Leave and Severance pay

August 8, 2014 in Uncategorized

Severance Pay

In the event that employees are retrenched, the Basic Conditions of Employment Act (BCEA) states that it is required for the employer to pay out severance pay to the employees to the value of one week’s remuneration per year of completed service.

The employer may offer the employee another (potentially lower) position to avoid the severance. The employer is not liable to pay severance if the employee unreasonably refuses to accept an offer made by another company or their current employer. An employee may however find it very reasonable to refuse an offer of a lower position made by their employer if the employee stands to receive a large retrenchment package.

The calculation of severance may exclude the following factors: tools of the trade allowances, education allowance, relocation allowance, taxi or bus fare, and an isolated lump sum payment.
Factors that have to be included in the severance calculations are; overtime pay, shift of standby allowances, fund contributions and commission, and bonuses/13th cheques.

It is of importance that the employer pay the employee the their severance package either on the employer’s next regular pay date or 7 days after the employee has been retrenched, which ever date is the latest.

Leave
The provisions made to leave of all types do not apply to employees that work for less than 24 hours per month, these provisions are for the following types of leave; maternity leave, family responsibility leave, study leave, annual leave, sick leave, and religious holiday leave.

In the event that an employee has utilized all their full pay annual leave then the Head of Department of the delegate may grant the employee unpaid leave. Only in exceptional circumstances will the employer grant the employee more than 184 calendar days of unpaid leave with a period of 18 months.

Severance pay and leave go hand-in-hand as the lack of understanding of the leave system can be one of the many reasons that an employee becomes retrenched from a company. When a company cannot afford to keep their employees and has to enforce retrenchment, the employees who take a lot of unpaid leave may appear to be unreliable to the company and therefore chosen to be retrenched.

•    http://www.worklaw.co.za/SearchDirectory/Legislation/basicchapter5,asp
•    http://www.labour.gov.on.ca/english/es/pubs/guide/severance.php
*Summary of the Terms and Conditions of Service in the Public Service (Resolution 3 of 1999

Unemployment Insurance Fund (UIF)

July 31, 2014 in Uncategorized

The Unemployment Insurance Fund (UIF) was introduced for workers that are unemployed, or unable to work due to maternity, adoption or sick leave, as a means to alleviate short-term pressure. The dependants of deceased contributors are also provided with short-term support.

All employees, as well as their employers, are liable for contributions to the UIF. However, an employee is excluded from contributing to the UIF if he or she –

  • is employed by the employer for less than 24 hours a month;
  • receives remuneration under a contract of employment as contemplated in section 18(2) of the Skills Development Act, 1998 (Act No.97 of 1998);
  • is employed as an officer or employee, as defined in section 1(1) of the Public Service Act, 1994 (Proclamation  No.103   of 1994), in the national or provincial sphere of Government;
  • has entered the Republic for the purpose of carrying out a contract of service, apprenticeship or learnership within the Republic, if upon termination thereof, the employer is required by law or by the contract of service, apprenticeship or learnership (as the case may be), or by any other agreement or undertaking, to repatriate that person, or if that person is so required to leave the Republic;
  • is the President, Deputy President, a Minister, Deputy Minister, a member of the National Assembly, a permanent delegate to the National Council of Provinces, a Premier, a member of an Executive Council or a member of a provincial legislature; or
  • is a member of a municipal council, a traditional leader, a member of a provincial House of Traditional Leaders and a member of the Council of Traditional Leaders.

The monthly declaration of employees to the Department of Labour for UIF has been legislated, yet many Companies and Payroll Administrators are not processing this every month or not at all. UIF is becoming more accessible via online services and it is vital that all information be submitted timeously and accurately on or before the 7th of every month for the previous month.

Employers must send specified information about their workers to the UIF. The details of the workers are stored in the database of the Fund. When workers become unemployed, the Fund can process the application without delay.

For the convenience and benefit of employers, an online service has been established to ease the UIF processes:

“uFiling is a FREE online service that allows you to securely submit your UIF declarations and pay your monthly contributions. It harnesses the power of the Internet allowing Employers of Domestics, Commercial Employers (SMME) and Tax Agents to complete and submit monthly UIF declarations and to securely pay UIF contributions.” https://www.ufiling.co.za/Home/AboutUfiling?Length=0.

A new toll free number has also been established by the UIF to assist beneficiaries with any enquires about services that the UIF provides: 0800 843 843 or 0800 UIF UIF.

http://www.labourguide.co.za/uif/909-employers-guide-to-uif

http://www.labour.gov.za/DOL/legislation/acts/basic-guides/basic-guide-to-uif-declarations

http://www.sars.gov.za/TaxTypes/UIF/Pages/default.aspx

https://www.ufiling.co.za/Home/AboutUfiling?Length=0.

Identifying Payroll Fraud

March 4, 2014 in Uncategorized

Payroll fraud can be defined as intentional acts to misappropriate funds from the payroll system. Some statistics to help paint the picture of what is happening:

  • According to Alexander Forbes, payroll fraud occurs more often than cash in transit heists in South Africa (http://www.alexanderforbes.co.za/media-centre/Lists/Af%20News/Attachments/23/Payroll%20fraud%20tops%20cash-in-transit%20heists.pdf)
  • More than 9% of workplace fraud in the United States is associated with payroll fraud (Association of Certified Fraud Examiners)
  • According to the same survey by the Association of Certified Examiners, it can take up to 36 months to discover a fraud scheme from the time it was first started

It is clear that these acts are thoroughly thought through and planned; thus it is imperative that you are able to identify the most common types of fraud that exist:

Buddy punching: fellow colleagues use each others’ information to clock in for one another, when they are not able to or are not in the office to clock in for themselves. You will find that actual head counts on some days will not balance with time sheets submitted.

Ghost employees: these are either former staff members that have not been discharged from the payroll or fake staff members that have been created, that payroll staff use to accrue funds. These funds are usually transferred to bank accounts linked to these fraudulent staff members.

Fabrication of payslips: Payroll staff alter their own or fellow colleagues’ payslips in order to secure contracts or credit based on false information.

Unauthorised claiming of hours: staff may fluff up their time sheets by claiming inflated overtime, attempting to reduce lunch break times, avoiding clocking out during break times etc.

Employee and Supervisor time sharing: an employee records extra time to get overtime pay, and splits it with his superior who approved of the overtime.

Other types can include:

  • Workers compensation fraud
  • Duplicate EFT files created
  • Pay rate alteration
  • False expenses or exaggerated expenditure
  • Exaggerating sales commissions

http://www.fraud-stoppers.info/types/payroll.html

 

The role of a Time and Attendance Clerk in Payroll

February 14, 2014 in Uncategorized

It is recommended that a T&A clerk check and maintain employee clockings regularly. The frequency depends on the number of employees employed in a company.

Typically in a larger company, this should be performed daily – we recommend that all companies do it daily.  It is surprising how often something that was clear on Monday is no longer as easy to recall on Friday.

Supervisors and foremen are not always able to recollect what happened two or more days ago regarding staff leave, absenteeism, hours worked etc; and this may be the cause of incorrect information being processed. A supervisor could, for example, forget who has worked overtime if he hasn’t made a note of it. So it’s best to formulate a communication process between the supervisor/foreman and timekeeper to ensure accurate information is processed. It is also important to make sure that the various types of leave applications are handed in as this affects the total number of hours the employee should be paid for. If all this information is processed on a daily basis then the month end work (chaos) is greatly reduced.

The additional responsibilities of a T&A clerk according to (http://www.mymajors.com/careers-and-jobs/time-and-attendance-clerk) are:

  • Review time sheets, work charts, wage computation, and other information to detect and reconcile payroll discrepancies.
  • Verify attendance, hours worked, and pay adjustments, and post information onto designated records.
  • Compile employee time, production, and payroll data from time sheets and other records.
  • Issue and record adjustments to pay related to previous errors or retroactive increases.
  • Process and issue employee paychecks and statements of earnings and deductions.
  • Process paperwork for new employees and enter employee information into the payroll system.
  • Record employee information, such as exemptions, transfers, and resignations, to maintain and update payroll records.
  • Provide information to employees and managers on payroll matters, tax issues, benefit plans, and collective agreement provisions.
  • Compute wages and deductions, and enter data into computers.
  • Keep track of leave time, such as vacation, personal, and sick leave, for employees.
  • Conduct verifications of employment.
  • Keep informed about changes in tax and deduction laws that apply to the payroll process.
  • Distribute and collect timecards each pay period.
  • Compile statistical reports, statements, and summaries related to pay and benefits accounts, and submit them to appropriate departments.
  • Prepare and balance period-end reports, and reconcile issued payrolls to bank statements.
  • Complete, verify, and process forms and documentation for administration of benefits such as pension plans, and unemployment and medical insurance.
  • Complete time sheets showing employees’ arrival and departure times.
  • Post relevant work hours to client files to bill clients properly.

http://www.mymajors.com/careers-and-jobs/time-and-attendance-clerk

Occupational Injuries and Diseases (OID) – Annual Return of Earnings

October 4, 2013 in Uncategorized

The benefits borne from claims of injuries or diseases (or death as a result thereof) that are sustained or contracted by an employee in the course of their employment are paid for from the Compensation Fund. Compulsory annual contributions from the employer finance these claims. All employers conducting business within South Africa are required to register.

The maximum amount on which the OID annual return of an employee can be calculated on is changed every tax year; this is referred to as the OID limit.  The Department of Labour advises the employer of the increase annually. The OID limit for the tax year March 2013 to February 2014 is R312 480 per annum.

Earnings that should be included when calculating annual return for the employee are:

  • overtime of a regular nature
  • bonus of any kind
  • commission
  • cash value of food and quarters supplied to staff
  • tangible fringe benefits
  • travel and other allowances that are paid regularly
  • earnings paid to a working director of a private company or members of a CC

An employer must make sure that they exclude the following:

  • any reimbursement payments
  • overtime worked occasionally
  • intangible fringe benefits
  • payments to cover special expenses

Annual returns can be submitted with the use of the W.As.8 form, or electronically via the internet ROE system (http://roe.labour.gov.za).

The Director-General of Labour has incentivised using the ROE electronic submission as a way to motivate employers to register on the website and speed up the assessment and payment process. Discounts on assessment value have been applied depending on the length of the time it takes the employer to make payment:

  • Pay within 30 days – 10% discount on assessment value
  • Pay within 60 days – 5% discount on assessment value
  • Pay within 90 days – 2% discount on assessment value

The employer must ensure that these OID limit changes are implemented on the payroll so that their annual returns are correct.

www.labour.gov.za/DOL

SARS Tax Codes

September 6, 2013 in Uncategorized

A tax code is a four digit identifier / number that SARS uses to identify information on an income tax return. It will usually appear alongside the amount it relates to, and is used by SARS to collate information about the tax paying community.
As an employer, you create tax certificates (IRP5s) for each employee, after submitting the tax returns for the company to SARS at the end of the tax year. An interim submission of tax certificate information is sent to SARS after August of each year, so that they are able to retain more current information.  Your employee uses the IRP5 certificate to validate how much income he/ she has earned, what type of income it is, and therefore also how much tax he owes SARS.

SARS has consolidated tax codes to simplify your financial and tax information into the following categories:
•    Income
•    Allowances
•    Fringe Benefits
•    Lump sums
•    Gross remuneration codes
•    Deductions
•    Employees Tax Deduction and Reason Codes

Additional codes are used to identify biographical information.  SARS revises the codes used regularly, and new codes are added to the list as required.
The general rules as prescribed and quoted by SARS regarding the use of tax codes are as follows:
•    All codes completed used for purposes of issuing an Employees’ Tax certificate must be in sequential order with the exception of the codes for gross totals.
•    The value of the specific remuneration amount paid to an employee must be reported on an Employees’ Tax certificate under the relevant code to which that specific type of remuneration relates
Ensure that your tax codes are correct and updated to avoid any penalties that may be applied by SARS due to incorrect information.

http://www.sars.gov.za/AllDocs/OpsDocs/Guides/PAYE-AE-06-G04%20-%20Guide%20for%20Codes%20Applicable%20to%20Employee%20Tax%20Certificates%20-%20External%20Guide.pdf

https://www.taxtim.com/za/tax-help.php#source-code

http://practicaltaxhandbook.co.za/content/download-your-tax-source-code-report-here

Fingerprint Enhancement – How to do successful enrolment

August 27, 2013 in Uncategorized

During enrolment of finger prints on biometrics clocks, we have noticed that it can be difficult to get good fingerprints for everybody on a given working site.  Low success rate percentages are recorded for employees who:

  • Use chemicals on a daily basis and whose fingerprints have been damaged
  • Have fingerprints that have aged over time
  • Have minor finger cuts

If not successfully enrolled initially, this results in difficulties when employees are clocking in.  The more errors that occur, the longer it takes for employees to finish clocking in on a given day.  This may result in some employees only managing to clock in successfully after the start time of the shift.  These employees may then be penalised for late arrival.

Using a Fingerprint Enhancer helps improve the percentage of finger print captured on any finger, resulting to a better reading of prints when clocking.

An effective biometric clocking system will mean a lot less stress for both the employer and employee.

COIDA — Claims Processing (Compensation for Occupational Injuries and Diseases Act)

August 13, 2013 in Uncategorized

Accidents at the work place can happen; therefore company personnel who assist employees involved in accidents should be familiar with Injury on Duty (IOD)and the Compensation for Occupational Injuries and Diseases Act (COIDA) payment claims processes.

“The aim of the COIDA is to provide for compensation in the case of disablement caused by occupational injuries or diseases, sustained or contracted by employees in the course of their employment, or death resulting from such injuries or disease; and to provide for matters connected therewith.”  (www.labourguide.co.za)

Any person who employs one or more workers must register with the Compensation Fund and pay annual assessment fees.
Employers are obligated to report all alleged accidents to the Compensation Commissioner, even if they don’t believe the employees report. Good practice on the employers’ side should include the keeping of partially completed W.Cl 2 forms as well as certified copies of all employees’ identity documents.

Employees are not responsible for the payment of medical costs. If an employee requests a second doctor’s opinion, he/she will be responsible for the payment of medical cost for the second opinion.

Claims

  • Claims for employees in the mining and building industries must be referred to the relevant mutual associations.
  • Claims by employees working for individually liable employers (the state, parliament, the provincial authorities and local authorities which have been exempt from making payments to the compensation fund) must be referred to the employer.

Forms de-mystified
W.Cl 2 – Notice of Accident and Claim for Compensation
WCL3 – Employers Report of Accident
W.Cl 4 form – To be completed by the doctor
W.Cl.55 form – Only used by the Commissioner when liability is accepted for payment of the claim. Where a W.Cl.56 is not issued.
W.Cl.5 – Progress Medical Report to the Commissioner
W.Cl 6 – Used by COIDA when liability is accepted by the Commissioner

Procedure to follow when an employee is involved in an accident at work:

Step 1 – W.Cl 2 W,CL3 and W.Cl 4 form:

  • Report the accident on the W,CL3 form – An accident must be reported when an employee meets with an accident arising out of and in the course of employment resulting in a personal injury for which medical treatment is required.
  • Notify the employer – Written or verbal notice of an injury at work is to be given to the employer before the completion of the shift. Good practice on the side of the employer will be to make a list of all witnesses of the accident for the investigation of the incident.
  • Complete the W.Cl 2 form – Notice of Accident and Claim for Compensation.

It is the employer’s duty to submit the W.Cl 2 within a period of 7 days to the Compensation Commissioner (or within 14 days of finding out the worker has an occupational disease)

Guidelines relating to the completion of the form:

  • ”Part A” page 1 of the form – provide full details, sign and date form where indicated.
  • Detach ”Part B” (an automatic copy of ”Part A”, page 1) by tearing it at the perforation.
  • Hand “Part B” to the employee and request him/her to hand it to the doctor/hospital concerned.
  • In serious cases, “Part B” must be handed to the emergency services personnel who have responded to the emergency.
  • Medical examination – The employee making the claim must submit to a medical examination at a reasonable time and place nominated by the commissioner or mutual association concerned, or by arrangement if the employee cannot go to the office of the nominated medical practitioner.
  • Complete ”Part A”, page 2 of the form by providing the full details.
  • Make a certified copy of Employee’s ID.

The first medical report (W.Cl 4) – The doctor must complete this form stating how serious the injury was and how long the employee is likely to be off work. The doctor sends the completed form to the employer. The employer sends the form with a certified copy of the employees ID and the first medical report (W.Cl 4) (if available) to the  Compensation Commissioner

Step 2:

  • Employer must receive the (W.Cl.55 postcard) from the COIDA office.This happens after Compensation Commissioner receives and registers the claim. Use the W.Cl.55 reference for all communication relating the claim.
  • W.Cl.56 form will only be used by COIDA when liability is accepted by the commissioner.  When not issued, it indicates the Compensation Commissioner has not accepted liability for any payment.
  • Appeal – If the worker disagrees with the decision, they can appeal the decision within 90 days by submitting form W929 to the Commissioner.

Step 3:
Progress report (W.Cl 5) – If the injury continues for a long time, a progress report must be submitted on a monthly basis until the condition is fully stabilised.

Step 4:
Final Medical Report (W.Cl 5) – Once the medical practitioner handling the case is satisfied that the employee is fit for duty, the practitioner will issue a Final Medical Report (W.Cl 5),
In this report the doctor states either that the worker is fit to go back to work or that the worker is permanently disabled. The practitioner must send this form to the employer who then sends it to the Commissioner. The Progress Report and Final Medical Report make use of the same form (W.Cl 5).

Step 5:
Resumption Report (W.Cl 6) – When the employee resumes work, a Resumption Report (W.Cl 6) must be completed and submitted to the Commissioner.
Only after every one of these forms has been submitted will the Compensation Commissioner make all of the payments and close the case. The worker and the employer should keep copies of all the forms.
www.labourguide.co.za

The Role of Payroll Policies and Procedures

July 24, 2013 in Uncategorized

The policies and procedures of an organisation provide a framework for the rules and principles that have been documented to ensure that the long term strategy of the organisation is realised; on a broader basis as well as in daily operations. Policies are the rules that are set out, while procedures provide the day-to-day methods to achieve these long term goals. In payroll, policy should be aimed at providing “compensation structures, systems and processes to promote compliance with all applicable regulations and its own fiscal management responsibilities and objectives.” (http://www.yale.edu/ppdev/policy/3501/3501.pdf).

The aim of the payroll department is to pay accurately and on time. An effective and efficient payroll process relies on clear and well defined policies and procedures.

According to (www.ameinfo.com/55422.html), procedures should provide the following:

  • Identify specific actions
  • Explain when to take actions
  • Describes alternatives
  • Shows emergency procedures
  • Include warning & cautions
  • Give examples
  • Show how to complete forms
  • Are normally written using an outline format

So, what constitutes an effective payroll policy? You should make provision for (http://www.ehow.com/about_7396105_payroll-policy-procedures.html):

  • Document processing
  • Data entry
  • Compensation structures
  • Time collection ( Time and Attendance)
  • Record keeping
  • Payment processes
  • Adherence of the appropriate legislation
  • Responsibilities and accountabilities of payroll staff and management
  • Separation of duties
  • The treatment of confidential information- access and security controls
  • Internal controls to avoid fraudulent activity

The structure and content of a company’s policy should be adjusted and tailored to suit the organisations environment and requirements.

If you find that your payroll process is confused on a monthly basis, your payroll policies and procedures should be your first point of call to be revisited. Be clear and specific about the procedures to be followed to avoid any misunderstandings. Employ automation (software) that can be integrated with these policies and procedures ensuring a cost-effective payroll and sustainability of the organisation.
www.ameinfo.com/55422.html

http://www.businessdictionary.com/definition/policies-and-procedures.html#ixzz2Xs4bUdPi

http://www.ehow.com/about_7396105_payroll-policy-procedures.html

http://www.yale.edu/ppdev/policy/3501/3501.pdf

Basic Guide to Family Responsibility Leave – Part 6 of 6

July 12, 2013 in Uncategorized

Proof
Employers may require reasonable proof of the birth, illness or death for which a worker requests leave.

Based on Legislation in Section 27, of the Basic Conditions of Employment Act

http://www.labour.gov.za/legislation/acts/basic-guides/basic-guide-to-family-responsibility-leave