HRTorQue will be closed from 20 December until 6 January. For emergencies please call: Karen van den Bergh (Payroll): 082 8911 722 or [email protected] Melany Bydawell (HR & Labour Relations): 083 441 5618 or [email protected] We take this opportunity to wish you and your loved ones a blessed Christmas and health, happiness and success for 2014.

Are we living in a state of mediocrity?
Are we a person of second rate ability or working in a team of second-raters?

"We don't want to think about our weaknesses. We don't want to talk about them, and we certainly don't want anyone else to point them out. This is a classic sign of mediocrity, and this mediocrity has a firm grip on the Church and humanity at this moment in history."
Matthew Kelly

Many think that the worst outcome you can have in starting any project or phase in life is failure. You try something and it fails and it is agreed that failing is no fun. However, what is worse than failing is constantly going sideways. The worst is being stuck and bogged down in mediocrity. Things are going reasonably well, but not spectacularly well. The reason that mediocrity is worse than failure is very simple: Failure allows you to move on, mediocrity stalls you and keeps you from reaching your potential.

Labour Minister, Mildred Oliphant, recently announced new minimum wage rates for domestic workers, effective from December 1. The wage adjustment is part of an annual binding determination made by the Minister in terms of the Basic Conditions of Employment Act.

From December 1, the minimum wage of those working more than 27 hours a week in metropolitan areas will be R9.63 an hour, while that of their rural and small-town counterparts will be R8.30. Metropolitan areas are defined as all urban areas within municipalities. Rural areas are those not falling into these city boundaries.

The Labour Department meanwhile cautioned that, in terms of the law, a domestic worker could not be made to work more than 45 hours a week; more than nine hours a day for a five-day work week; or more than eight hours a day for a six-day work week. They are, however, allowed to exceed these hours if overtime is paid at one-and-a-half times the employee's normal wage, or when an employee agrees to receive paid time off.

It is important to obtain your employee's written consent to deduct from his/her pay, and this can be written into your contract of employment or an addendum to the contract. This situation may arise from a loss or damage due to negligence. However, you may only be permitted to deduct a maximum of 25% at a time.

There are exceptions to obtaining written consent, for example:

•	Where the employee has been overpaid in error;
•	Union fees and or deductions required by law, for example tax and UIF;
•	Deductions authorised by an arbitration award or court order e.g. a garnishee order;
•	You have proved that he/she in indebted as a result of loss or theft but he/she refuses to give written consent to the deductions.

HRTorQue Outsourcing's payroll department will be ready for the implementation on 1 January 2014!

 
The principle of giving employers a tax incentive to encourage them to employ young people has been applied successfully, in various forms, in many countries around the world.
•  Employees benefit from having a job and hopefully skills upliftment.

The proposed employment tax incentive will encourage employers to hire young people by reducing the amount of PAYE payable to SARS, thereby reducing the cost of employment to the employer while leaving the employee's earnings unaffected.
•  Employers who employ qualifying youths benefit from a reduction of PAYE.

The effective date of the legislation and rollout:

•	The effective date of the legislation is proposed to be the 1st January 2014.
•	Despite making application via the Payroll Author's group of South Africa to have the date postponed to the 1st March 2014, we have been informed that this request has not been granted. We have it on good authority that the legislation will be effective and will need to be working in the payrolls, from the 1st January 2014.
•	It will apply to the Month end payroll for January 2014.
•	It will apply to the EMP201 for January, to be submitted by the 7th February 2014.
•	It will apply to the tax certificates for January and February 2014.
•	It will apply to the EMP501 reconciliation for February 2014.
•	There is a 3 year period envisaged for the employee tax incentive project; i.e. 1st January 2014 until the 31st December 2016.
•	This means that any tax incentive amount that has not been deducted as at 31st December 2016 will be forfeited.

Which employees "qualify" for the incentive?

•	Young people employed on or after the 1st October 2013 and who are not less than 18 years of age and not more than 29 years of age on the last day of the month;
•	Who are in possession of an RSA 13 digit bar coded ID document or
•	Are in possession of a valid Asylum Seeker document (at the time of writing, this document we are still waiting for the definition of a valid Asylum Seeker document from Home Affairs);
•	Works mainly in a SEZ (special economic zone, see explanation below), and the employer has a fixed place of business in the SEZ;
•	Is employed by an employer in an industry specified by the Minister of Finance, Minister of Labour and Minister of Trade and Industry. This will be defined by the SIC code, and the list is not currently available;
•	The "wage" as defined in Section 1 of the BCOE act 1997, must be at least the minimum wage for that sector, or R2000 a month if there is no minimum wage, and a maximum "remuneration", as defined in the Fourth Schedule of the Income tax act, without exclusions, of R6000 per month;
•	The incentive is not allowed if the young person is related or connected to the employer in any way, and domestic workers are specifically excluded, or if the person is paid less than the minimum wage or R2000 per month.
•	An employee is defined as per the LRA definition (essentially a natural person who "works" and is paid "remuneration"), but it excludes independent contractors. This translated means a "natural person" who works directly for another person and gets paid by that person. This definition includes casual workers, seasonal workers and (after the introduction of the proposed amendments to the BCOE Act and LRA), will include workers supplied by a labour broker to a company after 3 months of service at the company.

Which employers qualify for the incentive?

•	Private Sector Employers that are registered for PAYE.
•	BUT, the employer is not available for the ETI if they are non-tax compliant on the last day of month (i.e. they have failed to submit returns, have tax debt etc.)
•	At the time of writing this document I am still awaiting clarity on the process for employers who are not currently registered for PAYE where their employees do not qualify to pay tax. It appears that they will be able to register for PAYE, but because there is no PAYE due on a monthly basis, they will not be able to set off the incentive against any PAYE. It seems as if they will be able to submit a "claim" and be reimbursed the incentive owning to the employer every 6 months. I will clarify this process as soon as I have more detail in this regard.

Which employers do not qualify for the incentive?
•  Local, provincial or national government.
•  Municipal entities.
•  Public entities - unless the Minister of Finance specifically regulates to include one.

What do we understand by SEZ's - Special Economic Zones?
To encourage economic activity within Special Economic Zones, the same incentive will be available to an employer who conducts his/her business in one of these zones, with the added advantage that the incentive is not limited to young people but is available to all employees who qualify in terms of the other requirements. These zones will be designated by the Minister of Trade of Industry. At the time of writing this article that list was not available.

The Calculation of the Value of the Incentive

The calculation starts in January 2014 and ends in December 2016.

For the first 12 months for any qualifying employee the calculation is as follows:

•	50% of monthly remuneration up to R2000 (this is not to be confused with the qualifying wage rate of R2000 or minimum wage).
•	R1000 if the monthly remuneration is between R2001 and R4000 a month.
•	R1000 is the maximum ETI for any employee, the value of the incentive decreases from R1000 to zero for qualifying employees with remuneration between R4001 and R6000 per month.
•	ETI = R1000 - (0.50 x (Monthly remuneration - R4000)) (from R4001 to R6000 a month).
•	ETI = zero for employees with remuneration greater than R6000.

For the second 12 months for any qualifying employee the calculation is as follows:
25% of monthly remuneration up to R2000 (this is not to be confused with the qualifying wage rate of R2000 or minimum wage).

•	R500 if the monthly remuneration is between R2001 and R4000 a month.
•	R500 is the maximum ETI for any employee, the value of the incentive decreases from R500 to zero for qualifying employees with remuneration between R4001 and R6000 per month.
•	ETI = R500 - (0.50 x (Monthly remuneration - R4000)) (from R4001 to R6000 a month).
•	ETI = zero for employees with remuneration greater than R6000.

So what we understand the Bill to say is that there are a possible 24 ETI deductions over a 36 month period for an employer employing a qualifying employee. The tax incentive is calculated on the employee's remuneration for each month (i.e. there is no annulisation but if a short month was worked it would be pro-rated). The same "counting" principal applies to the months where the employee was employed by an "Associated Employer".

What do we interpret the Bill to say about roll-over and reimbursement of ETI Amounts from previous tax periods?

If the ETI cannot be claimed (partly or in full) in a month because:
•  The PAYE was less than the ETI
•  The Employer neglected to claim the ETI that they were entitled to or
•  The Employer was not "tax compliant" for a month or months

The Unclaimed ETI can be:

•	Rolled over to the succeeding months
•	For a period of 6 months, which ends in February and August
•	Limited to an amount of R6000 per qualifying employee at the end of a 6 month period (at the time of writing this document, we had a number of unanswered questions around this area, that we are waiting for clarity on)

Reimbursement of ETI after 6 months:
•  Employer must claim the accumulated ETI
•  In a "form and manner" still to be specified
•  The "rolled over" amount is cleared every 6 months by reimbursement
•  This would happen outside of payroll systems, by manual calculation

What documentation do we understand will be needed to be submitted to SARS?

The EMP201 will be amended for submission by 7 February 2014 and will contain an additional field:

•	SDL
•	UIF
•	PAYE (Gross)
•	ETI (for the month) - New field, the ETI will reduce the Gross PAYE if it is greater, if not it will reduce to zero. This field can be "supplemented" by any ETI amounts that have been "rolled forward" from previous months in a 6 month cycle (see notes on "rolled forward" ETI interpretations).
	February 2014 Tax Certificates will have new fields: -  That indicate that the employer is eligible and has qualifying employees     »  Employer SIC codes - see notes on SIC and ETI     »  Employer SEZ codes - see notes on SEZ and ETI -   That indicate the employee "qualifies" by reflecting:     »  Employee SIC code     »  Employee SEZ code     »  Employee ETI amount February EMP501 document will have new fields, not yet defined. There is a new CSV file required by SARS, which will contain all the information relating to the records, for qualifying employees in respect of whom the ETI has been calculated.

   -  The layout is not yet finalised.
   -  They will not be required monthly, but the payroll software and the employer will need to keep records
      to submit when required.
   -  The file will require the following fields:
   -  Employee ID number; Period of Reconciliation, March to February financial fields per month: month,
      remuneration, wage, theoretical ETI amount.
 

Practical steps to ensure that you are ready for the ETI and ensuring your documentation is ready to justify the incentive to SARS:

You will submit the incentive claim amount monthly to SARS and your PAYE will be reduced if you are tax-compliant. All the supporting documentation and calculations must be available and correct in case of queries.

We will ensure that the payroll software is ready to do the necessary calculations, but we will not know who is eligible. You will be required to let your payroll administrator know if you have employee's who qualify for ETI on the 1st January 2014. The specifications of this advise will follow as soon as possible.

You need to ensure that your letters of appointment or contracts are correct, and that your HR processes are aligned to correct report the following information regarding this new Bill:
•  Type and duration of employment
•  Nature of employment (remember it includes casual workers and seasonal workers)
•  Dates employment start
•  Wage - understand what this means, and document it correctly
•  Remuneration - understand what this means and document it correctly

We will be sending out a further communication which will clarify the areas we are waiting for clarity on. Once we have this information we will define exactly how we require this information to be provided from our payroll clients.

If you need help or further clarity in this area, please contact Karen: [email protected] or 082 8911 722.

SARS has issued a notice with regards to the payment reference number relating to the EMP201 monthly return. The notice is copied verbatim from the SARS website.

A PRN will now be used for an entire period, including any revisions of the EMP201 submitted to SARS will be pre-populated on the Monthly Employer Declaration (EMP201). One PRN will be generated in the CCYYMM period format, meaning that there will no longer be multiple PRNs per period. The PRN for the specific period must be used when revising an EMP201. This 19 digit PRN is used to match the payment to the amounts declared on the EMP201.

The EMP201 and payment process provides employers with an easier and more effective means to managing their Pay-As-You-Earn (PAYE), Skills Development Levy (SDL), and Unemployment Insurance Fund (UIF) accounts as they are merely requested to use the PRN appearing when making a payment.

This notice can be accessed here.

Comments invited on the establishment of a sectoral determination prescribing minimum wages and conditions of employment.

 
A Notice was published on 18 October 2013 to give interested parties the opportunity to make written representations in respect of an investigation by the Department of Labour, with a view to establish a Sectoral Determination prescribing minimum wages and conditions of employment in the Funeral Undertaking Sector.

A Notice was published whereby the payment method for payments of VAT, PAYE/SDL/UIF and Income Tax are prescribed in terms of Section 162(2) of the Tax Administration Act, 2011.

This notice indicates that no payments in excess of R100,000 may be made by cheque at a SARS office, or by post.

Nigeria's expat employees are eligible for benefits that include compensation under the Pension Reform Act, 2004 (as amended); the Employees' Compensation Act, 2010; the National Health Insurance Scheme Act, 1999; and the Insurance Act, 2003, says a report on the Legalbrief site.

A Nigerian working abroad, or moving overseas, is allowed to join, and/or to continue to make voluntary pension contributions to his or her retirement savings account (RSA). Where an existing contributor prefers to temporarily suspend his pension contributions, he shall formally request his pension funds administrator to freeze his or her RSA, until he or she returns to Nigeria to continue to make the pension contributions.

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]