Change in Official Rate of Interest

The Official Interest Rate for calculating Fringe Benefits increased by 0.25 % effective 23 November 2018.

Where an employer gives an employee a loan that is less than the official interest rate or interest free, the difference between the two must be treated a taxable Fringe Benefit.

This Fringe Benefit should be processed via the payroll and reported on the Employees IRP5 against SARS Code 3801.

The Official Interest Rate is defined in the Seventh Schedule as the rate of interest that is equal to the Repo Rate, plus 100 basis points (1%).

The repo rate increased to 6.75% on the 23 November 2018, and the official interest rate therefore became 7.75% effective 23 November 2018.

Please note that HRTorQue Outsourcing have updated all their payroll outsourcing clients effective 1 December 2018.

The COID Dilemma

Can an unpaid learner practically claim workmen’s compensation?

We are often faced with interesting practical challenges. One such challenge surfaced recently (and is likely to become more common as the government pushes for increased employment through learnerships and work experience programmes).

A company offered a work experience programme where they paid for students travel in order for the students to come to their premises and learn more about the trade. In the course of this work experience one of the learners was injured and the company tried to claim compensation from the Compensation Commissioner, but faced some real challenges.

The challenge came in three parts:

  1. Is the learner entitled to claim? Where there is a contract of service the learner should be entitled to claim compensation under the Act.
  2. Is the learner able to claim? As the learner is not being paid any salary often companies will not put the learners on to payroll. Where the learner is not on payroll the employer is usually unable to show the Compensation Commissioner that the learner is employed and levies have been paid on their behalf. It is unusual for an employer to think far enough ahead and include unpaid learners (not on payroll) on their annual return of earnings.
  3. What can the learner claim? Even if the employer has included the learners on their return of earnings or can show evidence of them being part of their headcount the first question the Compensation Commissioner will ask is to see their payslip and proof of earnings to support the claim calculation. Where they have not been paid anything, the claim is zero.

This leads to a very inequitable position where the learner should be able to claim, but the claim is worthless.

What to do?

There is no easy answer to this. In a perfect world the legislation would take this into consideration. The only alternatives are civil i.e.

  • Protect the company from any claims for compensation by getting learners to sign an indemnity form; and
  • Where the company is interested in looking after learners, consider general insurance products to cover the learner in the event of an incident at work

We are currently putting such examples to the Payroll Authors Group and other influential stakeholders in an attempt to get some clarity on the law in this regard and more importantly the practical application of the law. Unless there is a process that can be successfully followed to resolve a valid claim this would unfortunately remain a loose end that prejudices those people who need the benefits and cover the most.

December Payroll Dates

The Festive period is fast approaching and, to enable us to ensure that your payroll runs are processed effectively and trouble free, we would like to schedule your payroll runs for December 2018 and January 2019.

Therefore, we’d appreciate it if you’d let us know when your pay runs are anticipated to take place.

If you are closing down in December, please provide a cell number and contact name for the person who can be contacted regarding the proof of payment confirmation in December. This is often a challenge that we face when companies are closed.

While we will try to accommodate all requests, please be aware that we may not be able to accommodate all last minute changes. In addition, we cannot accept any responsibility for payroll being delayed at year end where clients’ staff are unavailable to approve the payroll before submission.

Should you have any queries, please contact us or your dedicated payroll administrator.

We take this opportunity to wish you and your family best wishes for the Festive Season and thank you for entrusting your payroll to our company.

PLEASE NOTE: HRTorQue will be closing on Friday 21st December 2018 and will re-open on Monday 7th January 2018.

During this time we will have a skeleton staff on duty to assist clients who will not be closing over this period and will require scheduled payroll services.

During the shutdown time please keep these numbers on hand.
Karen van den Bergh: 082 891 1722 – for any payroll or 3rd party payment queries.
Nicky Hardwick: 083 788 6999 – for any labour or HR issues.

Alcohol in the Workplace

The year is coming to an end and with this comes the celebrations and functions that are either held at the employer’s premises or off site. Either way the question often arises as to what, if any, the employer’s obligations are when providing alcohol at these functions.

In terms of the OHS Act General Safety Regulation 2A. Intoxication.

  1. An employer or a user, as the case may be, shall not permit any person who is or who appears to be under the influence of intoxicating liquor or drugs, to enter or remain at a workplace.
  2. No person at a workplace shall be under the influence of or have in his or her possession or partake of or offer any other person intoxicating liquor or drugs.

Employee ‘intoxication’ is a major concern and you will note that the OHS Act has placed upon employers the duty of prohibiting persons to enter or remain at a workplace who appear to be under the influence of intoxicating liquor or drugs.

These restrictions, together with COIDA and the implications of a possible injury on duty, have legal implications for employers and you should ensure that not only is it vital that these provisions be communicated to all employees, but that you keep a record of these communications. Employers should be in a position to demonstrate that they have made an effort to try and manage employees’ conduct around alcohol consumption, or preventing them from driving when over the legal limit or in an intoxicated state during these functions.

At social functions on the employer’s premises, the employer should ensure that employees have ‘signed off duty’ prior to commencement of the function. This will avoid any possible claims of ‘injuries on duty’, and consider the following steps to reduce possible liability:

  • Advise employees regarding the desired behaviour during work functions. This could include the employer limiting the number of drinks for the duration of the function.
  • Providing access to breathalyser tests.
  • Place a disclaimer in the area or pub.

Whilst year-end functions should be occasions to unwind and relax with colleagues outside of the normal working environment, both employers and employees still have certain responsibilities around their conduct, and would be expected to consider that both interests are not negatively affected.

Unfair Discrimination – What is the Burden of Proof?

Author: Tanya Mulligan (Cowan Harper Madikizela Attorneys

In the recent reportable case of Sasol Chemical Operations (Pty) Ltd v CCMA and others (29 August 2018) ZALCJHB 2680/16, the Labour Court evaluated the evidentiary burden placed on employees who contend that they have been subjected to unfair discrimination during their employment. The employee referred a dispute to the CCMA wherein he alleged that his remuneration was disproportionate to the Grade in which he was employed by Sasol. The employee, in his referral form, made no mention of either an equal pay dispute or discrimination based on race and merely requested that his remuneration be corrected in line with his Grade.

The Arbitration
During the arbitration proceedings, it transpired that the employee earned substantially less than a white co-employee, who held the same position and performed the same duties. In view of the evidence led the Commissioner considered the dispute to be an equal pay dispute, culminating in a claim of unfair discrimination based on race. Sasol in justifying the pay differentiation argued that the “white” employee had more experience.

Although the Commissioner accepted that the “white” employee had 7 to 8 years’ experience as opposed to the other employee who only had 3 years’ experience, he held that there was no justification for the differentiation in salary. The Commissioner then found that Sasol had unfairly discriminated against the employee and ordered Sasol to adjust the employee’s salary to be the same as that of his white colleague.

The Appeal
Sasol appealed the award in accordance with section 10(8) of the Employment Equity Act 55 of 1998, as amended (“the EEA”) and contended that the employee did not discharge the evidentiary burden contained in section 11 of the EEA. Section 11(1) of the EEA states “if unfair discrimination is alleged on a ground listed in section 6(1), the employer against who the allegation is made must provide, on a balance of probabilities that such discrimination (a) did not take place as alleged; or (b) is rational and not unfair or is otherwise justifiable”.

The question before the Labour Court was accordingly whether a bare contention of unfair discrimination by an employee triggered the employer’s onus to establish a defence or whether the employee had to present a prima facie case of discrimination.

The Labour Court, in interpreting the meaning of “alleged” as contained in section 11 of the EEA, referred to Labour Relations Law: A Comprehensive Guide (6ed 2015), wherein the authors opined as follows:- “The term “alleged” has not been consistently interpreted by the courts. It must be presumed to mean something less than making out a prima facie case, as would be required in the ordinary course with the burden of proof is not reversed. However, the weight of authority indicates that it means more than an unsupported contention or mere accusation”. The Labour Court accordingly found that a mere allegation of unfair discrimination is not enough to discharge the burden and it does therefore not shift the onus to the employer.

In this case, a claim for unfair discrimination based on race was not advanced and the employee failed to establish any link between the difference in pay and his race. To that end, the Labour Court referred to Rustenburg Platinum Mine v Bester (2018) 39 ILJ 1503 where the Constitutional Court held that the Labour Appeal Court misdirected itself by upholding a case not advanced by the employee. As the Commissioner, in this case, relied on an “unarticulated complaint”, the award by the CCMA was set aside and replaced with one that Sasol did not unfairly discriminate against the employee.

In order to discharge the burden of proof, employees are accordingly required to articulate and substantiate more than a bare allegation. It is also clear that Commissioners of the CCMA should be wary of unnecessarily embarking on an interventionist approach, with the aim of substantiating a bare allegation, as this may indicate a reasonable apprehension of bias.

Relevance of Prior Warnings When Considering a Sanction

Author: Nosisa Sibanda

Warnings are usually expressed to remain “live” for a specified period, typically 6 or 12 months. But what is the position if an employee receives a warning, and then goes on to commit a second, very similar, act of misconduct soon after the warning has expired? Can the employer take the spent warning into account when deciding to dismiss?

The answer depends on whether the second act of misconduct is serious enough to justify a specific sanction on its own.

Section 8 of the Labour Relations Act (LRA) Code of Good Practice, requires an employer to apply progressive discipline in the workplace. The purpose of issuing warnings to an employee is to try and correct his/her behaviour. Warnings are not intended as punishment.

The order and validity of warnings depend on the nature and seriousness of the misconduct committed by the employee. Furthermore, an employer should keep record of all warnings issued to its employees. This includes warnings that are still in effect or which have expired.

Expired warnings may not be used as progressive steps leading to a dismissal but may be used as aggravating factors if the employee has been found guilty of committing misconduct and an appropriate sanction needs to be determined. The fact that a prior warning has lapsed, does not mean that the prior misconduct cannot be taken into account when deciding on the appropriate sanction for the matter at hand.

Why are people dishonest?

Editor: Alan Hosking is the Publisher of HR Future magazine, He is a recognised authority on leadership skills for the future and teaches business leaders and managers of all generations how to lead with integrity, purpose and agility. In 2018, he was named by US-based web site as one of the “Top 25 Future of Work Influencers to Follow on Twitter”.

As more people are being exposed for lying, cheating, stealing and being generally dishonest at all levels of society, it is worth our while to explore the reasons for dishonesty.

There was a time when lies were told simply to avoid the consequences of one’s actions. The logic is simple. When a kid gets caught out by their parents for having done something they were not supposed to do, they tell a lie in the hope that they will avoid being punished.

Denial, as in, “I didn’t do it,” is the first lie that springs to the lips of such a child. And, if they are believed, they come to realise that denial is a powerful defence.

So, when those same children grow to adulthood having escaped the consequences of their deceitful actions over the years by lying as they were growing up, denial then becomes a habit.

If we’re looking for reasons as to why people lie, we need look no further than the way parents bring up their children. We don’t learn ethics at Business School. We learn ethics in the first 10 years of our life.

There are however two sides to the “upbringing” coin. On the one side, parents fail to hold their children accountable for their actions because they are blinded by their love for them and can’t believe that their child can or will do anything wrong. In fact, those parents are already believing a lie before their children have had a chance to lie to them.

Then again, other parents might let their children escape the consequences of their actions because they feel sorry for them for some or other reason. This is particularly true in the case of parents who feel they aren’t able to give their children what they would like to give them. This may be because of their financial circumstances where the parent feels guilty for not earning enough to give their child what they want. It could also be because of a divorce where the child is deprived of one parent’s presence. Again, guilt plays a role, leading to overcompensation where the parent overlooks transgressions and the child soon learns that they can escape the consequences of their actions. They then grow up thinking that society will treat them in the same way.

The flip side of the coin is that children actually learn to lie from having parents who shamelessly and blatantly lie for various reasons. Example is a very powerful influence in a growing child’s life so, when children witness their parents lying to authorities to avoid certain consequences, they assume that this is the best way to handle such situations and become accomplished liars themselves.

Whichever way you look at it, then, parents play a key role in determining the honesty or deceitfulness of their children. Of course, that doesn’t let those children off the hook. Everybody has to take responsibility for their own actions.

The denials coming from politicians, public sector workers, business consultants and others whose actions have been exposed as illegal or unethical is now becoming predictable to the point of being funny, if it weren’t so tragic.

If we allow dishonesty to go unchecked, dishonest people are going to rob our country of a better future. I urge you to take a stand against dishonesty by conducting yourself in terms of word and deed in an honest way. Take responsibility for your actions and hold others accountable for their actions.

After you have set an example of honesty, reward and endorse honesty whenever you come across it. Adopt the mindset that honesty is not the best policy – it’s the only policy!

Independent Contractors – Employers Beware

A common error made by HR departments is to assume that independent contractors are truly independent and that no PAYE needs to be deducted from payments made to these individuals. This often happens because the individuals in question previously worked for the organisation, have slipped into a consultants role (usually on retirement) and HR haven’t the time to check whether they are truly independent both initially and on an ongoing basis. HR should however be aware that should they be audited by SARS any “independent contractors” will be reviewed and if they are not independent then SARS will require the employer to deduct PAYE (and penalties and interest for historic non-payment would apply).

Independent contractors earn income for the services that they render, and SARS made changes to the Fourth Schedule of the Income Tax Act in 2000 to bring these individuals into the PAYE net if certain criteria are satisfied (please see Interpretation Notes 17 and 35) to protect the fiscus as far as possible. Note, while labour law Independent contractors are not necessarily employees for UIF (as the definition is linked to labour law), they may very well be for PAYE purposes.

Simply, in terms of interpretation note 17 a statutory test is first carried out to see whether an independent contractor is actually independent and thereafter a common law test is applied.

Statutory Test:

This test has two parts and the second part takes preference:

1. If part one is positive then the person is deemed “not” to be carrying on an independent trade and therefore any earnings are remuneration and PAYE should be deducted. The first test has two sub-parts both of which need to apply for the person not to be independent:

  1. The first element is that the services or duties are required to be performed mainly (which is a quantitative measure of more than 50%) at the premises of the client; and
  2. The second element of the test is whether the worker is subject to the –
    1. control of any other person as to the manner that the worker’s duties are or will be performed, or as to the hours of work; or
    2. supervision of any other person as to the manner that the worker’s duties are or will be performed, or as to the hours of work

2. Second Test

A person who employs three or more full-time employees, who are not connected persons in relation to him or her and are engaged in his or her business throughout the particular year of assessment, is deemed to be carrying on a trade independently.

So, if a person meets the second part then they will be an independent contractor even if they fail the first test.

Common Law Tests:
Assuming the statutory tests are not applicable then the common law test can be applied to see whether the person is independent. These tests are not a checklist and hence are not conclusive. They rely on the definition of an employee in section 200A of the Labour Relation Act. If the person is an employee per these definitions then payments made to them should be treated as remuneration and PAYE should be deducted. As a reminder, s200A of the Labour Relations Act defines an employee as:

Until the contrary is proved, a person, who works for or renders services to any other person, is presumed, regardless of the form of the contract, to be an employee, if any one or more of the following factors are present:

  • The manner in which the person works is subject to the control or direction of another person;
  • The person’s hours of work are subject to the control or direction of another person;
  • In the case of a person who works for an organisation, the person forms part of that organisation;
  • The person has worked for that other person for an average of at least 40 hours per month over the last three months;
  • The person is economically dependent on the other person for whom he or she works or renders services;
  • The person is provided with tools of trade or work equipment by the other person; or
  • The person only works for or renders services to one person.

Fixed Term Contractors

In what circumstances can an employee be classified as an FTC?

In the Labour Relations Act “a fixed term contract means a contract of employment which terminates on the occurrence of a specified event, the completion of a specified task or project, or on a fixed date other than an employee’s normal or agreed-upon retirement age.”

The entering into of a fixed-term contract usually occurs in the following circumstances, where the fixed term contractor:

  • Is replacing another employee who is temporarily absent from work.
  • Is employed on account of a temporary increase in the volume of work which is not expected to endure beyond twelve months.
  • Is a student or recent graduate employed for the purpose of being trained or gaining work experience to enter a job or profession.
  • Is employed to work exclusively on a specific project which has a limited or defined duration.
  • Is a non-citizen who has been granted a work permit for a defined period of time.
  • Is employed to perform seasonal work.
  • Is employed for the purposes of an official public works scheme or similar public job creation scheme.
  • Is employed in a position funded by an external source for a limited period.
  • Has reached the normal or agreed-upon retirement age applicable in the employer’s business.

There is a relatively common practice in South Africa for employers to rollover fixed term contracts on a regular basis. Where this is done employers should consider whether this moves a fixed term contractor more into the definition of permanent employee and what this might mean to the benefits to be provided to the contractor.

As a reminder, section 200A of the Labour Relations Act sets out what constitutes an employee as opposed to a fixed term contractor:

Until the contrary is proved, a person, who works for or renders services to any other person, is presumed, regardless of the form of the contract, to be an employee, if any one or more of the following factors are present:

  • The manner in which the person works is subject to the control or direction of another person;
  • The person’s hours of work are subject to the control or direction of another person;
  • In the case of a person who works for an organisation, the person forms part of that organisation;
  • The person has worked for that other person for an average of at least 40 hours per month over the last three months;
  • The person is economically dependent on the other person for whom he or she works or renders services;
  • The person is provided with tools of trade or work equipment by the other person; or
  • The person only works for or renders services to one person.

Trends in HR – HR Indaba October 2018

At the recent HR Indaba in Johannesburg a number of key trends in HR were highlighted during the interactive sessions. For interest, some of the key trends and topics in HR that were discussed, included:

  • Employee and Team Performance
    • Unlocking potential
    • Employee engagement
    • The value of international experience
    • Improving talent management
    • Culture – recipe for success
    • Powering company success through employee insights
    • Ergonomix – maximise productivity while reducing discomfort, fatigue and injury
    • Understanding the impact of “personality”
    • From potential to performance
    • Reasonable accommodation for people living with disabilities
  • Leadership and Development
    • How leaders cope with extreme pressure
    • How to be more relevant
    • Ultimate partnership – CEO and Head of HR
    • Entrepreneurial spirit
    • Working with customers to solve problems
  • HR Teams
    • Building future proof HR teams
    • The professionalisation of HR
  • HR and Finance Together
    • Why HR and Finance are critical for one another
  • Strategy
    • How to improve your diversity and inclusion strategy
    • The rise of the social enterprise
    • Being responsive to change
    • People development linked to business performance initiatives
    • HR for Africa
    • Creating innovative organisations
    • How to find scarce skills – accounting and finance
  • Process
    • Digitally transform your HR document processes
    • Leveraging HR processes in a complex legal ecosystem
    • Get relief from your HR administrative burden
  • Personal Development
    • Unlocking your true potential
      Work like you live – intuitively, collaboratively and in real-time
  • Technology and HR
    • Digital disruption in recruiting
    • Improved productivity with employee behavioural change through financial education
    • Developments in portable sit/stand office layouts
    • Social media and the workplace
    • How HR can help with digital transformation
    • Populating your organisation in the face of rapidly changing technology
    • The impact of Artificial Intelligence