative changes.
Extension for Compensation Fund returns gives SMEs some breathing space

By Madelein van der Watt, Development Manager Sage Pastel Payroll & HR.

The Department of Labour has extended the deadline for Return of Earnings for employers registered with the Compensation Fund to 31 May this year. These returns are usually due by the end of March each year.

Businesses, especially SMEs, who have been struggling to file returns via the online ROE submission portal (https://roe.labour.gov.za/) have been granted some welcome breathing space.

What information is important for the completing of the Return of Earnings?

  • The employer’s contact details
  • The number of people employed for the year of assessment (1 March 2014 to 28 February 2015)
  • The total earnings of each employee (up to the annual limit of R332 479)
  • Estimated headcount for the 2015 year of assessment (1 March 2015 to 29 February 2016)
  • Estimated earnings for each employee for the 2015 year (up to the annual limit of R355 752)
  • The Compensation Fund has not always been as fast and efficient as employers would like it to be. Many SMEs who did not receive their assessments in a timely manner were left without the letter of good standing they need for a range of purposes. Without it, they cannot tender for government business.


In construction, safety officers will not allow a new project to commence unless the company can produce a valid letter of good standing. The aim is to  ensure that employees who are injured on site will be able to claim from the Compensation Fund and that the employer will not have to carry the additional costs of medical bills or wage payments during periods of incapacity.

The Compensation Fund will only issue this letter of good standing if the following criteria have been met:

  • The employer must be registered with the Compensation Fund
  • The Return of Earnings submissions must be up to date
  • All assessments must have been completed to date
  • The employer must have settled all outstanding assessed debts
  • In 2013, the fund offered discounts on assessed returns if payment was made before a specific date.  This was a great idea that was poorly executed. Companies were given very little information about how to apply for the discounts. The department required employers to make payment in full with the promise that the discounts will be passed at a later stage. This has yet to happen.


Despite the extension of the deadline, SMEs would be wise to remember the Compensation Fund’s track record in administration and communication and submit the returns as soon as they can.

The official notice published by the Department of Labour is available at: Click here for the link

Five time-saving tools for SMEs

If you’re an owner or a manager of a small business, you’re probably frustrated by the amount of time you lose to everyday administration and how little time there is to stay up to date with current trends. But with the right smart technology in place, you can save hours every week that you used to spend on routine tasks, make unproductive time useful, and have more time to spend on activities that grow your profits.

These tools are surprisingly affordable – some of them are even free. And they will automatically take a lot of the pain out of your day so that you have more time to spend with your customers or on improving your products and services. Here are a few ideas that can you save time and money.

Get networking

Social networks such as LinkedIn can be a fantastic way to grow your professional network, putting you in touch with prospective customers, business partners, and future employees. Once you invest some time in creating a professional profile for yourself and your business, you can start introducing yourself to people with whom you could do business in the future. And by creating content on LinkedIn, you can also easily keep your professional contacts up to date with the latest happenings in your business and share posts that help to strengthen your relationships with them.

Keep learning

If you don’t have time to read as much as you’d like to, why not catch up with the latest business thought leadership while you are stuck in traffic? Audible is a great tool to use to download the best business books, or simply download informative podcasts by top business strategists and listen to them while you’re driving.

Get there quickly

There’s no bigger waste of time than getting stuck in the traffic and missing an important meeting. Use Waze – the world’s largest community-based traffic and navigation app – to keep up to date with real-time traffic and road info and direct you to your destination, while avoiding traffic snarl-ups.

Share files

With Dropbox for Business, you can easily share your documents on various devices or even with others for collaboration. You can also download Dropbox on your smartphone, so that you can easily access that important presentation or price list while you’re on the road. Best of all, Dropbox for Business is as easy to use as the consumer version, but more secure.

Automated payroll solutions

If you’re not already doing so, you should consider using payroll software to automate the processes of printing and distributing payslips as well as paying your employees each month. It will save you lots of time because you’ll no longer need to use Excel spreadsheets or paper to process leave applications, calculate hours employees have worked, or do the sums around deductions and tax -the software will do it for you.

What’s more, with the right solution, employees can even upload or check their leave balances and update their personal information from their mobile devices, saving you time and sparing you inconvenience. The software is really affordable today – the Sage Pastel Partner Flex solution, for example, costs as little as R135 per month for 10 employees. For such a small investment, you’ll be able to stay SARS compliant without the hassles of updating complex Excel spreadsheets each time there is a change in legislation or the tax tables.

Getting to grips with the complexities of employment contracts

An effective, flexible and understandable employment contract is the basis of a good employee-employer relationship. Let’s look at the basics of creating a sound employment contract.

What is an employment contract?

It’s a document that sets out the terms and conditions of employment between your business and an employee. It can be something as simple as a one-page letter you give a worker upon appointment or a formal document that outlines these terms and conditions in extensive detail.

Why is it important to provide employees with employment contracts?

The law (the Basic Conditions of Employment Act) states that you must give all employees a document containing information about the conditions of their employment. That applies whether they are full-time, contractors or temporary workers.

In addition to being illegal, not putting in place a contract with your employees can lead to disputes and misunderstandings further down the line. If you have a grievance with a worker, it will be harder to take action without a contract in place.

What information should an employment contract include?

  • Details for employer and employee: full name, address, employee’s occupation or tasks
  • Employment details: Dates and places of work, working hours
  • Payment details: Monthly salary or the rate and method of calculating wages, rate for overtime, allowances and benefits, bonuses, deductions, frequency of payment
  • Leave: Leave the worker is entitled to
  • Notice period
  • If the worker is a contractor, the period of the contract


Anything else I should know?

Be sure to get your employee to sign the document so there can be no arguments about whether he or she received it. If you hired any employees with a verbal contract, draw something up on paper as soon as possible.

And remember to update employees’ contracts if the law changes, they are appointed to new roles, their benefits or working conditions change, etc. It’s also important to note that the document must be written in language the employee can understand.

Where do I start with drawing up an employment contract?

There are many free templates available on the web – for an example click here. It can also be a good idea to ask a labour lawyer to give your employee contracts a glance to make sure they’re watertight and that the terms and conditions you’ve proposed are in line with the Basic Conditions of Employment Act.

What is the purpose of a contract after the date of employment?

An employment contract is not just important to start an employer-employee relationship but it is imperative that you stick to the clauses agreed on throughout the relationship. Recent changes in Labour Law dictates that fixed term contracts may no longer be treated as casually as employers used to treat them.

Previously, employers would create part time positions and offer a 3 month contract and casually extend them by not explicitly issuing the employee with a new temporary contract. Now, an employee would be within his rights to insist on being appointed in a permanent position and due to the employer’s lack of acting according to the contract, his behaviour resulted in intent to employ full time.

The lesson here is to strictly adhere to the contract stipulations and if you intend to change the content, it must be done on the actual contract and not only verbally.

For example: If an employee’s working hours are stated as 8am to 5pm on an employment contract and the employee starts arriving at 9am and leaving at 4pm every day without being reprimanded, the fact that the employer did not instruct the employee to adhere to the contract shows that the employer agrees with the new working hours arrangement. The employer will have a difficult time disciplining the employee based on working hours at a later stage.

Payroll processing guide for new business owners

Starting and growing your own business is an exciting and challenging undertaking. Entrepreneurship is not for the faint of heart, and the requirements for financial reporting and tax compliance can quickly bring those business owners fantasizing about The Next Big Thing, back to reality. Whether you manage your own payroll process or have grown your business to the point where you’ve hired an administrative and/or payroll manager, this payroll processing guide will ensure that you don’t miss any of the steps and stay on track with tax registration and submissions.

1. Employer registration for PAYE

By growing your business in South Africa and becoming an employer, you’re positively contributing towards our country’s economic prosperity, but this does come with some administrative responsibility. The first step in the process is to let the South African Revenue Service (SARS) know that you are registering as an employer and will be submitting PAYE tax. You are required to register with SARS as an employer by completing and submitting the EMP101 form, no longer than 14 days after becoming an employer.

2. Payment of PAYE tax

By or before the 7th day of each month, you are required to pay SARS the PAYE tax collected from your employees, and submit a completed EMP201 return, which shows all the PAYE tax deductions from your employees’ salaries, commissions, bonuses, and any additional earnings and benefits.

3. Skills Development Levy (SDL) registration

The South African government imposes a 1% levy on a company’s payroll to encourage learning and development in and through the company. The Skills Development Levy (SDL) is applicable to companies where the total amount paid to salaries is more than R500 000. Employers need to register for SDL with SARS no later than 14 days after becoming an employer. If your total for employees’ salaries is below R500 000, then your company is exempt from the SDL.

4. UIF registration

The Unemployment Insurance Fund (UIF) makes provision for employees who have contributed towards it, to receive an income if they find themselves made redundant or unemployed, or on maternity leave. Employees and employers contribute an amount equal to 1% of an employee’s salary to UIF.

As an employer, you need to register for UIF with the Department of Labour by completing the UI-8 Form, after which you’ll be given a registration number. You must also register for UIF with SARS within 14 days of becoming an employer. Employers not only make monthly UIF payments, but also need to declare these UIF contributions – this can be done electronically via your payroll system (instead of submitting the paper-based UI-19 form).

5. Issuing tax certificates

As an employer, you’ll be responsible for issuing tax certificates to your employees at the end of each financial year. These forms – either IRP5 or IT3a forms – go hand-in-hand with your employer reconciliation submissions (EMP501) and declarations (EMP201), which need to be submitted to SARS at the end of each tax year. If you run an automated payroll solution, you can produce and print tax certificates at the push of a button, and also upload these certificates to SARS’s online returns systems – e@syFile and eFiling – instead of needing to capture them manually.

6. Streamline your business with automated processes 

The benefit of running an automated payroll system is that it is much easier to integrate your internal HR and payroll processes with your SARS submissions. SARS’s electronic submissions applications integrate fully with automated payroll systems and solutions, which means you or your HR or business administrator can file returns and interact administratively with SARS from your office at any time of day. This is good news for you if you’re the kind of business owner who wants to focus your and your staff’s time on core business and leave the nitty-gritty processing up to technology.

South Africa's new Minister of Finance: Who is Nhlanhla Nene?

On 25 May 2014, President Jacob Zuma committed to a reshuffle in the parliamentary executive, which saw Deputy Finance Minister, Nhlanhla Nene, rise to the position of Minister of Finance. Succeeding Pravin Gordhan, who held the Finance Minister title from 2009 to 2014, Nhlanhla Nene’s first major task would be to steer what President Zuma called a ‘radical phase of socio-economic transformation’. With his solid expertise in the finance ministry, Nene has wasted no time in devoting himself to the task of raising the more than R40 billion required to stabilise the national budget and avoid a downgrading of South Africa’s ratings.

So who is the man at the helm of South Africa’s economic ship?

Qualifications

The 56-year-old Nhlanhla Nene is a member of the African National Congress and holds a B.Com Honours in Economics as well as several certificates including Macro and Micro Economics, Economic Policy, Marketing Management, and Evaluating Macroeconomic Strategies.

Experience

Nene became actively involved in student politics in the 1970s; served as a Regional Executive Committee member and then became the Chairperson of the Bambatha Branch of the ANC; became a shop steward of a labour union in the 1990s – instigating the negotiations for better working conditions from 1990 to 1995 and organising the financial sector’s first ever strike (under SACAWU).

He was also a Regional Administrative Manager for Metropolitan Life Insurance for 15 years.

Political Career

After serving as an ANC Caucus Chairperson and Local Government Councillor from 1996 to 1999, and as the Chairperson for the Kranskop Policing Forum from 1997 to 1999, Nhlanhla Nene joined the National Assembly as a Member of Parliament in 1999.

From 2002 to 2005, he was the Co-chairperson of the Joint Budget Committee before serving as the Co-chairperson for the Portfolio Committee on Finance from 2005 to 2008. In late 2008, President Kgalema Motlanthe assigned the role of Deputy Minister of Finance to Nhlanhla Nene, who replaced Jabu Moleketi after his resignation. Nene held the Deputy Minister position until May 2014 when he was appointed as Minister of Finance.

Where to From Here?

On 21 July 2014, Nhlanhla Nene addressed parliament during the delivery of the National Treasury Budget Vote, with his speech emphasising the need for faster economic progress in the next few decades ahead. His speech not only focused on the necessity of a long-term view of the government’s National Development Plan, but showed a crucial awareness of the immediate need for socioeconomic upliftment of the poor and the unemployed in South Africa.

The focus of the speech was on how to create a sustainable fiscus and a stable macroeconomic environment by stimulating progress in the National Development Plan. Nene’s approach prioritises a focus on asset and liability management, creating functional and profitable municipalities, promoting financial management capabilities at all levels of the public sector, reforming the savings and retirement plans of government employees, and lastly, fighting corruption in the procurement process.

Nhlanhla Nene’s role as the Minister of Finance of South Africa will not be an easy one, but with his experience and background, he certainly is confidently meeting this challenge head on.

The Question of a Tax Increase

Since the end of October 2014, when Nene addressed the need to raise an additional R44-billion to ‘balance the governmentís books’, many of the South African public are anxiously awaiting the new tax rates, which will be announced in the 2015 Budget Speech on 25 February 2015. You can visit our website again shortly after the 2015 Budget Speech to find out how the tax rates will influence you.

The benefits of automated systems in today's business environment

Business process automation is the use of software, systems, and processes that require less human intervention than traditional processes (which require human handling or direct influence). Automation is most prominently used where processes need to be standardised and repeated; where the human element is removed so that there’s less risk of human error, or inefficiency due to absence or other conditions. In today’s business environment, processes and systems are automated for the benefits of cost and time efficiency, error reduction, and resource and energy conservation.

Let’s look more closely at the benefits of systems automation:

1. Work efficiency

Most IT departments’ support desk resources are allocated via a ticketing system. Users on a network who are having IT trouble – can’t log in to their computers, experience printing errors, can’t access the email server, etc. – simply log a call to the IT department and a support technician either solves the problem remotely or arrives on their floor to diagnose it and fix the error. That ticketing system is controlled by an automated back-end process that allocates the calls to available technicians. The system takes into account the technicians who are available, those who are still on previous calls, and those who are absent from work ñ to ensure maximum efficiency of attending to and closing the tickets. Imagine the confusion that would ensue if IT calls/tickets were managed manually.

2. Resource optimisation

Picture this: every morning you arrive at your office building. You open your laptop bag and the security guard removes your laptop and writes the 22-digit serial number down in a security log while you complete a separate log with your ID number, name, cell phone number, and department/floor. There are more than 180 people for whom the security guard needs to follow this procedure every day – nevermind visitors to the building. What if the company provided everyone with an access card for each human and each laptop? That wouldn’t nullify the job of the security guard. It would, however, allow the security guard to do his or her job instead of performing the job of a data capturer. The system that reads and controls the scanning and access functionality can also record employees’ comings and goings, which can be used to calculate overtime. Or, if there is an incident of corporate espionage, theft or other questionable activities, the system records can be accessed for gathering evidence for investigation.

3. Data processing is what machines do best

Gone are the days when payslips were generated manually and resource planning was done separately from the payroll function. Human resources managers and officials rely on process automation to make their jobs easier and to handle the data processing and storage that would otherwise consume far too much of their productivity time. Payroll management can be fully integrated into other business processes such as employer tax and insurance compliance, financial management, resourcing, employment contract obligations, annual leave calculation, and managing employee benefits. Business process automation in this context can reduce up to 80% of the costs associated with payroll management, and greatly improve general business management efficiency.

Payroll automation means that payment and deductions calculations are all performed by a machine – the repetitive nature of these calculations (especially in large corporations) means that automating them exponentially reduces the margin for error and gives payroll administrators and other HR personnel greater job satisfaction by giving them time to perform more meaningful tasks. An automated payroll system also means that records are standardised, efficiently stored, and can be easily filtered and retrieved when the information is required.

So, it’s settled then

For the purposes of cutting costs, saving time, and optimising your resource allocation, it will greatly improve your bottom line to make use of systems and process automation.

Then and Now: How Tax Rates in SA have Changed

With South Africa’s 2015 Budget Speech fast approaching, and with last year recognised as the centenary of tax collection in South Africa (1914 – 2014), it’s worthwhile to take a few steps back into the history books and to explore the evolution of tax collection in South Africa.

The early 20th century

Before South Africa became a union (1910), each of the separate administrative regions – Cape of Good Hope, Transvaal, Orange Free State and Natal – was self-governed and worked according to its own budget. Each province or region collected duties from trade, fees from individuals’ income, and also indirect taxes. The government in the Transvaal relied heavily on the gold mining activity in the region to fill the coffers, but after the war and the South African unification in 1910, taxation on a range of mining types was consolidated under the Mining Taxation Act 6 of 1910. All individual taxes were abolished in the different provinces and reinstated under the nationally-applied Income Tax Act 41 of 1914. This new Act enabled parliament to apply a fixed tax rate and collect on annual income.

The tax rate in 1914

Income tax in 1914 was imposed on any income higher than £1,000. Any income over £1,000 was taxed at 2.5% (6 pence per pound), and a sliding scale applied. An income of £2,000 would be taxed at 1.35%, while a very well-off individual with £25,000 would only pay a tax rate of 7.5%. It didn’t take long for the government to lower the tax threshold, and in 1915 the £1,000 threshold dropped to only £300.

The tax rate in 1929

Solidarity Legal Services provides an interesting comparison of tax rates back in 1929 compared to tax rates today, citing the income of a senior professor at Stellenbosch University. In 1929, the annual salary of the senior professor (of £1,150) would be taxed at 0.93 %. While in today’s terms, the annual salary of the senior professor (of R800 000) would be taxed at 29.7 %. Today, itís also not only higher earners who need to relinquish a lot more of their earnings, but the middle class and lower earners are also much more heavily burdened by taxes than their counterparts 80 to 100 years ago.

How the tax amendments have affected taxpaying individuals

According to a paper from the University of Pretoria, on The Imposed Tax Burden in South Africa (Chapter 3), the Tax Act of 1914 was amended as follows:

  • 1914: The first Tax Act imposed tax on all income (or profits and gains) that was acquired within the South African borders.
  • 1917: The Income Tax Act (1914) and the Mining Tax Act (1910) were combined to create the Income Tax Act 41 of 1917. Income tax rates now became fixed.
  • 1925: Income Tax Act 40 of 1925 replaced Act 41 of 1917.
  • 1941: Income Tax Act 31 of 1941 replaced Act 40 of 1925.
  • World War II (1939 – 1945): The ‘Excess Profit Special Levy’ and the ‘Trade Profits Special Levy’ were imposed during the war, but repealed in 1947.
  • 1955: Donations became taxable.
  • 1962: A consolidation of the Income Tax Acts from 1941 to 1961 resulted in the Income Tax Act 58 of 1962, which is effectively still used today, along with the various amendments.
  • Amendments to the Income Tax Act 58 of 1962


In 1963, PAYE (Pay As You Earn) Tax was implemented, while in 1971 provincial income tax was eliminated. Both of these amendments meant that individuals had to carry a much higher tax burden. In 1984, fringe benefits became taxable, and in 2001, capital gains were stated as taxable.

South Africa’s income tax system is characterised as being progressive, meaning that the wealthy are liable for more of the tax burden than their poorer counterparts. In 2013, BDLive reported that then Finance Minister Pravin Gordhan had ordered that an extensive review be carried out on the South African taxation system “to assess whether or not South Africa’s tax system is able to generate sufficient and sustainable revenue to fund the government’s current and future expenditure priorities”.

Now in 2015, we await new Finance Minister Nhlanhla Nene’s news of whether or not to expect a tax rate increase. Will the individual taxpayer’s burden be slightly heavier this year or will we be surprised by an unchanged rate? Stay tuned to find out.

When software training isn't just about the software

Making the decision to automate your payroll system for the purpose of streamlining your business processes will result in the need for some skills training. Since payroll processes form part of a much larger arm of your business (payroll, HR, employee management, remuneration, employer tax, etc.), it only makes sense then that the skills training required is not only limited to the automation software.

Instead of simply offering you the software training for your payroll system, we encourage our clients to engage with the much broader subject matter that affects, and is affected by, the need for and implementation of a payroll system. We want to address the touch-points that demonstrate how useful and efficient payroll automation is; to show employers how valuable their investment in a payroll solution can be, as well as improving employees’ skills to drive a more effective and rewarding job experience. And, employees who have received payroll, HR and management training through our accredited courses will be able to further their careers with this robust foundation.

The benefits of our training courses

The Sage Pastel Payroll & HR training courses are comprised of interactive, hands-on experiential learning opportunities; delivered by lecturers and trainers with in-depth knowledge of, and years of experience in, the South African payroll industry. Our courses are accredited by FASSET and the SETA for Finance, Accounting, Management Consulting and other Financial Services. So what? This means that you as an employer contributing to the Skills Development Levy (SDL) can claim rebates for training your employees on these courses.

Some of our training courses

Simply perusing our list of training courses will show you how valuable we perceive the context of payroll to be. We offer:

  • Payroll Certified Administrators Certification Course (PCA)
  • Payroll Certified Installer Certification Course (PCI)
  • Human Resources Course
  • MS Excel Training Courses
  • PCA Exam Preparation Course
  • Annual Payroll Tax Seminar


In the interests of keeping our stakeholders up to date with tax legislation, we offer an Annual Payroll Tax Seminar, which covers retirement reforms, PAYE law changes and PAYE administration, any changes in the Labour Law, employment tax incentives, and more. Each year, we publish seminar dates and details on our website, where you can also get more information on costs, training venues, and how to register.

HR and payroll workshops

Tax submissions and broader HR legislated functions are the bane of many HR and payroll employees’ lives, so we also offer upskilling in employees’ functions that they can apply in their positions, no matter where they work. We are currently running:

  • SARS e@syFile Annual Submissions Workshop
  • Employment Tax Incentive Workshop
  • Tax Year-End Workshop
  • These workshops are presented by experts in their relevant fields, so you can be assured of training by people who are not only accredited with us, but also very passionate about what they do. This list of workshops will be updated on a quarterly basis, so keep in touch to find out when new workshops are being offered.


Not just anyone can offer Sage Pastel Payroll & HR Training

Unfortunately you may find opportunists out there who try to offer you Sage Pastel Payroll & HR training without being affiliated with our Authorised Sage Pastel Payroll & HR Training Centres, or without being Sage Pastel Payroll & HR certified and approved individuals or businesses. Be aware that you will also not benefit from SDL rebates if your training isn’t accredited.

What are the Tax Rates in South Africa?

Finance Minister Nhlanhla Nene has stated his intention to raise R44 billion over the next three years in order to stabilise the national budget and avoid a downgrade in the country’s ratings. One of the sources of these additional funds is likely to be direct taxes in the form of personal and company tax. He will announce the agenda for the next year at the 2015 Budget Speech, which is less than a month away.

On that note, there’s no better time to review South Africa’s current tax rates than right now. The following information will provide you with an informed foundation from which to receive the news of the new tax rates we’re all expecting in 2015.

The following table represents tax rates for the 2014/2015 tax year, ending 28 February 2015.

Taxable Income (R)
Rate of Tax (R)
0 – 174 550 18% of taxable income
174 551- 272 700 31 419 + 25% of taxable income above 174 550
272 701 – 377 450 55 957 + 30% of taxable income above 272 700
377 451 – 528 000 87 382 + 35% of taxable income above 377 450
528 001 – 673 100 140 074 + 38% of taxable income above 528 000
673 101 and above 195 212 + 40% of taxable income above 673 100

The tax rates for trusts other than special trusts are taxed at a rate of 40%.

The following tables indicate Tax Rebates and Tax Thresholds

Rebates

Primary R12 726
Secondary (Persons 65 and older) R7 110
Tertiary (Persons 75 and older) R2 367


Threshold

Below age 65 R70 700
Age 65 to below 75 R110 200
Age 75 and over R123 350


Tax rates for provisional taxpayers

Provisional taxpayers are those taxpayers who are not categorised as individuals who receive remuneration, an allowance, or an advance (paid by whoever their principal may be). Provisional taxpayers need to pay an amount of tax in advance (twice a year), based on an estimation of their earnings; although their final liability will be calculated at the time of assessment.

Retirement fund lump sum withdrawal benefits

If individuals choose to withdraw their retirement funds (or are mandated to withdraw according to fund assignment in terms of a divorce order), they may opt to withdraw the funds from their pension, pension preservation, retirement annuity, provident, or provident preservation as a lump sum. The following table shows how this lump sum withdrawal is taxed:

Taxable Income (R) Rate of Tax (R)
0 – 25 000 0% of taxable income
25 001 – 660000 18% of taxable income above 25 000
660 001 – 990 000 114 300 + 27% of taxable income above 660 000
990 001 and above 203 400 + 36% of taxable income above 990 000


Retirement fund lump sum benefits or severance benefits

If an individual passes away, is terminated or made redundant from his or her position of employment, or retires, they may withdraw their retirement funds in a lump sum. The following tax rates apply:

Taxable Income (R) Rate of Tax (R)
0 – 500 000 0% of taxable income
500 001 – 700 000 18% of taxable income above 500 000
700 001 – 1 050 000 36 000 + 27% of taxable income above 700 000
1 050 001 and above 130 500 + 36% of taxable income above 1 050 000


Travel allowance

Where employees travel for business purposes, the following table is used to calculate the allowable deductions for business travel:

Value of the vehicle (including VAT) (R)
Fixed cost
(R per annum)
Fuel cost (c/km)
Maintenance cost (c/km)
0 – 80 000 25 946 92.3 27.6
80 001 – 160 000 46 203 103.1 34.6
160 001 – 240 000 66 530 112.0 38.1
240 001 – 320 000 84 351 120.5 41.6
320 001 – 400 000 102 223 128.9 48.8
400 001 – 480 000 120 997 147.9 57.3
480 001 – 560 000 139 760 152.9 71.3
exceeding 560 000 139 760 152.9 71.3
6 Trends Affecting Payroll And HR in South Africa

South African companies face a number of human resources (HR) and payroll related challenges today, and there is no sign that the pressure will be let up in 2015 or 2106. Volatility in the workplace and workforce, skills development, and  tax regulations and labour laws that never cease to change are perhaps the most challenging issues that businesses need to face.

 

Thankfully there are many technologies, such as paymaster, and business models that assist organisations in South Africa in achieving greater control an improved management of HR with their business needs and of course take the pain out of payroll management. Here are some key Trends affecting Payroll and HR for next year or so are as follows:

 

Compliance Compliance Compliance

It is expected that the regulatory and tax environment will continue to become more complicated, as proven by trends in the last decade or so. Implementation of pension fund reform has been delayed, however it is still very likely to happen, for example. And the environment changes every tax year.

 

Increase in payroll fraud

Payroll fraud has seen reported incidences increase at an alarming rate especially among SMEs in South Africa. The growing number of companies asking payroll firms to assist with forensic investigations after falling prey to payroll fraud and this indicates that the crime is on the rise.

 

The three components of the classic fraud triangle Motivation, opportunity and rationalisation  form a perfect storm in payroll and this creates enormous risks for businesses. An automated payroll solution, such as Paymaster, well planned and implemented processes and strict governance are essential to containing the risks.

 

Cloud Technology

A growing number of entrepreneurs now use cloud applications to get up and running quickly with essential business applications such as payroll and HR, this use of cloud technology is expected to grow.Many existing businesses are expected consider the cloud as a method of optimising operational and capital costs in their IT environments, this will include Payroll. Furthermore it is expected that many companies that have not yet done so will implement online employee self-service solutions and this automate time consuming processes like expense claims and leave approvals.

 

The reason that the cloud plays such a large part of future operations is due to the fact that it empowers people to be productive while they’re mobile. The recent Sage Business Index survey for 2014 showed 59% of South African businesses believe the mobile infrastructure in South Africa makes it possible to work effectively on mobile devices. And more than 40% believe that, in the future, tablets and smartphones will be of most use for accounting and/or payroll.

 

Strategic investment in HR

Business has recognised that an engaged and empowered workforce with the right skills and levels of competency will deliver a superior return on investment. A workforce that is engaged, happy and satisfied is proven to be vastly more productive and delivers the greater levels of innovation and customer service demanded to compete in today’s environment.

 

Because of this, many companies are automating or outsourcing their routine HR processes so that HR managers can focus on performance management, training, skills development, alignment of the workforce with the business strategy, and other key strategic initiatives.

 

Outsourcing

A growing number of  companies are outsourcing routine payroll tasks such as processing the monthly payroll and printing and distributing payslips, allows them to concentrate on core business and entrust an efficient, specialist provider such as Paymaster with staying ahead of compliance requirements, technology, and other complexities of running a modern payroll.

 

Online tools for smoother recruitment

Recent surveys have shown that up to 75% of organisations are adding online recruitment to their traditional recruitment methods and using social media in this respect. It is expected that more companies to use tools such as online applicant tracking, talent communities, and internal career portals in conjunction with their traditional recruitment processes as the cost for these is reducing and the process is not only faster but produces a more quality in the candidates.

 

In time, business will be able to export job specifications from their HR systems to online recruitment platforms or import a successful job applicant’s details directly into their payroll and HR software. This will bring new levels of efficiency to the admin processes that surround recruitment.