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HRTorQue REPORTER
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Table of Contents |
1. Closing for the Festive Season
2. There is No 'Normal' Retirement Age Without a Contract
3. Department of Labour is Actively Knocking on Doors!
4. Tax Legislation - Use of Company Car When the Car is Rented
5. Contracts of Employment - Are they necessary?
6. Taxi fares as a travel allowance?
7. The Importance of Job Profiles
8. Company Cell Phones and Computer Equipment
9. Allowances, Advances and Reimbursements (Issue 3)
10. Contact the HRTorQue Team |
1. Closing for the Festive Season |
As 2012 draws to a close, we'd like to thank you for your ongoing support during this challenging but very rewarding year! Melany, Karen and the whole team at HRTorQue would like to wish you a wonderfully relaxing holiday and an exciting 2013.
Please note that
HRTorQue will close for the festive season on
21 December 2012 and will return to work on 7 January 2013.
Please contact Karen or Melany for urgent matters during this period:
Payroll: Karen van den Berg - 082 8911 722
Labour Relations: Melany Bydawell - 083 441 5618 |
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2. There is No 'Normal' Retirement Age Without a Contract |
Author: Melany Bydawell |
We are often faced with the question, "What is the legal age that our employees are required to retire from our organisation?"
This question is usually coupled with the next statement and question, "This employee is not performing adequately any longer but has been with our organisation for years. How can I get them to exit without having to performance manage him/her?"
Employers often do not have a contract of employment at all, or they have omitted to include a clause that provides for the age upon which the employee will be expected to retire. It is important to include an agreed retirement age in contracts of employment for those employees who are not members of a pension or provident fund, but even if they are, employees who are members of a pension or provident fund are bound by the rules of the fund, in particular, the mandatory age upon which the employee will retire.
There was a recent judgement handed down by the Durban Labour Court in a case concerning an employee's retirement age. To summarise, the employee was not a member of the employer's provident fund and the employee's written contract of employment did not stipulate a retirement age. Upon reaching the age of 64, the employer told the employee that he had reached the company's "normal" retirement age and that he would have to retire. The employee was unhappy that he had been "forced" to retire, approached the Labour Court and claimed that the termination of his employment, based on the alleged retirement age, was unfair.
The Labour Court confirmed the following principles:
• If an employee is not a member of the employer's provident / pension fund, the rules of the particular
fund, including the prescribed retirement age, will not apply to the non-member employee.
• If an agreed retirement age does not exist in a written contract of employment, the employer may then
attempt to prove that there is a "normal" retirement age that applies to the employee concerned.
In order to prove that there is a "normal" retirement age, an employer must demonstrate that former employees in the same capacity have all, as a matter of practice, retired at the same age. An employer may not unilaterally impose a retirement age. If a dismissal based on age is found to be unfair (because there is no agreed or "normal" retirement age), an employer could be ordered to compensate the employee in an amount not exceeding 24 months' salary.
Contact Melany Bydawell for assistance with Contracts of Employment. |
3. Department of Labour is Actively Knocking on Doors! |
Author: Melany Bydawell |
YOUR EE REPORT IS DUE ON 15 JANUARY 2013
Is your company compliant with the requirements of the Employment Equity Act?
Are you prepared to chance a fine as high as R900 000 and the possibility of criminal charges?
The Department of Labour has increased its inspections on Employment Equity and have created two levels of inspection to monitor it within organisations. The first level of inspector may visit unannounced in teams of up to five people. They have the authority to issue compliance orders to organisations that are not compliant.
The second level is two-men auditing teams designated with the responsibility to audit a company's implementation of EE. Each team has been set the target of auditing a minimum of 40 companies per year so it is recommended that you give serious thought to ensuring that you are compliant.
For assistance please contact Nicky Hardwick on [email protected]. |
4. Tax Legislation - Use of Company Car When the Car is Rented |
Author: Karen van den Bergh |
Some employers find it more convenient to hire cards on a long term basis from a company which hires cars for use by the general public, and to give such a car to an employee for use as a "company car", rather than buy a car. They then find it difficult to determine the "original cost" of the car to which they must apply the specified percentage to arrive at the month fringe benefit value, on which the employee must be taxed.
The Act now recognises this practice and provides that in such cases the value of the fringe benefit will be the hire charge paid by the employer to the hirer (Avis, Hertz, etc.).
Where the car is leased, no account may be taken of any payments by the employee for the licence, insurance or maintenance of the vehicle, as all such costs are borne by the lessor of the car. |
5. Contracts of Employment - Are they necessary? |
Author: Melany Bydawell |
According to section 28 and 29 of the Basic Conditions of Employment Act employers are required to give employees written particulars of employment. Section 29, which sets out detailed requirements, which must be contained in the written particulars of employment, does not apply to employees who work less than 24 hours per month for an employer. In addition, subsection 29 (n), (o) and (p) do not apply to employers who employ less than 5 employees.
The written particulars of employment do not necessarily have to be in the form of a contract of employment, although it is preferable that employees are issued with contracts of employment on commencement of their employment with the company. The written particulars should include all the legal requirements as detailed in the Act.
When a condition of employment changes the written particulars must be revised to reflect the change; and the employee must be supplied with a copy of the document reflecting the change. If an employee is not able to understand the written particulars, the employer must ensure that they are explained to the employee in a language and in a manner that the employee understands. |
6. Taxi fares as a travel allowance? |
Author: Karen van den Bergh |
Can taxi fares be treated as a travel allowance for income tax purposes?
As far as SARS is concerned, taxi fares are not a travel allowance, they are fully taxable as remuneration. |
7. The Importance of Job Profiles |
Author: Delys Brouckaert & Melany Bydawell |
Human resources are the most valuable asset of an organisation. HR infrastructure is therefore a critical component of an organisation and the facilitation of day to day management of employees is becoming increasingly challenging.
Job profiles are the building blocks of an organisation's HR infrastructure and describes the major areas of a position, namely: |
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Job Title: Clarifies the position, job title, and level (if applicable). |
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Statement of Purpose and Objectives: A general statement, summarizing in three or four sentences, the purpose or objective of the position. |
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Job Profile: A detailed list of specific duties and tasks in their order of significance. This list should include any associated standards and measurements that the employee may have for meeting certain objectives. |
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Experience and Skills: For example, if the position requires the use of a computer, then the type of software or hardware used to perform the job would be listed. |
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Description of Competencies: Details of strengths needed to perform the position such as "ability to work with tight deadlines and multiple managers". |
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| Job profiles provide several benefits: |
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Clarification of roles & responsibilities: This avoids the conflict and misunderstanding that arises with unmet or unclear expectations. |
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Recruitment & selection: Writing appropriate interview questions functions as a foundation for developing interview questions. |
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Maximises the spend on employees: By ensuring experience and skills needed for the position are detailed and matched to prospective applicants and existing employees - this also ties in with the Workplace skills Plan. |
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Discourages employees from refusing to do something because "it is not my job". |
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Provides a basis for employee reviews, salary increases, setting goals, and growth paths by forming the basis of performance reviews. |
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Serves as legal documentation that can be useful in the event an employee files a termination or discrimination claim against the company. |
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8. Company Cell Phones and Computer Equipment |
Author: David Beattie |
A new draft interpretation note has recently been introduced by SARS to deal with the use of employer-provided cellular phones, computer equipment or employer-funded telecommunications services. This new interpretation note deals with the following benefits: |
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Private use by an employee of employer-provided telecommunications equipment (e.g. cell phones) or computer equipment (e.g. laptop) and; |
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Any allowance or reimbursement granted by the employer in respect of the employee's privately owned equipment or service contract which is used for business purposes. |
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In terms of the Seventh Schedule to the Income Tax Act, no value is placed on the private use of an asset consisting of telephone or computer equipment which the employee uses mainly for the purposes of the employer's business. The word 'mainly' has been interpreted by the courts to mean use of more than 50%. If the business use is therefore more than 50% then no value will be placed on the private use of that asset.
It is important to note that SARS will conduct their own investigation into whether the asset is being used mainly for business purposes. They will include the nature of the employees work, qualifying criteria for entitlement to use of the asset and the conditions of use of the grant. The onus is on the employer and employee to prove that the particular asset is required due to the nature of the employee's employment and that it will be used mainly for business purposes. If an employee incurs expenses on behalf of the employer and proof of such expenses are provided to the employer, such amounts can be excluded from taxable income. If however, the employee receives an allowance this allowance must be included in the taxable income of the employee.
Interestingly the draft interpretation note also sets out a formula which SARS will accept to determine the cost of free minutes where the contract includes a free cellular phone, and deals with the tax treatment of split-billing arrangements. The draft interpretation note makes it clear that employers are responsible for ensuring that the assets / services are used mainly for business purposes. Failure to do this will result in the use being declared a fringe benefit and this value being included in the employee's remuneration for Employees' Tax purposes. |
9. Allowances, Advances and Reimbursements (Issue 3) |
Author: David Beattie |
The new issue of this Interpretation Note has recently been released by SARS. Issue 3 includes commentary and examples of the calculation of the deduction from subsistence allowances, as well as a new section dealing with travel allowances.
This new draft interpretation note importantly now deals with the meaning of the phrase 'obliged to spend at least one night away from his or her usual place of residence in the Republic'. The interpretation note refers to ITC 1668 in which the court distinguished between employees who lived far away from their place of employment and were given an accommodation allowance, and the situation where performing the duties of employment required the employee to spend nights away from home.
In respect of travel allowances, the draft interpretation note gives examples of what constitutes business travel and private travel for purposes of the deduction for business travel expenses, and states that the location of a recipient's place of employment or place of business is a factual enquiry.
As an example: |
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An employee who works for a restaurant in the Gateway Centre for 3 days a week and then the Pavilion branch for 2 days a week would regard travel between their home and either store as being regarded as private travel. |
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Where the employee normally works at the Gateway branch but periodically travels to Gauteng to assist with the opening of branches there would regard this travel as business travel. |
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The taxing of this travel allowance can take place in one of two ways. The employer can either include 80% of the travel allowance in remuneration for taxation purposes or if they are satisfied that at least 80% of the use of the motor vehicle is will be for business purposes, only 20% of the travel allowance or advance is included in remuneration and is subject to employees' tax.
The word 'satisfied' suggests that the employer must actively look into the facts of each employee's circumstances, and objectively weigh up and apply their mind to whether or not the employee should qualify. This can be done by regularly reviewing employees' logbooks, and taking into consideration changes in the role or function of the employee. |
10. 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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