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| Editor's Note |
In this month's edition, we start by summarising the key points of the recent budget speech. Thereafter we cover a diverse range of topics, including whether UIF applies to foreigners, a noted concern about invalid garnishee orders and the importance of the earnings threshold in the Basic Conditions of Employment Act. Finally, we continue with our series on managing incapacity and absenteeism.
As usual, should you require any further detail on any of these topics, please feel free to contact us.
We do offer a referral scheme for new clients sent in our direction so if you know of anyone looking for outsourced payroll services then please let us know*.
*Terms and conditions apply. |
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| Table of Contents |
1. Budget Update
2. Basic Conditions of Employment - Earnings Threshold
3. UIF and Foreigners
4. Managing "Intermittent Absenteeism"
5. Managing Incapacity - Subjecting an Employee to a Medical Exam
6. Garnishee Orders
7. Sectoral Determination - Wholesale and Retail Wage Increase
8. Contact HRTorQue |
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| 1. Budget Update |
| Author: Dave Beattie |
The budget was always going to be an exercise in damage control. Minister Gordhan had been passed a hot potato that he had to juggle and somehow satisfy the ratings agencies, the taxpayers and citizens of South Africa in general. The budget in general seeks to achieve a balance between raising taxes and cutting expenditure. Both of these issues had to be dealt with very carefully given it is a municipal election year.
A key theme of this budget is that higher taxes are coming the way of the wealthy but most surprisingly this did not take the form of the suggested 'super tax'. Instead higher Capital Gains inclusion rates for both companies and individuals (effective tax rates of 22.4% and 16.4% respectively) together with an increase in the annual amount above which capital gains become taxable were seen. Transfer Duty rates on 'high end' properties (above R 10 million) were also increased by 18% and measures were proposed to strengthen the estate duty and donations tax regimes.
Tax base broadening measures occupied centre stage. Minister Gordhan made it clear that time was running out for taxpayers who had undisclosed assets offshore. To assist taxpayers in regularising their tax and exchange control affairs he announced a special voluntary amnesty from October 2016 to March 2017.
There is a planned provision of R475 million to the Department of Small Business to provide assistance to small and medium sized businesses. We sincerely hope that this is spent on practical implementable measures and not social events in the form of 'roadshows'.
As expected there was limited tax relief in terms of Personal Income Tax. This relief was mainly aimed at lower and middle income taxpayers. Whilst the marginal rate of tax was not increased across the brackets this year, there is the intention to introduce a 'super tax' bracket in the near future.
Very disappointingly the economic growth predicted for 2016 is 0.9%. Economists suggest that a growth rate of 3.5% would be necessary to pull the country out of the quagmire that it is in currently. With tax revenues projected to be R11.6 billion below the 2015 budget forecast, there are clearly tough times ahead.
The Capital Gains inclusion rate for individuals and special trusts increases from 33.3% to 40% and for other taxpayers from 66.6% to 80%. The annual exclusion for individuals and special trusts increases from R30 000 to R40 000.
Other proposals include:
• 7.3% (30 cents per litre) increase in the general fuel levy
• The introduction of a R2.30 per kg tyre levy to finance recycling initiatives
• A 50% increase in the incandescent globe tax
• A 33% increase in the plastic bag levy
• An 11-12% increase in the motor vehicle emissions tax
• The introduction of a tax on sugar-sweetened beverages with effect from 1 April 2017
• Increases in Sin Taxes of 6% and an 8.5% increase in the duties on alcoholic beverages
and tobacco products
Further detail on the quantitative changes in the budget are available to download here. |
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| 2. Basic Conditions of Employment - The Earnings Threshold |
| Author: Karen van den Bergh |
Section 6 of the Basic Conditions of Employment Act makes provision for the Minister of Labour to publish a determination on the advice of the Commission that will exclude employees earning above a certain amount per year from sections of Chapter 2 of the Act. Chapter 2 primarily deals with the regulation of working hours of employees. The current threshold is R205 433.30 per year.
Employees earning under the threshold amount:
These employees have the full protection of every section of the Basic Conditions of Employment Act (BCEA).
The Act entitles such persons to certain things such as (not an exclusive list):
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Overtime may only be worked by agreement between the employer and employee. |
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The employee has the legal right and entitlement to demand payment for overtime worked at the rate of 1.5 times his normal wage rate, or at whatever rate is applicable (not less favourable than the minimum set in the Act). |
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The employee can also enter into an agreement with the employer whereby he can be given time off work instead of payment for overtime worked. |
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Generally, the employee can legally refuse to work more than the following:
- 45 hours per week normal time
- 10 hours per week overtime
- 12 hours in any one day (consisting of nine hours normal time and three hours overtime) |
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Note: There are some circumstances where the employee may not be able to refuse, such as in emergency overtime. |
From the above you will note that persons earning under the threshold have a legal right to demand.
Employees earning over the threshold amount:
Persons earning over the threshold amount do not have a legal right to demand anything in respect of Sections 9, 10, 11, 12, 14, 15, 16, 17(2), and 18(3) of the Act with effect from 1 July 2014.
The employee earning over the threshold amount, do however have a right to negotiate.
Thus, the employee earning over the threshold amount must approach the employer, negotiate and reach agreement on how many normal hours and overtime work will be required from the employee. Once this has been established the parties must agree on remuneration for the overtime worked. Such remuneration may be less than the minimum prescribed by the Act.
The same must be agreed upon for work on public holidays as per section 18(3) and work on Sundays.
The employer is in a similar position; the employer also cannot demand that employees earning over the threshold must work overtime, standby duties, attend callouts etc, without limitation and without compensation.
The reason why the employer cannot make those demands is stipulated in section 48 of the BCEA, which reads as follows:
1. Subject to the Constitution, all forced labour is prohibited.
2. No person may, before his or her own benefit or for the benefit of someone else, cause,
demand, or impose forced labour in contravention of subsection (1).
Therefore, for employees earning over the threshold, the employer is in the same situation in that he cannot demand, but must instead also negotiate.
It is extremely important to remember that the employer may not, upon learning of the threshold earnings notice, make unilateral changes to the employment conditions of employees earning in excess of R205 433.30 per annum. The conditions agreed upon in the initial employment agreement are legally binding and must be honoured unless it is mutually agreed to changes these conditions. |
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| 3. UIF and Foreigners |
| Author: Karen van den Bergh |
Section 4 (1) (d) UIF contributions Act 4 of 2002 does exclude certain types of foreign employees from contributing, in circumstances where they enter SA for a contract of service, apprenticeship or learnership of a fixed duration, and on termination of such service or learnership they must return to their home country by law or as per the contract.
If there is no legal or contractual obligation on the employer to repatriate the employee to his home country on termination of the contract, then the exclusion will not apply and UIF contribution would have to be deducted and paid over.
Can foreigners claim UIF in SA?
As to the claiming of benefits, the UIF Act does not specifically exclude non-residents in section 14, and the benefits seem to apply to all "contributors" (sections 12 and 16) who comply with the provisions of the UIF Act.
A "contributor" is merely defined in Section 1 as a natural person, who is or who was employed, to whom the Act applies and who has made contributions.
We are also not aware of any legislative prohibitions for permanently employed foreign nationals who have a passport, relevant working permits and are UIF contributors from claiming UIF Benefits. |
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| 4. Intermittent Absenteeism vs Block Periods of Sick Leave |
| Author: Melany Bydawell |
Whilst employees are entitled to take 30/36 days' sick leave in a 3-year period, the BCE Act clearly discourages excessive intermittent absenteeism as outlined in 'Section 23. (1) 'Proof of Incapacity'.
This section gives the employer every right to request a medical certificate if employees continuously absent themselves 'on more than two occasions during an eight-week period', and is contrary to the belief that 'an employer can only take action once the BCEA allocation has been exhausted'.
Intermittent absenteeism is often the result of an underlying problem (substance abuse, domestic, financial, depression etc.) and is the most disruptive to the employer.
In an effort to improve productivity, it is in employees' and employers' best interests to ascertain the underlying cause of the intermittent absenteeism through a reliable system, which assists in the monitoring and managing of employee incapacity.
When a reliable system is in place the employee can be assisted / managed in a way that leads to overall improvements within the company. |
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| 5. Managing Incapacity - Subjecting an Employee to a Medical Exam |
| Author: Melany Bydawell |
The Incapacity section of the Labour Relations Act requires that an employer should investigate the extent of the ill health or injury if an employee is temporarily unable to work.
It also states that the cause of the incapacity is relevant should the employer decide to dismiss the employee. The Act suggests that in certain kinds of incapacity for example alcoholism and drug abuse, counselling and rehabilitation may be appropriate steps to consider.
The Employment Equity Act states that it is not unfair discrimination:
To distinguish, exclude, prefer any person on the basis of the inherent requirements of the job
Testing of an employee for any medical reason is prohibited unless:
It is justifiable to do so in the light of medical facts, employment conditions or the inherent requirements of the job.
From the above it is apparent that person/job specifications outlining the inherent requirements of the job are necessary when referring employees. This ensures objectivity of the medical investigation / assessment.
In many situations, the procedure in referring an employee for a medical investigation is often hampered by misunderstanding by the employee and his representative.
They perceive this intervention to be a disciplinary measure and infringement of their rights.
It is therefore important for organisations to ensure that they have a clear policy in relation to the management of incapacity. This policy should include among other important factors the relevant legislative provisions and the stipulation that an employee may be required to undergo a medical assessment to confirm the duration and extent of the incapacity. |
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| 6. Garnishee Orders |
| Author: Dane McDonald (Article published on www.fin24.com) |
Editor's note: We have included this article published on www.fin24.com to highlight some of the challenges with garnishee orders. HRTorQue offers a service not only to pay garnishee orders, but also to validate these orders. While this validation has not been a high priority for employers historically, paying invalid orders has a negative impact on employees and should be an area of concern particularly as it tends to impact the less well-off.
The Government has appointed a company to investigate the abuse of emolument attachment orders, also known as garnishee orders, in the public services sector.
Q Link Holdings was appointed on Tuesday to "investigate the extent and abuse of EAOs in the public service".
Public servants are some of the most heavily indebted in South Africa accounting for approximately 40 percent or more of unsecured debt.
Q Link executive chairperson, Clark Gardner, told Fin24 that the company will manage all existing garnishee orders and will receive all new ones.
The company will capture the orders and access the Government payroll to 'execute' on the deduction and the payment to collectors, Gardner said.
"Irregularities and past over-deductions will be challenged in the appropriate court to rescind on a case by case or class action basis and criminally prosecuted if appropriate," he said.
In July Judge Siraj Desai ruled that garnishee orders against 15 consumers were "unconstitutional" and "an assault on human dignity" in a landmark case.
The class action was brought by the Stellenbosch's Legal Aid Clinic against a group of credit providers and Flemix & Associates, a law firm that facilitates the salary deductions.
In December 2013 Cabinet authorised the Ministers of Finance and Trade and Industry to take measures to assist the over-indebted.
This led to a call by Finance Minister, Nhlanhla Nene, for tenders to find a service provider to undertake an investigation into the extent and abuse of garnishee orders in the public sector. |
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| 7. Sectoral Determination - Wholesale and Retail Wage Increase |
IMPORTANT NOTE: Wholesale and Retail Wage Increase - 1st March 2016
On the 9th February 2016 the Minister of Labour issued an amendment to Sectoral Determination 9 depicting the increase effective 1st March 2016. To view a copy of the Sectoral Determination you can download this here. |
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| 8. Contact HRTorQue |
Head Office (Durban)
Phone: 031 564 1155 • Email: [email protected] • Website: www.hrtorque.co.za
Address: 163 Umhlanga Rocks Drive, Durban North, KwaZulu-Natal
Johannesburg Office
Ground Floor, West Wing, 6 Kikuyu Road, Sunninghill, 2191 |
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