We always hear that South Africa has some of the best legislation in the world. We also hear that South African has too much red tape that stifles the entrepreneurial spirit. In the 26 years that I have been a tax practitioner I have seen legislation introduced that clearly unnecessarily adds to the compliance burden of the business owner. Very often this legislation is introduced in a haphazard manner that complicates the application of the legislation at company level. The introduction of the Employment Tax Incentive in 2013 is a case in point. We are 7 years down the line and making very slow progress in terms of achieving a stable and easy to understand product.
When dealing with clients and prospective clients, legislative compliance is often a very emotional issue. In our tough economic times, most businesses are concentrating on keeping clients and generating revenue. Compliance almost becomes a nuisance factor. Irrespective of how hard we try and put legislative compliance into the spotlight we find that there is a ready reason to put it on the backburner. No matter how frustrating this is, it isn’t until a crisis that legislative compliance becomes important. So, what constitutes a crisis?
When celebrating the turn of the year very few people would have predicted the position the world would be in now. Enter the COVID-19 pandemic stage left. This unprecedented event has wrought havoc on economies across the world. In our own economy panic set in when it was announced that there was going to be a general shutdown. The poor state of the economy left most employers ill prepared for such an event and very quickly it was evident that many companies would not be able to pay their employees for April. Government quickly stepped in with the introduction of funding schemes and the TERS UIF scheme.
We were faced with the difficult situation of trying to analyse and interpret this new legislation whilst receiving a deluge of TERS claims to process on behalf of clients. The volume of work was certainly not a problem. The problem was the fact that many of the claims related to new clients who did not run their payroll with us. Compliance issues that we regularly post articles on and highlight in Health Checks to our clients are now the cause of many of these new clients either not getting TERS claims, or having such claims delayed. What is abundantly clear is that compliance around payrolls and the human resources space is one of those areas that organisations are neglecting. Who would have thought that it would take something like COVID-19 to bring these inadequacies and non-compliance into the spotlight.
Whilst we have seen a frantic scramble to meet the necessary compliance standards by many organisations, this behaviour is akin to putting a plaster on a leaking dyke. There has to be a real intention to get the basic building blocks of the payroll / HR process correct. This is not a very time-consuming process and the solutions need not be expensive, corporate solutions. A practical solution can be designed to ensure that there is legislative compliance and that the company meets industry best practice. ‘Nice to have’ systems can be added at a later stage if a need is established.
Step one though is to highlight the areas of non-compliance, the areas where there are holes, and to not only plug those holes but to implement a basic system that provides the comfort of knowing that non-compliance is not going to cost the company a lot of time and money at some stage in the future.
HRTorQue offers a free HR Health Check to any organisations wanting a snapshot of where they are in terms of compliance and industry best practice. The process takes a maximum of 1.5 hours and the outcome is a report listing the areas of non-compliance and where improvements can be made. If you would like to take advantage of this opportunity you are welcome to contact Dave Beattie on [email protected].