The Minister of Labour Mildred Oliphant, acting in accordance with S6(3) of the Basic Conditions of Employment Act (BCEA), increased the annual earnings threshold to R205 433.30 from the previous figure of R193 805.00 on 1 July 2014.

This is significant as employees who earn in excess of the threshold (now R17 119.41 gross per month) are excluded from the protection offered by the BCEA in terms of sections 9, 10, 11, 12, 14, 15, 16, 17(2) and 18(3).

These sections cover the limiting of ordinary hours of work to 45 hours per week (s9), to payment for any overtime worked in excess of 45 hours (s10), limitations on a compressed working week (s11), provisions which allow for the averaging of a work week (s12), the mandatory provision of a meal interval of not less than 30 minutes for employees who work for longer than 5 hours (s14), provisions which allow for certain mandatory minimum daily and weekly rest periods (s15), an employee's entitlement to increased pay for work on Sundays (s16), the payment of a mandatory allowance for employees who engage in night work (s17(2)), and increased pay for employees who work on public holidays.

Employees who earn in excess of the threshold are not entitled to the minimum protections contained in these sections of the BCEA.

Earnings relate to the regular annual remuneration before deductions, i.e. income tax, pension, medical and similar payments but excluding similar payments (contributions) made by the employer in respect of the employee, provided that subsistence and transport allowances received, achievement awards and payments for overtime worked shall not be regarded as remuneration for the purpose of calculating remuneration in terms of the threshold.

The increase in the threshold affects those employees who currently earn between R193 000 and R205 433.30 as they now become entitled to the above-mentioned basic rights.

Do you hear these excuses on a regular basis?

In real terms this translates into "it wasn't important enough to me", for whatever reason.

Social media soaks up billions of hours of 'spare' time. Where did or do we find the time for that?

Running out of time is mostly a euphemism, and the smart individual, manager or employer realises that these are message about something else that is unrelated. The people you're trying to manage or relate to are always adjusting and re-assessing which meetings they go to and which activities they prioritise etcetera.
 
The solution has nothing to do with giving people more time (you can't) and everything to do with holding people responsible, ensuring that you have done a work study to assess volume of work and creating more urgency.

South Africa's unemployment rate increased to 25.2% in Q1 2014 as the economy fights to gain momentum. The rate also means that unemployment is the highest of more than 40 emerging markets tracked by Bloomberg. The rate rose from 24.1% in Q4 2013, Statistics SA said in a report. The number of people without jobs climbed by 237 000 to 5 million mainly due to a slump in employment in informal industries.

Of concern is that unemployment is likely to increase in Q2 2014 due to job losses in the mining sector. The biggest job losses was in the transport industry, which lost 66 000 employees, while the community and social services industries, including government, cut 42 000 jobs, while 38 000 positions were lost in the trade industries.

Employment in manufacturing, which makes up about 15% of the economy, grew by 38 000 and t he finance industry added 8 000 jobs. The economy is set to expand 2.7% this year, well below the 5.4% growth needed to cut unemployment to 14% by 2020, according to the state's National Development Plan.

Demographic Requirement Dropped from Job Equity Rules

 
Do you require assistance in complying with the requirements of the Employment Equity Act?
Contact Nicky Hardwick.

The Department of Labour has withdrawn its controversial proposal for national and regional demographics to be used for employment purposes, during National Economic Development and Labour Council (Nedlac) negotiations on the draft employment equity regulations.

The draft regulation arose from a provision in the Employment Equity Amendment Act, which was signed into law by President Jacob Zuma in January. This empowered the labour minister to pass regulations to specify the circumstances in which employers had to use the demographic profile of either the national economically active population or the regional economically active population.

The proposal was opposed and labour experts also emphasised that the proposals would not pass constitutional muster.

Coloureds represent 53% of the economically active population in the Western Cape but less than 11% nationally. Indians make up 12% of workers in KwaZulu-Natal but only 3% nationally.

In terms of the withdrawn draft regulations, a designated employer employing 150 or more people would have been required to use the national demographics for the upper three levels of the workforce (i.e. top and senior managers and professionals), and an average of the national and regional demographics for the lower levels (skilled, semiskilled and unskilled individuals). Those employing fewer than 150 people would have to use national demographics for top and senior managers and regional demographics for professionals and lower levels.

In the absence of such a regulation, the law simply says that employers may opt to take the demographic profile of the national and regional economically active population into account in setting out their employment equity plans - there is no obligation on them to do so.

The courts had ruled that national demographics could not be the only criterion, saying regional demographics had to be considered as well. They had also ruled that employment equity could not be applied on a mathematical basis as this would result in quotas, which were specifically prohibited by the act.

As long as employers have valid reasons for their numerical goals, the Department of Labour cannot force on them national and regional demographic representivity.

Following on from our previous tax alert entitled "The End of the Road for the Cheque", it appears that SARS has taken further steps to ensure taxpayers discontinue the use of cheques for the purposes of settling their tax debts.

With effect from 30 May 2014, taxpayers are no longer permitted to make any cheque payments to SARS in the following circumstances:

•	During the preceding 3 years the taxpayer made two payments by cheque to SARS that were "referred to drawer"; or
•	The payment is in excess of R50 000 with regards to:    -  Income Tax except for the following:        •  Donations Tax        •  Withholding tax in respect of non-resident sellers of immovable property located in South Africa        •  Assessments of owners or charters of ships or aircrafts who are not resident in South Africa    -  Value-Added Tax (VAT)    -  Employees Tax (PAYE)

It is important to note that the R50 000 limit noted above relates to the total payments made by cheque by that person on that specific day. Therefore if, for example, a person is required to make an Income Tax and VAT payment on the same day the total of both cheques cannot exceed this R50 000 threshold.

We recommend that the payment of taxes by cheque be used as a last resort as non-adherence to the above requirements will result in cheques being rejected and late payment penalties and interest being imposed.

There are no benefits linked to age or retirement at all in the UIF Main Act that relates to the benefits payable. Unemployment benefits are strictly intended for employees who have involuntarily lost their employment.

There are the 5 pillars of benefits under which you can apply for benefits:
•  Unemployment benefits
•  Illness benefits
•  Maternity benefits
•  Adoption benefits
•  Dependants' benefits

The purpose of UIF is to accommodate workers who have (involuntarily) lost their job or income due to retrenchment and dismissal, (illness or pregnancy, adoption and death).

A quick summary of when you can claim from the 1st pillar are the following:
•  Your contract of employment has been terminated;
•  Your fixed term contract has ended and not been renewed;
•  You've been dismissed (or fired) from your job, as defined by section 186 of the Labour Relations Act '95;
•  You or your employer has been declared insolvent, in terms of the Insolvency Act, 1936;
•  Your contract of employment has been terminated by the death of your employer;
And you're registered as a work-seeker with a Labour Centre And you are capable of and available for work.

At the end of each month, the employer is required to submit a declaration to the Department of Labour containing one of the following reasons and if an employee had left your employment one of the following (yellow) reason codes would be on the UI19

The following employment status codes are valid:

Code	Description
01	Active
02	Deceased (death benefits)
03	Retired
04	Dismissed
05	Contract Expired
06	Resigned
07	Constructively Dismissed
08	Employer's Insolvency
09	Maternity / Adoption Leave
10	Illness Leave
11	Retrenched
12	Transfer to Another Branch
13	Absconded
14	Business Closed

If the reason code is 03 - Retired - no unemployment benefits are available online. However, if the employee believes that they are entitled to benefits, the employee is asked to visit the office with a completed UI2.11, signed by the employer, on which they have declared whether the contract was terminated by the employer or the employee. If the employee has terminated the contract, or has agreed to the termination of contract, there are no benefits due, only if the employer has stated that there was an involuntary benefit.

There is confusion as to the reasons when the DOL see a reason 'code 03', and there have been discussions around whether it should say, voluntary retirement, i.e. no benefits due.

Below is an extract that makes it pretty clear what the intention of the act is:

Question:
If I decide to retire at 60 instead of 65 can I claim UIF?

Answer:
There is a difference between unemployed, and being retired. The purpose of UIF is to tie over workers who have (involuntarily) lost their job or income due to retrenchment, dismissal, illness or pregnancy. It is implied that these workers will attempt to get back into the job market. If you retire early, you do so voluntarily, with the assurance that you have a pension to support you. So early retirement does not entitle you to a UIF benefit, otherwise everyone would be doing it.

We have received a recent stream of queries regarding offshore employment and the tax consequences thereof for South African citizens. More and more South African citizens are accepting employment or considering offers from offshore companies. The fact that these people are investigating the tax implications of this move prior to accepting offers is a very responsible move that can limit an unwanted tax surprise later on. To assist such interested parties we have set out the law as it currently stands and then answered one of the more common questions regarding this practice.

In terms of South Africa's 'residence-based' system of taxation, the general rule is that income earned from the rendering of services anywhere in the world, by a tax resident of South Africa, will be included in their 'gross income' as defined in Section 1 of the Income Tax Act. Certain exemptions are however provided for, including Section 10(1)(o) of the Act.

The exemption provided under Section 10(1)(o)(ii) of the Act applies in respect of services rendered outside South Africa for, or on behalf of, any employer, as long as the individual is outside South Africa for a period or periods exceeding 183 full days (calendar, not working days) in aggregate, during any twelve month period commencing or ending during a tax year. In addition, the exemption will only apply if, during the 183 day period, there was at least a 60 day continuous period of absence from South Africa. Before continuing it is important to note that this exemption does not apply to self-employed individuals or independent contractors.

There is a responsibility on the taxpayer to prove their absence from South Africa for a period complying with the requirements of s10(1)(o)(ii) of the Act, as well as the fact that such absence was attributable to them rendering services outside of South Africa. It is important to note that there must be an employment relationship, with the taxpayer having a valid employment contract with the employer. In addition the taxpayer must ensure that a copy of their passport is available for scrutiny by SARS. It is also advisable that the taxpayer maintain a running schedule of the days that they are outside the country. This schedule will show SARS where the 183 day and 60 day continuous period of absence has been met.

Recently we have been asked an interesting question relating to a taxpayer who provides maritime services to offshore oil installations in Nigeria. He works on a week on / week off basis and with the distances that need to be travelled he spends most of his down time in Nigeria. The taxpayer asked whether downtime and leave etc. spent offshore would be included in the calculation of the 60 day continuous period identified in Section 10(1)(o)(ii).

SARS Income Tax Interpretation Note 16 deals with this matter saying:

"Weekends, public holidays, vacation and sick leave spent outside the Republic are considered to be part of the days during which services were rendered during the 183 day and 60 day periods of absence."

It would therefore not matter whether the taxpayer (in full-time employment) was working, on leave or off sick whilst offshore. As long as the taxpayer is still out of the country, these days would be included when calculating the 183 day or 60 day continuous periods.

It is imperative that the taxpayer is aware of all these requirements and that the information is retained in the format acceptable to SARS. Taxpayers intending to work offshore are urged to consult a registered tax professional if they have any doubts as to their tax status. These tax professionals are also best placed to correctly reflect these earnings on a resident taxpayer's tax return.

Should you have any questions in this regard please do not hesitate to contact Dave Beattie on either 031 582 7410 or [email protected].

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     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]

Employment Equity & Skills Development Melany Bydawell: 031 582 7425 [email protected] Nicky Hardwick: 031 582 7418 [email protected]   Tax Dave Beattie: 031 582 7410 [email protected] Executive Coach and Team Interventions Melany Bydawell: 031 582 7425 [email protected]   Payroll Third Party Administrator Kacey Chetty: 031 582 7409 [email protected]   Accounts Cheryl Naidoo: 031 582 7408 [email protected] Dispatch Karl van der Merwe: 031 582 7407 [email protected]