HRTorQue Outsourcing
HRTorQue Reporter
August 2019
 
HRTorQue Reporter Archive
Table of Contents
1.    Confirming Employment & POPI
2. Retrenchment Guidance - Part One
3. Retrenchment Guidance - Part Two - Notification Procedures
4. Cost Savings through Data Management - Variable Pay
5. Botswana Minimum Wage
6. Implementing Time and Attendance Systems Successfully
7. SARS Intention to Validate Tax Certificates
8. Contact HRTorQue
   
Should you require any further detail on any of these topics, please feel free to contact us.
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1. Confirming Employment & POPI
Author: Denelle Gopal
The Protection of Personal Information (POPI) Act was created to ensure that all organisations in South Africa behave in a responsible manner when gathering, processing, storing and distributing another individual's personal information. Organisations will be held accountable if there is abuse of any type of personal information.

Failure to comply with this legislation will result in fines of up to R10 million and/or up to 10 years in jail time for some offences. This right to protection of personal information does not only apply to individuals but any legal entity, including businesses and communities.

As an employer, you will often be required to confirm employment for loans; accounts and/or references. You will further be required to share personal information for the purpose of processing payroll, managing medical aids and/or post-retirement benefits and in dealing with government agencies. In terms of the POPI Act it important that you have obtained permission from the individual concerned before disclosing any confidential information otherwise you could be in contravention of the Act. This includes all details relating to the employee's employment with you.

For more information and/or if you require the relevant HR related POPI documentation please contact [email protected].
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2. Retrenchment Guidance - Part One
Author: Nicky Hardwick
Editor's Note: If you are planning any retrenchments or redundancies please speak to one of our experts in advance. We have retrenchment guidelines and draft letters that will help you through this challenging process.

In this newsletter we have two articles about retrenchment and your obligations as an employer. In our first article we deal with your payment obligations in a retrenchment process and we look at part one of the guidelines seen as good practice by the Labour Court in a fair retrenchment process i.e. avoidance and reduction of the effects of retrenchment.

Note that you have to follow the retrenchment procedure stipulated by the Labour Relations Act, or potentially pay penalties of up to 24 months' salary as compensation. However, even if you are unable to reach full agreement with your employees or their union, where applicable, you can still go ahead and retrench once you have completed proper consultations with them - and continue consultations even after the employee has left your services! Obviously, if you can achieve a signed agreement, this would be first prize.

Employer Responsibilities: Payment

Your responsibilities when retrenching include the following payments;
1.   Any leave pay; and
2. 1 month's notice (depending on what their contract says and how long they have been with you) (the staff can be asked to work their notice or you can pay them out for this); and
3. 1 week's severance pay for every completed year they have worked for you

If you do mutual retrenchments, that means you or your adviser will sit with each person one by one and try to get them to accept the retrenchment without having to go through the formal process that the law asks for, which is more time consuming. To do this you would need to offer more in terms of payment (e.g. 1 week pay or more) to encourage them to accept.

Good Practice Step 1. Avoidance and Reduction of the Effects of Retrenchment

Management is obliged to implement all or certain of the following before implementing any retrenchment measures in order to avoid or reduce the effect of such action:
•  Reduction of the workforce through natural attrition
•  Restriction of new hirings by means of recruiting and promoting from within
•  Elimination of all casual labour
•  Non-renewal of short-term contracts of employment
•  Cessation of all overtime work
•  Voluntary retrenchments
•  Retirement of all employees over retirement age
•  Implementation of layoffs
•  Placing employees on short-time
•  Demotion / offering alternative jobs at lower pay or status
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3. Retrenchment Guidance - Part Two - Notification Procedures
Author: Nicky Hardwick
In our previous article, we dealt with your payment obligations in a retrenchment process and we looked at part one of the guidelines seen as good practice by the Labour Court in a fair retrenchment process i.e. avoidance and reduction of the effects of retrenchment. This month we look at step 2, the notification procedure.

Good Practice Step 2. Notification Procedure

The requirement in this step is to notify employees (or their union) in writing that management is considering retrenchment allowing them to take part in proper consultations. The notice should give as many details as possible in order to allow employees to make suggestions and representations to management. If there is a "representative" union, they must attend the consultations.

It should include, at the very least:

•   The specific reasons why the retrenchment is being considered, including any pertinent facts and figures and where possible financial and production statistics.
Measures already taken by management to avoid or limit the retrenchment.
The proposed number of employees who may be affected.
The categories of employees who may be affected (foremen, drivers, operators, general workers, anyone over 55, on a final written warning, etc.).
The proposed date of the retrenchment.
The proposed dates and times when employees will meet to consult with management.
The proposed selection criteria e.g. Skill Retention, Apprentice Contracts, LIFO, early / voluntary retirement, temporary workers, employees on short time, etc.

If you do not notify correctly, you risk derailing your entire process.
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4. Cost Savings through Data Management - Variable Pay
Author: Jonathan Aitken
For larger employers and those with wage employees, variable pay tends to form a material part of the remuneration paid to employees (by variable pay we mean any pay that varies from pay period to pay period dependent on variable factors which may or may not include performance). Variable pay elements could include commissions, performance bonuses, overtime and certain allowances. Overtime tends to be the main element of variable pay, but this is not always the case.
Many employers track time using time and attendance systems, but very few monitor and proactively manage variable pay despite this being a sizeable cost for the organisation.

Significant cost savings can be made by following the process below:

•   Data Collection - collect data on employee time through an appropriate Time and Attendance system and process (see our separate article on how to set this up properly) and preferably by collecting individual employee data in a suitable HR or payroll system (Note: it is difficult to proactively manage anything if you don't have good data);
   
Analyse the data to identify patterns:
 
-   Which employees are racking up the most overtime (look at trends)
- Which departments / depots / locations / teams see the most overtime? Is this expected?
- Is the reason for the overtime clear?
•  Staffing shortages
•  Heavy project loads / specific projects
•  Employees looking for extra pay - no discernible reason
- Is overtime being paid according to legislation, union rules?
- Are other allowances in line with union/bargaining council rules or have some allowances crept in because of legacy arrangements?
   
Consider ways to improve work practices and/or communication
-   Communicate the company policy to employees and managers;
- Utilise tools to notify managers where overtime is becoming excessive;
- Monitor and resolve employees claiming excessive overtime;
- Proactively plan for staff shortages by using alternative staff or changing shift patterns;
- Consider cross training in bottleneck areas to reduce the workload on key employees or teams;
- Identify scarce skills and bottle necks and implement plans to address these;
- Set targets for managing variable pay and track variable pay against output to make sure variable pay is reflected in improved efficiency / performance

It is also helpful to put a cost figure to overtime and variable pay and set targets for managers to reduce and hit lower targets.

While in South Africa we tend to focus on employees entitled to overtime under the BCOE, it is also important to consider work practices for salaried employees and make sure we as employers don't create a culture of working overtime just for the sake of it. Where this is an issue consider better communication, limiting meetings to maximum lengths (of say 45min or an hour) and reducing the impact of team meetings.
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5. Botswana Minimum Wage
Author: Jonathan Aitken
The Ministry of Employment, Labour Productivity and Skills Development has published a notification informing the public that the Government of Botswana has approved an increase for minimum wage rates for 2019/2020.

The adjusted minimum wage rates took effect on 1 July 2019.

Trade / Industry Basic Minimum Wage
Building, construction, exploration and quarrying industries P6.77 per hour
Wholesale distributive trade P6.77 per hour
Manufacturing, service and repair trades P6.77 per hour
Hotel, catering and entertainment trades P6.77 per hour
Garage, motor trade and road transport P6.77 per hour
Retail distributive trade P6.01 per hour
Security guards P6.77 per hour
Domestic service sector P1,000.00 per month
Agricultural sector P1,000.00 per month

Employers are advised to adhere to the newly stipulated rates. Failure to do so will be a violation of s138 of the Employment Act, Cap 47:01 and punishable in terms of s151(d) of the same Act.
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6. Implementing Time and Attendance Systems Successfully
Author: Jonathan Aitken
A large number of employers are unhappy with their time and attendance systems. When we look into their cases we see a few common themes:

1. The Hardware
The hardware for time and attendance is often the same throughout South Africa. Biometric (fingerprint or facial recognition) Chinese built platforms that tend to function as they are intended i.e. to record when a person clocks in and clocks out. They are usually quite reliable and the only time they tend to be an issue are where they are poorly located on the site (allowing employees to bypass them) or don't have back-up power or a stable wi-fi or ethernet connection meaning data for large patches is unavailable or unreliable;

2. The Software
There are various vendors of different sizes providing Time and Attendance software in the market. The software can be of varying quality with the most significant attributes impacting the client being:
a.   Can the data be reliably extracted to excel?
b. What rules can be set in the system (see below for further discussion on the rules) and are these reliably translated to the data?
c. What is the setup and after sales support like? It is this attribute which causes some of the biggest frustration for employer as the time and attendance data is critical for prompt payments to staff, but they often feel let down by the after sales support;
 
3. The Rules

Most employers who are new to time and attendance systems assume they are plug and play i.e. once installed they are easy to use. In practice the two most important elements to getting this right are setting the rules and managing the process (see point below). By setting the rules we mean establishing in the software how the system should treat unusual situations e.g.
a.   If an employee is 10 minutes late is this allowable or should it be treated as short time;
b. Inputting shift schedules into the system so the system automatically reflects overtime and normal time correctly;
c. Correctly calculating and averaging hours according to the BCOE as opposed to calculating overtime on a daily basis (this can significantly increase costs for an employer if done incorrectly);

In many cases the employer doesn't spend any time on this aspect and by the time it is implemented it is difficult for them to revise their practices as they have set a precedent. Badly set rules cost money and make reconciling the hours for payroll time consuming and challenging.

4. Managing the Process
This is the process of extracting the data for the period, reviewing it for any anomalies, following up with management and revising / redefining any incorrect records. We have never seen an employer without some data issues to resolve in a period. These could be trying to understand why an employee worked for 18 hours straight (usually they didn't clock out); trying to adjust time where there has been a change in the shift schedule and specific employee data is incorrectly reflected; or investigating employee absences. Irrespective of the cause, the biggest mistake we see made by employers is this task is allocated to their payroll or HR team to manage at the last minute just before they have to run payroll. By this stage there is no time to check with line managers. It is far, far better for the data to be daily or weekly and signed off by line managers. This promotes the right behaviour and significantly improves the quality of the data.

5. Integration with Payroll
For many employers, this is one of the key attributes they look for in their software, but in practice this does not improve the chances of a successful implementation. It is the old problem of GUGO (Garbage In Garbage Out). If the rules are bad and the process is badly managed, it doesn't matter whether the system integrates or not. Sometimes it makes it worse because nobody actually checks the data and they assume it is correct.

6. New Software and Apps
Time and attendance is a pace where we expect new applications and AI to make a significant impact. There are already apps to allow for monitoring of employees through the GPS on their smart phones and for facial recognition cameras to track individuals around a site. However, the expense and software development to fully implement these have not really been tested in South Africa to the best of our knowledge. That said, even if you do have these enhancements you will still come back to the following two critical success factors in getting time and attendance right:

•  Set the rules correctly in advance.
•  Manage the process daily/weekly to correct anomalies and get line managers to
    sign off.
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7. SARS Intention to Validate Tax Certificates
Author: Jonathan Aitken
From February 2020, SARS have indicated an intention to validate the amounts shown on tax certificates to the PAYE, UIF and SDL actually deducted on those certificates.

What they mean by this is they will take the taxable earnings amounts, run them through their calculators and work out (within a margin) whether the correct amounts of tax were deducted. Where an employee has worked for a full year this is unlikely to be an issue, but this may lead to a larger number of audits where the forecast annualised calculation used by payroll systems results in materially different figures for the full year.
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8. Contact HRTorQue
Durban
Phone: 031 564 1155  •  Email: [email protected]  •  Website: www.hrtorque.co.za
Address: 163 Umhlanga Rocks Drive, Durban North, KwaZulu-Natal
 
Johannesburg
Ground Floor, West Wing, 6 Kikuyu Road, Sunninghill, 2191
 
Cape Town Office
Ground Floor, Liesbeek House, River Park, Gloucester Road, Mowbray, Cape Town, 7700

Bloemfontein Office
62 Kellner Street, Westdene, Bloemfontein

East London
24 Pearce and Tecoma Street, Berea, East London

Port Elizabeth
280 Cape Road, Newton Park, Port Elizabeth

Polokwane
125 Marshall Street, Polokwane

Nelspruit
Promenade Centre, First Floor, Suite 11A, Nelspruit
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