Labour Broking Alternatives – Free Seminar

HRTorQue and MacGregor Erasmus are pleased to invite clients on a first come first served basis to our free seminar on alternatives to using labour broker workers in your business.

The seminars will be held on the dates below in Durban, Cape Town and Johannesburg and will cover the following areas:

  • The aftermath and need for new staffing models arising from the recent Constitutional Court judgment and how it flattens the playing field by limiting quite strictly how and when Labour Broking staff may be used;
  • Exploring efficiencies in employing Broker staff in-house and the options available in HR management and optimisation;
  • Testing whether other outsourced services will be deemed Labour Broking staff and be met with similar challenges;
  • Tax implications and practical questions regarding remaining tax compliant on respect of independent contractors, FTC staff, casuals and the like.

Durban: 30 August
Cape Town: 29 August
Johannesburg: 3 September

To book a place, please contact info@hrtorque.co.za

Employment Tax Incentive and Special Economic Zones

This article looks at the practicalities of ETI as it relates to clients of HRTorQue and then looks at the practical implementation of ETI as it relates to SEZs.

A number of employers have not yet taken advantage of the Employment Tax Incentives “(ETI)” initiative on offer by SARS. There are a number of challenges and risks around activating this incentive, but if managed properly significant, real benefits can flow to the employer.

The Employment Tax Incentives (ETI) was designed to encourage employment of young individuals and is a valuable tool for employers to recover funds from the state. It has been extended a few times already and we have recently heard it has been extended further (to be confirmed).

If you are a client of HRTorQue’s and you have activated ETI you should be aware of the following:

  • If you do choose to have ETI activated, you will receive a monthly report with your test reports showing who the current calculation on your payroll. It is very important that you note that you can only claim ETI for your organisation if you are currently in good standing with SARS, in all your tax types.
  • We cannot access your current standing with SARS, this can only be done by the person that holds the efiling “Income Tax” profile. We only have access to the PAYE profile in most circumstances, so we are completely in your hands when it comes to knowing if you are in good standing.
    If you are currently NOT in good standing with SARS, you must tell your payroll team to remove the ETI from your payroll before you run live, for the current month payroll. Your payroll team will then move the ETI calculated for the current month to a “calculated but Unclaimed status” for our payroll administration team to reserve these funds with SARS via the EMP201 submission for future use, if possible, within the relevant tax seasonal time frames, (as explained on the refund document below).

It is important to note that it is extremely difficult and a significant risk to your organisation to attempt to withdraw the ETI post submission and payment to SARS. Please make note of this important issue and help us keep you safe in this regard.

Here is a link from SARS that explains how to claim, post the current period, if you are not in good standing, and the process that is followed.

The 1st August 2018 brought us more changes in this process as SARS finally gazetted the Special Economic Zones for ETI.

Designated Special Economic Zones and ETI Act

On 6 July 2018, the Minister of Finance published Gazette No 41759 designating six Special Economic Zones (SEZ’s) for the purposes of section 6 (ii) of the employment Tax Incentive Act, No-26 of 2013 (the ETI Act).

With effect from 1st August 2018 and for the purpose of the ETI act the 6 designated zones are:
1. Coega (PE AREA)
2. Dube Transport (KZN)
3. Industrial Development Zone (East London)
4. Maluti-a-Phofung (Bethlehem area)
5. Richards Bay (KZN)
6. Saldanha Bay (Western Cape)

Boundaries and other details of these SEZ’s can be found in Gazette number 41758.

One of the criteria that must be satisfied before an employee can qualify to generate an employment tax incentive for the employer is that the employee must be not less than 18 years old and not more than 29 years old at the end of the claiming month.

However, section 6(a) (ii) of the Employment Tax Incentive Act provides as follows: “6. Qualifying employees. – An employee is a qualifying employee if the employee –

(a) (ii) is employed by an employer operating through a fixed place of business located within a special economic zone designated by notice by the Minister of Finance in the Gazette and that employee renders services to that employer mainly within that special economic zone; or”

The age requirement for ETI therefore does not apply where:

  1. The employee provides services mainly to an employer in a designated SEZ, and
  2. The employer operates through a fixed place of business located within that SEZ.

Fixed Place of Business

The six SEZ’s designated by the Minister of Finance have clearly defined boundaries, to comply with the first requirement, the employer must operate through a fixed place of business located within the defined boundaries of the SEZ.

If the employer has branch offices, the employer satisfies the first requirement if one or more of the branch offices operate through a fixed place of business within one or more of the six designated SEZ’s. A branch office is not a separate legal entity from the business under which it operates, therefore it is irrelevant whether the branch office or the business is regarded as the employer for purposes of section 6 (a) (ii), as both form part of one legal entity.

Note that an employee’s residential home will not constitute a fixed place of business for the purpose of section 6(a) (ii) of the ETI Act.

Rendering of Services Mainly within an SEZ

The word “mainly” in the income Tax Act means ‘more than 50%’, and this principle is applied to section 6 (a) (ii) of the ETI Act. This would be measured per month (ETI is administered on a monthly basis). Secondly, the employee must render more that 50% of his or her services per month physically within a designated SEZ where the employer has a fixed place of business (as discussed above).

Application of the Section 6(a) (ii) Requirements

In practical terms, the following three criteria must be met by an eligible employer in order to satisfy the requirements of section 6(a) (ii):

  1. The employer must operate through a fixed place of business, and
  2. The fixed place of business must fall within a designated SEZ, and
  3. The employee must render services to the employer mainly with that SEZ

The result is that the ETI claimed under section 6(a) (ii) is ultimately ‘ring fenced’ to the employees rendering services mainly within that designated SEZ.

The same principles apply if the branch office is registered separately for PAYE from the business.

Tax Certificate Codes for SEZ’s

While the Government Gazette that designated the six SEZ’s was published on 6 July 2018, the effective date is 1 August 2018. Employees who qualify in terms of section 6(a)(ii) in the month of August 2018 must be reported on tax certificate for the August 2018 mid-year tax certificate submissions.

What do you do if you want to claim ETI?

HRTorQue has considerable experience in managing ETI calculations and applications. We are experts at reducing client stress by managing these types of administrative tasks on their behalf.

For the maximum benefit in relation to claiming ETI, we recommend contacting your payroll team leader who will guide you through the process.

Directives and Severance Benefits

In simple terms, and dealing with employees only, a “severance benefit” is defined in the Income Tax Act as a payment of a lump sum by an employer (i.e. not paid by a retirement fund or from the proceeds of an insurance policy) to an employee in respect of the relinquishment, termination, loss, or variation of the employee’s employment under circumstances where:

  1. The employer is 55 years of age or older
  2. The employee cannot continue working due to sickness, accident, injury or incapacity through infirmity of mind or body
  3. The employer discontinues the trade in which the employee was employed or makes the employee redundant by reducing staff.

Severance benefits are also described as ‘Voluntary Severance Packages’.

Taxation Rules

Severance benefits are taxed using the same tax table as used for retirement fund lump sums.

Table: Retirement Fund Lump Sum Table (including Severance Benefits):

Taxable Income Percentages and Brackets
0 – 500 000 R 0 + 0% of each R1
500 001 – 700 000 R 0 + 18% of the amount above R500 000
700 001 – 1 050 000 R 36 000 + 27% of the amount above R 700 000
1 050 001 and above R 130 500 + 36% of the amount above R 1050 000

This table must be applied on a cumulative basis by taking into account severance benefits and any retirement fund lump sums paid previously. Payrolls cannot apply this table because the payroll does not have a record of these prior lump amounts paid to the employee.

Only SARS have the records to be able to apply this table correctly and employers must apply for a tax directive from SARS to be able to withhold the correct employees’ tax amount.

Directive Rules – IRP3 (a)

SARS have confirmed the following directive application procedures for the taxation of a payment by an employer of a severance benefit.

Prior to September 2017, when an employer selected “Severance Benefit – Voluntary Retrenchment” on the IT3 (a) directive application, the normal income tax table was incorrectly used to determine the employees’ tax to be withheld from severance benefit lump sums. This was corrected by the final income tax calculation on assessment where the severance benefit tax table is used for severance benefits reported as code 3901 on the tax certificate.

From September 2017, the Tax Directive system was amended and the severance benefit tax table is now used to determine the employees’ tax amount stated on the tax directive if the reason “Severance Benefit – Voluntary Retrenchment” is selected.

If the employer used the reason “Other” and in the description field entered ‘Voluntary retrenchment’ instead of using the correct box (historically we saw people doing this because they were worried that under the old practice they would not get the R500,000 exemption), these directives must be cancelled and resubmitted with the reason “Severance Benefit – Voluntary Retrenchment” to ensure that the assessment calculation is correct.

The following ‘Reason’ options can be selected on the IRP3 (a) directive application form:
1. Severance benefit – Death
2. Severance benefit – Retirement (age of 55 or older)
3. Severance benefit – Retirement due to ill health
4. Severance benefit – Involuntary retrenchment
5. Severance benefit – Voluntary retrenchment

Tax Certificates

The following codes must be used to report the severance benefit amount and its related employees’ tax amount on tax certificates:

  • Code 3901 (Gratuities / Severance Benefits (PAYE))
  • Code 4115 (Tax on retirement lump sums and severance benefits).

Note:
If the employer has incorrectly used code 3907 for the severance benefit the amount will be treated as normal income and taxed using the income tax table on assessment without the R500 000 exemption allowed by the severance benefit tax table.

The employees’ tax withheld in accordance with the directive must be reported on the tax certificate as code 4115 and not as normal PAYE (code 4102).

Cost-effective Alternatives to using Labour Brokers

Many employers in South Africa use labour brokers (TES). Often, they continue this practice because they don’t feel able to manage the volume of workers together with the HR commitment (some employers may only have ~100 permanent staff, but engage 1,000 temporary workers). Following the ConCourt ruling, employers are scared they will not be able to manage the additional workers internally and the additional cost will put them out of business. This is not the case and there are alternatives available to employers that should result in minimal extra work for them and marginal to less cost depending on how they approach the transition.

What does a labour broker do?

A labour broker effectively performs a number of tasks for an employer including:

  • Recruiting and contracting workers
  • Managing these workers (the client would manage them operationally)
  • Run payrolls and pay the workers
  • Manage relationships with third parties including unions/bargaining councils
  • Manage IR issues and terminate the workers’ employment

Potential Options

Employers in the face of the Concourt ruling could choose the following options:

  • Do nothing and face significant financial risk; or
  • Engage the TES workers directly and manage them internally; or
  • Engage the TES workers directly and outsource the processes performed by the labour broker previously

Comparison of Options

The table below illustrates the comparison between trying to manage the TES workers internally and outsourcing. We don’t look at the option of doing nothing because it really doesn’t make much sense financially or form a risk perspective.

Cost Comparison

As cost is a significant factor we have also included a comparison below between labour broking services, managing internally and outsourcing. We have assumed a company with 200 TES workers currently and assumed a current labour broking fee of between 10% and 15% of payroll.

For a more detailed overview the table below illustrates the key assumptions and working for each element.

The above table does not consider any savings through efficiency gains by managing and controlling the workers better. Previously there would have been no incentive to upskill.

Conclusion

Outsourcing is a clear option to better manage your risk and financial exposure if you currently use TES workers. We would recommend you do a review of your business and individual circumstances before you make a decision. If managed well the transition has the potential to improve your business.

Can I still use labour brokers in my business?

Last week, the Constitutional Court clarified a section of the Labour Relations Act regulating labour brokers. There have been a number of rather confusing articles and advice circulating since and the intention of this article is to try simplify things and explain what is actually going on.

Brief History of Labour Broking
In 1996, when the Labour Relations Act (LRA) was created, labour brokers were re-named Temporary Employment Services and, as the name implies, their service was associated with the temporary placement of staff at clients. For a number of reasons, these staff often ended up working for long periods of time and/or indefinitely, resulting in complaints from unions that companies were using labour brokers to underpay staff or to get around the Labour Legislation, with respect to key issues such as terms and conditions, collective issues and dismissal law.

Government Intervention
The Government reacted by amending the LRA with198A. In substance, what the Government introduced was:

  • Companies who wished to use labour brokers in genuine, temporary work could continue to do so with the labour broker remaining the employer at all times;
  • In respect of people who earned over the threshold being R17 119.44 per month (R205,433.30 per annum), these employees would remain the employees of the labour broker (as the LRA would not apply);
  • However, in respect of employees who weren’t employed in temporary capacities, and were employed at the client beyond three months, they would be deemed the employee of the client and, more importantly, the client was obliged to treat the employee on the whole, no less favourably than their own staff, i.e. they needed to give them all the benefits and salaries their own staff received.

Litigation
The labour broker industry challenged the legislation, which went through a number of Courts ending up at the Constitutional Court, who have now confirmed the following:

  • In respect of employees provided by labour brokers who will engage in temporary assignment i.e. to replace someone who is sick and the like, the labour broker will remain the employer and it will be business as usual;
  • However, where a labour broker places an employee at a client, after a period of three months the client becomes the sole employer of the employee.

What role then does the labour broker play?
The Constitutional Court says that the labour broker (whilst there is still a contract between the client and the labour broker) will remain as a party and they will continue to run the payroll and undertake whatever duties they are supposed to in terms of their contract with the client. This is known as the so called “triangular relationship”. They are, however, no longer the employer after the three-month period.

Once the contractual agreement comes to an end, the labour broker falls completely out of the equation and the client will proceed with the employment relationship in the normal course with that employee.

Future CCMA Matters
The labour broker employees, after three months, become the client’s employees and will refer matters to the CCMA against the client. If the client has an agreement with the labour broker, then the employee can also refer the matter against the broker, but this is probably an unlikely scenario as it is anticipated the client would have deeper pockets and, in many cases, be less able to protect themselves if they have abdicated responsibility for managing the employee to the labour broker.

Worrying Issues – Backdated Benefits
The big issue to be concerned about is the fact that should you have had labour broking staff on site for a period of more than 3 months, especially if they have been there at any time since 2015, you may face a claim for the difference between salary and benefits paid and what should have been paid compared to your other staff i.e. a backdated calculation.

Conclusion
As an employer, there is no practical restriction on your continuing to use a labour broker. However, you take on considerable risk if you continue to use the services of a broker for individuals paid under the LRA threshold, as you would be taking on the full risk of employment (and any risks associated with unequal pay) with the relationship being managed by a third party. In these circumstances, we would suggest it would be better to treat the relationship as it actually is i.e. the individuals are your employees and if you need a third party to manage them, manage payroll, or HR, then you should engage the third party on this basis to do these services, with appropriate service level agreements in place.

Can an employer cancel leave which has already been granted?

What happens when an employee has applied for leave, their manager has approved the leave and then operational circumstances change and the employee is required on site? Can an employer cancel the employee’s leave?

In ordinary circumstances, an employer can (within reason) retract any leave based on operational requirements as leave is given at the employer’s discretion. If an employee then does not arrive at work, depending on the individual circumstances (for example if he/she is sick), they could be disciplined.

From an ethical perspective however, the employer should consider the circumstances for the leave before cancelling and also the impact of cancelling on the employee. For example:

  • If the leave is important personally e.g. for an employee to attend his/her child’s wedding then it would have very negative long term consequences for the employee’s morale should the leave be cancelled;
  • If an employee has spent money on arranging travel and accommodation it would be inequitable to cancel the leave unless the employee is at the very least compensated for these expenses.

In these instances, we would consider the smart thing to do would be for employers to carefully consider whether it is really necessary to cancel the leave.

The Impact of Stress and Psychological-related Illnesses in the Workplace

Author: Shahnaaz Bismilla and Kerry Gantley (Cowan-Harper-Madikizela Attorneys)

The work environment has changed drastically over the last few years and as we transition to the fourth industrial revolution, employers need to be aware of the changing risks that business will face. With technology, we spend more time in meetings, at our desks and leading sedentary lifestyles. In South Africa, the state of the economy, with its political, economic and financial factors means that employees are living in much more stressful times.

It, therefore, comes as no surprise that stress-related illnesses have increased substantially over the last few years. Insurance companies have seen a substantial increase in the number of disability claims resulting from psychological, psychiatric and mental disorders.

According to a 2016 study conducted by the South African Depression and Anxiety Group (SADAG), 1 in 4 employees has been diagnosed with depression. How are employers dealing with employees diagnosed with depression? If you, as an employee, were diagnosed with a mental illness, would you feel comfortable disclosing your mental health status to your employer? If so, you would be only 1 in 6 employees who would be willing to do so according to a 2017 survey by SADAG.

The recent Labour Court case of Jansen v Legal Aid South Africa [2018] ZALCCT 17 (16 May 2018) concerned the automatically unfair dismissal of a long-standing employee of the Legal Aid Board because of depression.

The employee had been in the employ of the employer since 2007 and by all accounts was a good performer. During 2010, the employee was diagnosed with major depression. The employee disclosed his condition to the employer and accessed the employer’s wellness program. During 2012, the employees’ condition deteriorated due to his personal circumstances which were exacerbated by his supervisor unexpectedly testifying on behalf of his spouse during his divorce proceedings.

The employee had difficulty dealing with the actions of his supervisor and was feeling betrayed and mistrustful. This was brought to the attention of the employer who was advised by a clinical psychologist that the issue needed urgent resolution as it was negatively affecting the employee’s mental state. The employer ignored this advice and the employee’s condition deteriorated, affected further by the employer’s inaction. As a result of his condition, the employee was absent from work for a period of 17 days during August 2013 and, upon his return to work, he informed the employer of his mental state and the difficulties he was experiencing. Again, the employer ignored the issue and instead notified the employee that his leave of absence would be regarded as unpaid leave.

On 7 November 2013, and whilst the employee was on sick leave, the employer attended the employee’s residence and issued him with a disciplinary charge sheet for misconduct, ranging from unauthorised absence, a failure to notify the employer of his absence to insolence and a failure to obey a reasonable instruction.

The employee did not deny his conduct and upon receipt of the charge sheet once again alerted the employer to his mental condition and the severe impact it was having on him. The employer ignored this evidence and persisted with the disciplinary action, convened a disciplinary enquiry and summarily dismissed the employee.

The termination of his employment together with the additional strain of financial loss of income further exacerbated the employee’s mental health and his personal circumstances deteriorated even further.

In dealing with this matter in the judgment, Acting Judge Mthomebeni confirmed that at all relevant times the employee was suffering from a mental condition and that the employer was aware of his condition. The Judge confirmed that the employer was aware that the employee had a mental illness and was therefore under a duty to reasonably accommodate the employee. The Court found that the employer failed to take into account the mental state of the employee at the time that he perpetrated the misconduct.

The Judge reasoned that the employee was treated unfairly because of his mental condition and therefore on the facts of this particular matter an automatically unfair dismissal had been established. Interestingly, the employer chose not to lead any evidence. The Court awarded the employee reinstatement with retrospective effect. In addition, and having due regard to the suffering incurred by the employee both during his employment and subsequent to the termination thereof, occasioned primarily in the Court’s view by the employer’s continuous disregarding of the employee’s condition, the Court further awarded the employee a further 6 (six) months compensation as a “solatium” to assuage the hurt and indignity caused by the employer’s actions.

In assessing the merits of this matter, the Court ruled that the employee’s depression did not amount to a disability. In coming to this conclusion, the Judge had regard to the definition of disability as set out in Section 1 of the Employment Equity Act 55 of 1998, as amended.

The EEA defines a disability as a:-
“…long term or recurring physical or mental impairment which substantially limits their entry into, or advancement in Employment”.

Whilst in this case the Judge found that the employees’ depression did not amount to a disability, in certain circumstances depression (and other psychological, psychiatric and mental disorders) may amount to a disability especially if the condition falls within the definition of what constitutes a disability as defined in the EEA and as stipulated in the Code of Good Practice on the employment of persons with disabilities. The Code provides excellent guidance to both employers and employees in this respect.

Employers should recognise that there are different types of depression on a wide spectrum. The South African College of Applied Psychology recognises 6 different types of depression ranging from clinical depression to psychotic depression. Where the form of depression falls within the definition of a disability, it should be recognised as such.

According to the World Health Organisation (“WHO”), depression is the leading cause of ill-health and disability in the workplace. SADAG’s research indicates that employees are taking more than 18 days off work due to depression but are reluctant to disclose depression as a reason for sick leave due to the stigma associated with the condition. Such absenteeism has a direct financial impact on an employer. However, for those employees who are reluctant to disclose their condition, this can also result in a loss of productivity for employers, incurred because of employees who report for duty but are unable to perform (presentism).

Employers should also be mindful of the stigma associated with mental illness, including depression and in many instances, employees are reluctant to disclose their condition. Considering the prevalence of depression and the direct negative impact it has on the workplace, employers are encouraged to create a culture of openness and understanding that fosters a safe space for disclosure where employees are reassured that they will not suffer negative consequences but instead will be supported and assisted.

Employers must play an active role to create this environment. According to the South African Depression and Anxiety Group (“SADAG”), employers can assist by:

  • Educating employees on depression and especially how cognitive symptoms can affect work performance;
  • Raising awareness of any existing employee wellness assistance programmes AND emphasise that they can help with mental health problems, like depression, by providing access to medical facilities;
  • Promoting a culture of acceptance around depression and other psychiatric disorders – they are no different to diabetes or asthma;
  • If an employee shares their struggle with depression, referring them to a mental health care professional and reassuring them the illness can be treated; and
  • Exploring creative ways to support an employee’s recovery, like flexible/adjusted working hours.

Understanding that wellness is not only about physical conditions, but also mental conditions, is fundamental in any workplace and employers should consider having innovative policies and processes in place in how they will address such conditions and as to how they should adopt a holistic approach. Employers should introduce wellness initiatives and take proactive steps to identify employees at risk and to encourage employees to personally take charge of their wellness.

The South African Human Rights Commission has developed an excellent resource on disability which is useful in understanding what constitutes a disability and how to manage disabilities in the workplace.

Personal Income Tax Filing – HRTorQue Tax Team

The tax filing season officially starts on 1 July 2018 for the 2018 tax year (1 March 2017 to 28 February 2018). The closing date for e-filing submissions will be the end of October 2018 for normal taxpayers and the end of January 2019 for provisional taxpayers.

Pricing:

Our charges for completing tax returns will depend on when we receive your information. Premium pricing will kick in for last minute returns to try and avoid the challenges we face every year.

Information Received By Cost of Return incl. VAT
15 October 2018
(15 December for provisional taxpayers)
R810.00
Later than 15 October 2018
(later than 15 December for provisional taxpayers)
R1,625.00

Please Note: We reserve the right to charge a surcharge on the completion of tax returns that require the drafting of additional schedules.

The cost of completing these tax returns will include the following services:

  • Collection and collation of supporting documentation necessary to complete your tax return
  • Completion and filing of the tax return
  • Checking of assessment and notifying you of the result thereof
  • Submitting any additional information requested by SARS via e-Filing. (Note this is SARS’ first request for information and additional charges will apply where further information is required, or a dispute is necessary.)
  • Further charges will apply where SARS first query extends to additional queries, and possibly an audit. Fees will be billed at an hourly consulting rate of R750 plus VAT or part thereof. This approach is necessary due to the ever-increasing queries made by SARS. These extended queries require further collation of the necessary documentation and hence our fee covers our time spent. Should you wish to take up the issue personally we will forward you all the necessary supporting documentation to do so.

Process:

Due to the volume of work anticipated during this filing season and the need to maintain the high standards required by the South African Institute of Tax Professionals I will once again be assisted this year by a broader team, so please don’t be surprised if you receive correspondence from Erin, Gina or Megan.

Returns that are submitted via e-Filing are generally assessed within a couple of minutes and the assessment will be forwarded to you in cases where payments to SARS need to be made. If you are due a refund, please keep an eye on your bank account and notify me if you have not received it within 30 days. Due to the volume of returns submitted it is not possible to monitor the progress of each refund payment. SARS no longer sends out notifications where they experience bank account problems; and due to Call Centre congestion and the risk of fraud they are loathe to assist with refund verifications.

If you have all the necessary documentation to complete your tax return and would like to be one of the ‘early birds’, please can you get this information through to me as soon as possible and the work will be processed on a first come, first served basis.

Provided you are on my e-Filing profile we will endeavour to lodge your return within 72 hours. For new clients your details will need to be loaded onto my e-Filing profile. Once loaded into e-Filing it takes approximately 48 hours for the profile to be activated. Please note that the information that you provide in this regard must be exactly that which is reflected on e-Filing, otherwise the request will be rejected.

In the event of SARS making an error on the assessment the tax return completion fee includes a maximum of 30 minutes consulting with SARS on your behalf. Any interventions that exceed this period will be billed at an hourly consulting rate of R750 plus VAT or part thereof. This approach is necessary due to the ever-increasing errors made by SARS. Should you wish to take up the issue personally we will forward you all the necessary supporting documentation to do so.

Information Requirements:

To complete your tax return accurately and timeously we require the following information:
PLEASE NOTE ALL DOCUMENTATION TO BE SENT TO TAX@HRTORQUE.CO.ZA

  • IRP5 certificate/s (Please request a copy from your employer so that we can verify that the IRP5 agrees to the IRP5 on the pre-populated tax return)
  • IT 3(a)’s relating to untaxed income, IT 3(b)’s for interest and dividends and IT 3(c)’s for any capital gains received
  • Sale of any capital assets
  • Details of any other income that you may have received from any sources (e.g. if earning rental income, we would need the total income earned in the year and a schedule of the expenses incurred in generating the rental income (i.e. interest paid on bond, levies, management fees, repairs and maintenance, electricity / lights and water etc.)
  • Medical aid tax certificate
  • Retirement annuity tax certificate
  • Travel Details: Opening and closing mileage, business / private km’s, total km’s travelled, car make and model and original cash purchase price. You are required to maintain a detailed logbook if you want to claim business mileage against your travel allowance. This detail includes the clear separation of the business and private mileage undertaken and the listing of the clients visited daily. Please email this logbook to me.
  • Should you have use of a company car please note that you are required to maintain a detailed logbook. In the event of a SARS review / audit this detailed logbook will need to be sent to them. Please email this logbook to me.
  • If you earn mainly commission (more than 50% of total remuneration) then we require a schedule listing the expenses that you incurred during the tax year to earn that commission. Please retain the supporting documentation for 5 years as SARS may audit you at any time.

If any of the details listed below have changed please notify me so that we can make the necessary changes on the tax return:

  • Marital status (kindly advise if you are married in / out of community of property). If you are married in community of property and receive investment or rental income in addition to your salary, please send through your spouse’s name and ID number.
  • Residential and postal address
  • Telephone / cell phone numbers / email address
  • Bank Details: Account number / holder, branch code and type of account (very important). If these details change, you will be required to take a certified copy of your ID, proof of residence and original current bank statement (with bank stamp on it) to your nearest SARS office in person. SARS requires you to do this in person due to recent occurrences of fraud.

Should you have any questions regarding this process please do not hesitate to contact the team on tax@hrtorque.co.za.

Dishonesty and the Employer’s Onus in Dismissal Disputes

Author: Neil Coetzer (Cowan-Harper-Madikizela Attorneys)

An apple a day?

In the case of Compass Group Southern Africa (Pty) Ltd v van der Merwe N.O & Others (JR633-16, 9 February 2018) the employer had approached the Labour Court with a review application, seeking to review and set aside the findings of the Commissioner who had found the dismissal of the employee to be both procedurally and substantively unfair.

The employee, whose duties included storing and serving apples at a hospital, was caught in possession of several apples which she was carrying in a bag obtained from the hospital ward. Upon being confronted by her employer, the employee apologised and begged for forgiveness. The employee was found guilty of misconduct and dismissed by the employer.

The employee’s version at the enquiry, and subsequently the arbitration, was that she had bought the apples from a vendor and that she had taken them with her to work. While the vendor was not called as a witness at the disciplinary enquiry, at the arbitration he indicated that the employee had left the apples with him and that the employee had gone to collect a plastic bag to place them in. These were two mutually destructive versions which placed serious question marks over the employee’s defence.

It was common cause that the employee had access to apples on the day of the incident. The employee also conceded that the apples found in her possession were ‘strikingly similar’ to those that were served in the hospital ward.

The Court commented on the onus of an employer to prove that a dismissal was fair. It explained, with reference to Woolworths (Pty) Ltd v CCMA & Others (2011) 32 ILJ 2455 (LAC), that:-

“In an unfair dismissal case relating to misconduct, the ‘evidentiary burden’ starts with the employer but once the employer provides prima facie proof of the misconduct as alleged, the ‘evidentiary burden’ shifts to the employee to prove his own defence. If the employee then fails to put up a defence or fails to prove his defence, the employers [sic] prima facie proof of misconduct becomes conclusive proof and the employer has then discharged the ‘overall onus’ that always rested with it.”

The Court found that the employer had established a prima facie case of misappropriation of company property or dishonest conduct on the part of the employee and that therefore the employee was required to ‘prove to be honest what admittedly on its face looked dishonest’. The Court found that the employee clearly failed to do so and then had to consider whether her dismissal was fair.

The Court found that the employee had engaged in conduct which essentially amounted to theft, concocted an obviously dishonest defence, showed no real remorse and, finally, occupied a position of trust within the Company. The Court accepted that the Labour Appeal Court has in the past followed a strict approach in respect of dishonest conduct by employees, particularly for reasons related to the employer’s operational requirements. Importantly, the Court found that persistent theft of stock ‘places in jeopardy the security of employment of all employees’. The Court also found that there was no basis to find that the dismissal of the employee was procedurally unfair.

In the circumstances, the Court set aside the arbitration award and found that the dismissal of the employee had been both substantively and procedurally fair.

This judgment confirms that dishonesty in the workplace will usually result in dismissal. The Courts will not expect an employer to continue to employ an employee who has broken the trust relationship or engaged in conduct which has negatively impacted on that relationship.

Notice of Draft Taxation Law Amendment Bills

To give effect to the tax proposals announced by the Minister of Finance in the Budget review of 21 February 2018, the following draft Bills have been published (16 July 2018) on the SARS and National Treasury web sites:

  • The Taxation Laws Amendment Bill;
  • The Tax Administration Laws Amendment Bill;
  • The Explanatory Memorandum to the Taxation Laws Amendment Bill, and
  • The Memorandum on the Objects of the Tax Administration Laws Amendment Bill