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| Table of Contents |
1. HRTorQue - BEE Status
2. Calculations of Notice, Severance and Leave Pay
3. Moving from Mates to Managers - Skills for New Managers
4. Notes Relating to the BCEA Legislation - Calculations
5. COIDA and Domestic Workers
6. How will 'Retirement Fund Reform' impact your pension fund?
7. How does the new 'Employment Tax Incentive' (ETI) work?
8. Let's Talk About "State Old Age Pensioners" and UIF
9. Manual PAYE Forms
10. Official Rate of Interest Increased
11. Contact the HRTorQue Team |
| 1. HRTorQue - BEE Status |
| Author: Melany Bydawell and Karen van den Bergh |
We are pleased to advise that HRTorQue Outsourcing (Pty) Ltd has scored excellently on the QSE Scorecard, and is categorised a Level 2 Contributor to Broad Based BEE, meaning that our clients can claim 125% of their spend with us on their own scorecard.
Furthermore, due to our categorisation as a "Value-Adding Supplier", our clients can claim a further 25% on their spend with us. |
| 2. Calculations of Notice, Severance and Leave Pay |
| Author: Karen van den Bergh |
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We have recently dealt with labour cases where disputes have arisen regarding the value of leave pay. |
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This has not only cost the client a significant amount of money in terms of legal and consulting costs, but also led to the employer settling on a value that exceeds that legislatively prescribed. |
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By utilising the services of an external consultant, the company can show that it has endeavoured to interpret and apply the legislation, taking into account the specifics of its own organisation. This significantly reduces the risk of non-compliance. |
During 2004 we held seminars and sent many emails about the changes in the BCEA legislation and Section 35(5). We have noticed that a number of organisations have not worked through these changes as yet and that many do not calculate Notice Pay, Severance Pay, Leave Pay paid out on termination or Leave Pay (while on Annual leave) correctly. Many still calculate using only the basic wage or salary, perhaps correctly, but without any consideration of the change in legislation. This could lead to your actions being found to be irregular by the Department of Labour.
We have included a number of notes below and mention that this legislation is complex and can result in an increase in payroll bills if a proper documented process is not followed. The basis of this action should include a decision to include or exclude certain allowances and an explanation as to why that decision was made.
To ensure that you have applied your mind correctly please contact David Beattie (Tax Manager) on 031 582 7410 or email him at [email protected]. Dave will send you a quotation covering the process to be taken, with the output being a recommendation on whether or not to change your payroll calculations.
I have listed below the process that will be followed during this consultative exercise and the cost thereof:
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Consultation to introduce Section 35(5) of the Basic Conditions of Employment Act. |
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Consult with regards to the identification of various cash payments, allowances, company contributions and fringe benefits (where clients are unsure as to the totality of these items a report will be obtained from the payroll department). |
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Separation of income categories into income payments for 'work done' and 'to enable work to be done'. |
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Identification of payments that are specifically excluded in terms of this legislation. |
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We will prepare a report detailing the process that has been followed in arriving at 'inclusions' and 'exclusions' in terms of this legislation. This report will include the discussion of various anomalies, identify decisions made and then be signed off by the client. |
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The outcome of this consultative process (the decision table) will be implemented into the payroll if you are a HRTorQue Payroll client. |
Where the employer would like a remuneration policy detailing the company's treatment of leave payments, one will be drafted. The cost of this policy will be quoted on separately.
The cost of this consultative and implementation process is R4 500 plus VAT. Should travel to your premises be required, the cost per kilometre is R4.00. In the event that the consultant is required to travel out of town to undertake this process all transport, meal and accommodation costs will be for the client's account. |
| 3. Moving from Mates to Managers - Skills for New Managers |
| Author: Iole Matthews (Executive Coach) |
You've just promoted a great employee, someone who's ambitious, works well and knows the business. Now you look forward to seeing him/her shine as a manager!
A few months later you are left wondering what went wrong.
For some reason, the idea persists that front line employees who excel can be placed in management or supervisory positions and they will do equally well. However, that's rarely the case without help.
Perhaps the worst dilemma for managers is getting placed in a supervisory role without any training for how to do it well. The typical manager suddenly has to become a motivator, trainer, mediator, planner, problem solver, cheerleader, delegator, disciplinarian, social worker and more, all while remaining diligent workers. They also have to renegotiate relationships with those they have been promoted over, people who were peers and those who may well have wanted the position as well.
Here's where the 'Mates to Manager Workshop' can help, providing an opportunity for first-time managers and supervisors to learn the practical skills it usually takes managers years to learn.
At this quality, focused, practical supervisor training, they will learn how to:
• Influence, work, and negotiate with people - not just boss them around
• Communicate powerfully and persuasively
• Understand a range of techniques to manage conflict and build relationships
• Engage, lead and develop a team
• Delegate effectively to increase productivity and motivation
• Use coaching skills in order to maximise your team's performance
• Manage time while juggling an ever-changing list of priorities
But will one workshop really make a difference?
We understand that one workshop isn't the total solution to achieving management excellence, and no one expects managers to be able to go back after two days and get it all right, all of the time.
Bottom line... As great as the workshop is, like any training there are hiccups when translating theory into practice. Back at work managers will have additional questions and encounter unexpected challenge in applying the learning.
That's why we INCLUDE four live, group coaching sessions! These four sessions provide direct and personal access to an experienced coach for two hours each month following the workshop.
At these sessions managers have an opportunity to:
• Find answers to their most pressing questions.
• Share advice on implementing ideas and plans more successfully.
• Share and learn from each other's successes.
• Test new initiatives before embarking on changes.
• Valuable learning opportunities from questions and challenges of others in the group.
For more information contact Melany Bydawell: [email protected]. |
| 4. Notes Relating to the BCEA Legislation - Calculations |
| Author: Karen van den Bergh |
The changes to Section 35(5) of the Basic Conditions of Employment Act have caused much confusion in the labour market. The most amusing point of this so-called change is that nothing was really changed. The fact that a Government notice was published in mid-2003 seemed to awaken the private sector.
To adequately deal with these issues I feel that it is necessary to define the concepts from a labour perspective first.
Remuneration
'Remuneration' is defined as the payment in money or kind, or both in money and in kind, made or owing to any person in return for that person working for another person.
Wage
'Wage' means the amount of money paid or payable to an employee in respect of ordinary hours of work or, if they are shorter, the hours an employee ordinarily works in a day or week. Wage would therefore exclude payments in kind and payments done for work outside of ordinary hours.
The term 'wage' is used for the calculation of:
• Overtime
• Sick leave pay and family responsibility leave
• Public holidays
An 'allowance' in labour terms is a payment to allow work to take place. Examples of such payments include:
• Transport allowances
• Tool allowances
• Uniform allowances
The important point to note here is that these payments allow work to take place and bears no relation to work done. A transport or uniform allowance would still have to be paid even if work was not done.
Benefits
In terms of labour terminology, a 'benefit' is something that an employee enjoys as a result of their association with their employer. The best examples of this would be the ability to purchase clothing rejected during the manufacture process whilst working for a clothing manufacturer and the ability for bank employees to receive low interest loans whilst working at a bank. The benefits acquired by the employee have no bearing on the employee's ability to work or performance. When thinking of the term 'benefit' in terms of tax legislation one would think of contributions to pension or provident funds or a fringe benefit gained.
Fluctuating Payments
This point is particularly important when an employee earns payments that fluctuate each month. To accommodate this phenomenon the legislation requires that, for weekly paid employees, an average of the past 13 weeks earnings be used. For salaried employees an average of the past three months must be used.
If the employee has not been employed for the full 13 weeks prior to termination then a more representative period must be used. Seasonal workers or other workers whose income fluctuates according to market demand would be unfairly disadvantaged if the averaging process was performed over the less productive months. There would then obviously be an unfair advantage to the employer if the averaging were done in the higher earning months. In these cases I believe that the averaging should be done over a full year to ensure fairness, to include payments that are "regularly paid".
The Act also makes mention of between 'regular overtime' and 'occasional overtime' and, in this instance, to include or exclude the overtime would need you to apply your mind.
Inclusions and Exclusions from 'Remuneration'
There a number of remuneration items included and excluded in the Government notice.
Annual Payments Pro-rated
An employee still in employment will not be entitled to a pro-rated share of the bonus, as he/she will get the bonus when it is actually paid. If the employee's employment is however terminated, they will be entitled to a pro-rated share thereof as they would not be in employment when it is paid out. This fact obviously assumes that the bonus is guaranteed.
Application of Legislation
This legislation was applicable from 1 July 2003. This means that only leave that accrues after this date would be subject to this legislation. The Payroll Authors Group has always been of the opinion that this legislation is merely a clarification and that nothing really changed.
Please contact me if you have any queries in regard to this notice: [email protected]. |
| 5. COIDA and Domestic Workers |
| Author: David Beattie |
Johannesburg - Domestic workers are on the verge of being covered by the Compensation for Occupational Injuries and Diseases Act, Labour Minister Mildred Oliphant said on Saturday.
"The [minister] said a number of public hearings were planned on the review of the laws, and appealed to domestic workers to participate," her spokesperson, Mokgadi Pela, said in a statement.
Oliphant addressed domestic workers during an imbizo in Soweto. The act was currently one of the motions undergoing a Parliamentary review. The Unemployment Insurance Act, which included the extension of worker maternity benefits and the extension of the claim period, was also being reviewed. She said benefits would apply to both South African domestic workers as well as legal foreign nationals working locally.
"Oliphant told the consultative forum that South Africa has 663 331 registered domestic workers, however this was a far cry from the number of domestic workers employed in the country," said Pela.
"She challenged the department's inspectorate to up its game and ensure that domestic workers are registered and afforded worker rights."
Contact Dave Beattie on [email protected] for any COIDA (WCA) queries. |
| 6. How will 'Retirement Fund Reform' impact your pension fund? |
| Author: Karen van den Bergh |
Over the past few months we have all heard snippets about the retirement reforms, and it is a complex issue.
Basically treasury had the following main concerns and these were the objectives of reform - to:
• Promote household savings
• Reform the Retirement Industry
• Enhance the tax treatment of Retirement Funds
• Address the charges of Retirement Funds
You will have noticed that in the 2013 budget, the minister released a number of Retirement Reform proposals around the tax treatment of Retirement Funds, which has already been realised with more being introduced in March 2014. We asked Kathryn Ann Maroun, a Corporate Benefits Specialist with Quattro Fund Managers to comment on this question - What are the timelines and when can we expect new regulation?
She had the following comments:
"Retirement Funds were, this week, urged to allay fears among members about retirement reform, including the changes to the law that come into effect on 1 March 2015.
From 1.3.2015, Provident Funds will be harmonised with Pension Funds, with regards to annuitisation. This means that upon retirement, only 1/3 of all contributions from 1.3.2015, and not the entire amount, as is currently the case, will be available as a lump sum on retirement. The other 2/3 of the member's contributions from 1.3.2015 will have to be used to buy an annuity or monthly pension when the member retires.
Provident Fund Members need to be reassured that the amount that they have saved prior to 1.3.2015, plus growth on this amount will still, upon retirement, be paid out as a lump sum, and will not be affected by the new legislation. It is imperative that Provident Fund members understand that it is only future contributions from 1.3.2015 that will be affected, and will be paid out on the same basis as a Pension Fund, upon retirement, and not any past contributions.
However there are exceptions to this new rule: if the value of your contributions plus growth is less than R150 000 upon retirement, the entire amount will be paid as a lump sum. Provident Fund members aged 55 or older on 1.3.2015 will not have to buy an annuity or monthly pension with their savings if they stay in their Provident Fund. However, if they move to a new fund, the contributions to the new fund and the growth on these contributions will have to be used to buy an annuity, or monthly pension, unless it is less than R150 000, upon retirement.
The issue around enforced preservation of a member's retirement savings, upon resignation from their job, is still being discussed by government, labour and business, but to date there are no formal proposals, and thus enforced preservation of your retirement savings during your working life will not be implemented next year."
There are some changes in relation to Government's key proposals or recommendations that trustees should be aware of.
If you require assistance with these changes, please email [email protected] who will put you in contact with Kathryn-Ann of Quattro Fund Managers. |
| 7. How does the new 'Employment Tax Incentive' (ETI) work? |
| Author: Karen van den Bergh |
What is ETI?
ETI is a tax concession made to encourage employers to hire young people with no work experience. The employer may claim the ETI from the South African Revenue Service (SARS) by reducing the amount to be paid over in terms of PAYE by the total ETI calculated on the basis of qualifying employees. This tax concession came into effect on 1 January 2014.
Who qualifies for ETI?
Employers who are registered for PAYE purposes and whose tax affairs are in order, are permitted to claim ETI. If an employer's tax affairs are not in order ETI may still be claimed, subject to certain restrictions, as soon as the tax requirements are complied with.
Who does not qualify for ETI?
Employers who have been disqualified by the Minister of Finance due to their replacing existing workers or who do not comply with the regulations prescribed by the Minister.
Instances where the employee's monthly remuneration:
Is less than the regulated remuneration, or R2 000 where remuneration is not regulated.
Would be less than R2 000 if the employee worked for only a portion of the month.
When may ETI be claimed?
Employers may claim ETI if they have workers in their employ who comply with the following requirements:
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They must be in possession of a South African identity document. |
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They must be between 18 and 29 years old. (This age limit is not applicable if the employer's fixed business address falls within a special economic zone, or if the employer operates in an industry designated by the Minister of Finance.) |
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They must not be domestic workers. |
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They may not be family of the employer or be in any way connected to the employer. |
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They must earn at least the minimum wage or, should there be no required minimum wage, R2 000 per month. |
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Their earnings must be less than R6 000 per month (fringe benefits included). |
Note: ETI may be claimed for a maximum of 24 months per qualifying employee.
How is ETI claimed?
An employer can claim by reducing the PAYE payable monthly, by the total ETI as calculated for each qualifying employee. This can be done by completing the ETI field on the monthly EMP201. There is no limit on the number of qualifying employees that may be hired.
Note: Employers must be able to produce the identity documents of the employees that ETI is claimed for, if requested to do so by SARS.
How is ETI calculated?
Employers must carry out the following steps each month:
Identify all the qualifying employees for the month.
Determine the relevant claim period - first 12 months or second 12 months.
Determine each qualifying employee's monthly remuneration.
Determine the amount of ETI for each qualifying employee.
Calculate the total ETI for the month.
The ETI is calculated as follows:
| Monthly Remuneration |
Year 1 - First 12 months ETI
for Qualifying Employees |
Year 2 - Second 12 months
ETI for Qualifying Employees |
| R0 - R2 000 |
50% of monthly remuneration |
25% of monthly remuneration |
| R2 001 - R4 000 |
R1 000 |
R500 |
| R4 001 - <R6 000 |
Formula: R1000 - [0.5 x
(monthly remuneration -
R4 000)] |
Formula: R500 - [0.25 x
(monthly remuneration -
R4 000)] |
If a worker was employed for only part of the month, calculations must be adjusted accordingly.
Note: If the value of the ETI is more than the PAYE liability of the entity for a specific month or if the employer is not able to claim for a specific month, the ETI is carried over to the next month.
What fines are applicable?
Fines will be imposed should, inter alia:
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An employer claim ETI for an employee who does not qualify. The penalty will be equal to 100% of the ETI claimed and the employer will consequently face PAYE underpayment and penalties and interest. |
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An employer replaces an employee with a qualifying employee. In such a case the employer could be fined R30 000. |
The foregoing is only a limited summary for information. Consult [email protected] for more information. |
| 8. Let's Talk About "State Old Age Pensioners" and UIF |
| Author: Karen van den Bergh |
In 2003 there was some confusion created by a change in the Main Act, and they were excluded, but the Contributions Act was not amended.
So the anomaly was created in that state old age pensioners were required to pay UIF contributions if they were employed, but they could not claim benefits if they lost that employment.
That amendment was withdrawn in 2006, and all persons employed (except for the specific exclusions) are subject to the payment of contributions and are also entitled to benefits, if they lose their jobs involuntarily (provided they are capable of and available for work). Age is immaterial, as is the receipt of any form of pension. |
| 9. Manual PAYE Forms |
| Author: Karen van den Bergh |
SARS has issued a notice on their website to notify employers that manual completed PAYE forms will no longer be accepted, with effect from 25 August 2014. An exception to the rule was made with regards to IRP5/IT3(a) certificates, provided that the total of such certificates issued does not exceed 5.
Employers who issue more than 5 IRP5/IT3(a) certificates can either use the eFiling functionality to capture the information, or the e@syFile software to submit the declarations and forms.
Please contact Karen on 082 891 1722 or [email protected] for an outsourced payroll solution that takes care of all the statutory submissions. |
| 10. Official Rate of Interest Increased |
| Author: Karen van den Bergh |
| The SA Reserve Bank recently increased the repo rate to 5.75% effective 1st August 2014 (up from 5.5%) which means that the rate to be levied by employers on low or interest free loans provided to employees for Fringe Benefit calculation purposes will be 6.75%. |
| 11. Contact the HRTorQue Team |
Head Office (Durban)
Phone: 031 564 1155
Fax: 031 564 1228
Email: [email protected]
Website: www.hrtorque.co.za
Address: 163 Umhlanga Rocks Drive
Durban North, KwaZulu-Natal |
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Sales
Melany Bydawell: 031 582 7425
[email protected] or 083 441 5618
Payroll & HR Administration
Karen van den Bergh: 031 582 7413
[email protected] or 082 891 1722
Human Resources / Employee Relations
Melany Bydawell: 031 582 7425
[email protected] or 083 441 5618 |
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