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Table of Contents |
1. Probation: Does it serve any purpose?
2. Independent Contractors
3. Disclosure of Salary Information
4. Job Profiles
5. Taxation Laws Amendment Bill 2013 (TLAB)
6. Contact the HRTorQue Team |
1. Probation: Does it serve any purpose? |
Author: Melany Bydawell |
Most employers include a probation period into their contracts of employment when engaging new staff and yet they do not understand what a probation period means.
They often believe that this is a way of terminating the employee's services during or at the end of the period if the relationship does not work out and that they are not obliged to follow any procedures.
While there is still a procedure to be followed before terminating an employee during or at the end of the probation period, the law allows for leniency in the reasons for their dismissal.
This leniency in terms of the Labour Relations Act, No. 66 of 1995 ("LRA") Item 8 of Schedule 8 of the LRA ("Item 8") allow employers to place newly-hired employees on a probationary period, determined in advance and of a reasonable duration. The duration of the probationary period must be determined by considering the nature of the job and the time it will take to determine the employee's suitability for the position.
During this period employers must advise the employee of any aspects in which the employer considers the employee to be failing to meet the required performance standard. This feedback should be done in writing and the employee is entitled to reasonable evaluation, instruction, training, guidance or counselling in the work standards required.
Item 8 goes on to say that any person, albeit a Judge or Commissioner, evaluating the fairness of a dismissal of a probationary employee for poor work performance "ought to accept reasons for dismissal that may be less compelling than would be the case in dismissals effected after the completion of the probationary period".
In view of the above and during the probationary period, employers are given more leniency in their reasons for dismissal than would be the case after the employee's employment has been confirmed. |
2. Independent Contractors |
Author: David Beattie |
The Organisation, from time to time, has to make use of the services of an Independent Contractor for specific tasks / projects.
Provisions and Constraints
The following factors may not be present in terms of Section 200A of the Labour Relations Act, no 66 of 1995 (as amended) when determining whether a person is an Independent Contractor or an employee:
1. The manner in which the person works is subject to the control or direction of another person;
2. The person's hours of work are subject to the control and direction of another person;
3. In the case of a person who works for an organisation, the person forms part of that organisation;
4. The person has worked for the organisation for an average of at least 40 hrs/month, for the last 3 months;
5. The person is economically dependent on the other person for whom he/she works or renders services;
6. The person is provided with tools of trade or work equipment by the organisation; and
7. The person only works for or renders services to one person/organisation.
The above does not apply to any person who earns in excess of the amount determined by the Minister of Labour in terms of Section 6(3) of the Basic Conditions of Employment Act.
It is important to note that, when making a determination as to whether a person / company is an independent contractor or an employee, it is imperative to consider SARS Interpretation Notes 35 and 17. The application of the statutory and common law tests reflected in these Interpretation Notes will determine whether Employees Tax need be deducted and how payments should be coded for payroll reporting purposes. |
3. Disclosure of Salary Information |
Author: Melany Bydawell |
Can employers prohibit employees from disclosing details of their remuneration?
Employment contracts often contain clauses prohibiting employees from disclosing the details of their remuneration to any person, including colleagues and refer to disciplinary action if this is the case.
Whilst the reason behind this is understandable and reasonable, as employers do not want to have this information being freely discussed in the workplace, cognisance is to be taken of s78(1)(b) of the Basic Conditions of Employment Act, No 75 of 1997 (BCEA). This provides that "[e]very employee has the right to discuss his or her conditions of employment with his or her fellow employees, his or her employer or any other person." It has been recognised that "[r]emuneration is always a term and condition of the employment contact."
Can employers require an employee to contract out of his/her right to discuss conditions of employment?
Section 79 of the BCEA Section 79(2) states that "...no person may do, or threaten to do, any of the following:
a) require an employee not to exercise a right conferred by this Part;
b) prevent an employee from exercising a right conferred by this Part; or
c) prejudice an employee because of a past, present or anticipated
i. failure or refusal to do anything that an employer may not lawfully permit or require an employee to do;
ii. disclosure of information that the employee is lawfully entitled or required to give to another person; or
iii. exercise of a right conferred by this Part."
In the circumstances, a provision in a contract of employment prohibiting an employee from exercising his/her right to disclose his or her remuneration will be unenforceable. However, this should not be seen as allowing employees to discuss the remuneration of other employees and employers may prohibit this. |
4. Job Profiles |
Author: Melany Bydawell |
A recent survey conducted in a South African company revealed 46% of the employees had no idea what their job description is.
How sure are you that your employees know what they should be doing every day?
We wonder why performance and objectives are not being met but the fact is that nearly half, or more, of your employees don't know what their job profile/description is!
What are the results?
• This will prevent your organisation from realising its goals;
• Employees will not focus on the correct deliverables and objectives;
• Inaccurate, inconsistent and fair evaluations due to lack of standards and measurements to measure
performance.
We can assist you in providing your employees with job profiles. Clarity of role and expectations is one of the biggest motivating factors to employees as well as achieving overall organisational objectives. |
5. Taxation Laws Amendment Bill 2013 (TLAB) |
Author: David Beattie |
National Treasury released the TLAB during July and from a payroll perspective we will only really be impacted by a few items, namely:
Company Cars (rented by the employer)
Storing of the Fringe Benefit value of a company car (rented by the company as opposed to being purchased) in a new code on the IRP5. The new code 3816 was included on the IPR5 for the Aug submission.
Income Protection Policies
Employer paid premiums are, in future, to be taxed as a fringe benefit as the premium is no longer deductible. Premiums paid by the individual (i.e. a natural person) iro life, disability, severe illness will no longer be deductible if they are aimed at income protection. Pay outs on life, disability and severe illness policies will be tax free irrespective of whether or not the pay-out is in the form of a lump sum or an annuity.
The following IRP5 codes will be applicable until February 2015:
Code 3801 - Fringe Benefit for Employer paid premiums (if Employer owned policy)
Code 3808 - Fringe Benefit for Employer paid premiums (if Employee owned policy)
Code 4018 - Deduction for Employee paid premiums.
From March 2015, Code 4018 will no longer be applicable.
Bursaries and Scholarships
The qualifying annual earnings limit is to be increased to R 250 000 (up from R 100 000) for bursaries and scholarships granted to relatives of an employee. To assist in the establishing the employees' remuneration upfront a new "proxy remuneration" concept has been introduced (which is effectively the employees annual remuneration as at the end of the previous tax year). This is the remuneration factor that can be used when establishing if the employee meets the remuneration criteria below which the employee is exempt from fringe benefit tax on the bursary. The value of the tax free bursary has been increased to R30, 000 for further education schemes (i.e. above matric/grade 12). This became effective from March 2013.
Retirement Reforms
The proposed reforms that are to be introduced are based on the proposal we have already seen in 2012 and again in the Budget of 2013. They primarily deal with the tax treatment of contributions (Employer and Employee) as well as the process of aligning Pension Funds, Provident Funds and RA's. Essentially, any contribution made by an Employer to a fund will be taxed as a fringe benefit in the hands of the individual. There will be a deductible amount (Employee and Employer combined) of up to 27.5 % of the greater of taxable income or remuneration subject to an annual cap of R350,000. These reforms will impact some individuals more than others - but not that significantly. There are also a few items to be finalised regarding protection of vested rights, the tax implications when transferring from one fund to another, the impact on persons aged under 55 VS those over 55 (new entrants) during the transition period, etc. We recently attended an interesting talk by National Treasury on these issues and there are a few very tricky and complicated scenarios which need to be further investigated and finalised, so there is still a need for additional consultation regarding this change. Implementation is now planned for March 2015.
Employer-provided Accommodation
This refers to where the Employer actually "gives" the employee accommodation (e.g. transfer of ownership of a low cost house). Here again the definition of how remuneration (i.e. the R250,000 p/a) is made up is sometimes left to interpretation (e.g. does it include or exclude a portion, or all, of the travel allowance?) and also what remuneration figure must be used when working out the fringe benefit tax on such a transfer. This has now been dealt with, as has the issue of when the employees' remuneration increases during the year to an extent that his new remuneration puts him over the qualifying limit. The concept of the "proxy remuneration" (i.e. as per the Bursary schemes) must be applied here as well.
Valuation of the Fringe Benefit for Defined Benefit Purposes
There have been some changes regarding replacing values for the previous years' assessment with new values applicable for the new assessment year, which will provide a huge amount of effort from everyone in the "chain". The PAGSA has requested some further clarity on the formula to be used and how it should be implemented.
Employee Share Schemes
There are some proposals which deal with how to handle the re-characterisation of income (i.e. to address tax avoidance issues). This typically happens when dividends are paid (as opposed to remuneration) in respect of services rendered and as such tax is not paid on the income (i.e. it's seen as dividends and as a result the tax due is less than had it been declared as ordinary income). There are some changes that are on the cards here which should be finalised in the new year.
A few items we are still awaiting clarity on include:
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The final format for postal addresses as they will need to appear on the employee's tax certificate from next year. |
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Confirmation of the new validation rules for codes 3702 and code 3703 (i.e. travel re-imbursive codes). |
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List of Special Economic Zones (SEZ) to be used in the management of the new Employment Tax Incentive Scheme. |
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New codes on the tax certificate to store the R30,000 bursary threshold. |
Also, the rights of Asylum Seekers have been in the spotlight recently in terms of how they are able to access government services and as such there are various departments of government (i.e. SARS, Dept. of Labour, etc.) that need to determine (and agree a standard) how these individuals need to be uniquely identified (i.e. they need some form of Asylum Seeker ID number) for if and when they receive benefits from the UIF, or are put on to the ETI scheme. |
6. Contact the HRTorQue Team |
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Sales
Melany Bydawell: 031 582 7425 / 083 441 5618
[email protected]
Payroll & HR Administration
Karen van den Bergh: 031 582 7413 / 082 891 1722
[email protected]
Human Resources / Employee Relations
Melany Bydawell: 031 582 7425 / 083 441 5618
[email protected] |
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