Employee New PAYE Business Reporting Spec for Employer Filing Season

Effective September 2019

SARS published the tax certificate specification document on 26 March 2019.

The document specifies the requirements for the generation of an import tax file for the annual as well as the interim submission. The requirements in this version of the BRS will become effective from September 2019 PAYE interim reconciliation period. To access the new BRS, please click here.

HRTorQue Now Offering VIP and Psiber Payroll Support

We are pleased to announce that HRTorQue now has the resources and capability to offer a support service to clients who wish to run their own payrolls on Sage VIP or Psiber, but who need help with material changes.

Our team are available to help with:

  • Payroll Setup
  • IRP5s and EMP501 Reconciliations and Submissions
  • Report Setup
  • Package Changes, e.g. medical aid price increases; new income/deductions

UIF Changes

Claiming When Losing a Portion of Earnings / Contributors to Nominate a Beneficiary / Domestic and Small Employers to Report and Pay Annually

The Minister of Labour has made the following material changes to the regulations in the Schedule, as published in Government Gazette 42140 No R 1434:

  • A “small enterprise” definition has been added to the regulation as contemplated in section 1 of the National Small Enterprise Act, 1996 (No. 102 of 1996).
  • The UI Amendment Act added section 12(1B) to the Unemployment Insurance Act to provide that a contributor who loses a portion of his income due to reduced working time is entitled to benefits (despite still being employed) if the contributor’s total income falls below the benefit level that the contributor would have received if he had become wholly unemployed.
  • Contributors may nominate a beneficiary by submitting the new nomination form UI 53 to the Fund immediately on commencement of employment. If a contributor did not, before his or her death, complete the nomination form at the commencement of new employment, the Fund must accept a nomination form completed at the previous employer as valid.
  • Employers must provide the Commissioner with the information in terms of their employees by submitting the declaration electronically or by completing form UI 19.
  • Domestic and small enterprise employers may declare employees and contributions annually provided that the contributor’s services are not terminated in which case the declaration must be done on termination.
  • Forms UI 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 3, 4, 5, 6A and 19 have been changed. Examples of the forms included in Government Gazette No. 42140.
  • Form UI 53 (beneficiaries) has been added by the regulation.

Applying for an Exemption from the National Minimum Wage

On 19 December 2018, the Minister of Labour gazetted the process for companies to apply for an exemption from the National Minimum Wage.

It is important to note the following:

  • The exemption, if granted, is only for 12 months.
  • The applicant needs to show it cannot afford the minimum wage and must have consulted all applicable unions and bargaining councils.
  • Even if granted, the company will still need to pay a minimum of 90% of the minimum wage (R18 per hour currently).

Employee Benefits – Late or Incorrect Payments and Information

Consequences for Employers and Employees

S13A of the Pensions Fund Act requires employers to meet certain deadlines with respect to both the payment of contributions and the submission of information to funds for these contributions to be allocated and invested swiftly.

  • Contributions must be paid by the 7th day of the following month; and
  • Information must be supplied by the 15th day of the following month

The consequences of getting this wrong are:

  • Potential criminal charge for the directors of the employer including a fine of up to R10m and 10 years in prison
  • Interest on late payments
  • A loss of investment returns for employees
  • Potential civil liability for loss of risk cover when premiums are not paid on time or misallocated

Employers spend considerable time choosing an appropriate fund for their employers, but then assume all the on-going administration within payroll and subsequent reporting to the fund works seamlessly. In practice this is seldom the case. Payrolls are set up incorrectly, payroll departments struggle to keep up to date with employee movements which impact benefits (engagements, terminations, maternity, disability, pricing changes) and fund portals are sometimes confusing or difficult to use.

With a little assistance this can be managed. HRTorQue administers many payrolls and fund portals and can either look after your entire payroll or help you design processes and reports to manage this risk in your organisation. Contact us at [email protected] if this is an area you need help with.

BCEA – Employee Minimum Pay of Four Hours Per Day

The November 2018 amendments to the Basic Conditions of Employment Amendment Act (BCEA), Act 7 of 2018, provide for the inclusion of the National Minimum Wage. They also include the insertion of a new section to provide for daily wage payments applicable to employees or workers who earn less than the earnings threshold – an employee who works for less than four hours on any day must be paid for four hours work on that day.

National Minimum Wage – Things to Consider

President Cyril Ramaphosa signed the National Minimum Wage (NMW) Bill into law on Friday, 23 November 2018.

The Bill came into effect on 1 January 2019.

There are a few exceptions to the national minimum wage of R20 per hour, which include:

  • The minimum wage for farm workers will be R18 per hour.
  • The minimum wage for domestic workers will be R15 per hour.
  • The minimum wage for workers on an expanded public works program is R11 per hour.

Employers should also be aware of some of the following points in relation to the National Minimum Wage:

The NWM is an hourly rate.

It is clear from the wording in the NMW Act that the national minimum wage must be administrated in an hourly rate basis.

Schedule 1 of the NMW Act states that:
“…the national minimum wage is R20 for each ordinary hour worked.”

The concessions for farmworkers, domestic workers, workers on an expanded public works program and workers who have concluded learnership agreements are also based on a minimum wage rate per hour.

From a practical perspective this means employers need to review their wage rates on an hourly basis to form a proper comparison.

Definition of “Worker”

The following new concepts are defined by and for the purpose of the NMW Act:

  • “Employer” (“any person who is obliged to pay a worker for the work that that worker performs for that person”)
  • “Worker” (“any person who works for another and who receives…any payment for that work whether in money or in kind”).

We foresee that there can be confusion between an independent contractor and the new concept of a “worker”. Employers may wish to be cautious and make sure independent contractors’ rates are also tested.

Employment Tax Incentive Act (ETI)

Section 4(1)(a) of the ETI Act requires the employer to pay a wage in each month that is not less than “the amount payable by virtue of a wage regulating measure…”.

Wage regulating measures always specify an hourly minimum rate, and sometimes specify a monthly and/or a weekly minimum wage in addition to the hourly rate. The result is that payroll systems and employers that apply the hourly minimum wage rate specified by the wage regulating measure, will comply with section 4(1)(a).

If there is no wage regulating measure, section 4(1)(b) specifies a monthly minimum wage of R2 000 and requires the employer to ‘gross-up’ the actual wage paid in the month if there are less than 160 “employed and paid remuneration” hours in that month.

Section 4(1)(b) does not provide for, and therefore does not allow, the minimum wage to be validated against an hourly wage rate, whereas the national minimum wage will be applied on an hourly basis.

This creates a challenge for employers and payroll systems. The Payroll Authors Group of South Africa has raised this with National Treasury in the hope this will be addressed in the coming months. In the meantime employers will need to take comfort from the fact that if the NMW hourly rate is paid it is likely the monthly test under ETI will be met.

Financial Exemption

The original drafts of the NMW allowed for a one year exemption for companies who could show they would be faced with financial hardship in implementing the NMW. In the final Act this has been replaced with a 10% reduction so even if hardship is claimed and on successful application these companies would need to comply with a minimum hourly rate of R18.

Adjusting Payrolls

Once you have carried out an assessment of your workforce, please make sure you inform payroll to make any amendments. Your payroll systems will not adjust themselves (while this may seem intuitive we have seen multiple employers who have assumed this would be the case). For HRTorQue clients, we can only adjust payrolls on clients’ instructions.

If you would like assistance reviewing your payroll/workers and are considering how to implement the NMW while minimising the impact on your business please give us a call.

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.

Compensation Fund Earnings Threshold – Incorrect Notice

On the 13 June 2018, the Minister of Labour gazetted a notice in relation to the Compensation for Occupational Injuries and Diseases Act that (sic) “the increase in the minimum earnings amount of R60,336 per annum and the maximum amount of R430,944 per annum with effect from the 1 April” would apply.

The Payroll Authors Group of South Africa has contacted the Department of Labour to question this on the basis there is no minimum and that the announcement in January 2018 reflected a change from 1 March and not 1 April.

The Department of Labour has confirmed PAGSA are correct and that the maximum earnings amount of R430,944 should apply form the 1 March 2018.