Payroll Deductions and Medical Aid

by with No Comment Medical AidPayroll

I got this question from a reader of the weekly Paymaster newsletter.

I have a situation here, whereby our employees were contacted telephonic by Medical aid with regard to joining their V programme. Many of the employees agreed to join and were advised by MA that there were in the interim supposed to advise their HR and Payroll personal of the deduction. Needless to say that the employees did not do this and when the company was billed their contributions reflected had been in arrears.

When the deduction was implemented on the payroll, the payroll department was advised by the employees that they were under the impression that only once they confirmed with payroll and HR then only will the membership be activated.

MA claims that there telesales is legally binding and that employees accepted to join V. Do we as a company still require a signed off document from our employees or do we implement the deduction as we are now bound to MA for their services.

Some thoughts:

The employee has agreed to the new product and there should be some form of notification to this effect to payroll, perhaps in a letter to the employee from MA with an attachment to sign and send to payroll. Alternatively this maybe in the agreement between you and MA that once they have informed you of what the employee has decided then you are obliged to deduct the contribution.

This may be an additional product and that the employee needs to sign a specific document for. Perhaps MA has a sample acceptance and authority to deduct form

What should you do?

1) Engage with MA about the arrears as this may lead to MA suspending certain benefits.

2) In fact, insist that this does not happen again. Get agreement that MA will not liaise directly with your staff but will always work through the broker or management. (or at least get permission)

3) Check your agreement with them or with your broker re access to your employees and tighten up those clauses. Ask your Broker to help in sorting this out

4) Get signed authority from the employees or signed “I have changed my mind forms”

5) Then implement once you have this sortedP

Everybody earning less than R 172 000 per year must now be paid overtime

by with No Comment EmployeesovertimePayroll

From 1 July 2011 the new threshold contained in the basic conditions of employment act has been increased to R 172 000 a year

Earnings“means an employee’s regular annual remuneration before deductions. It excludes contributions made by the employer in respect of the employee. Where the employee receives subsistence and travel allowances, achievement awards and payment for overtime worked shall not be regarded as remuneration.

What does this mean

1) The following working hours apply

a. Less than 5 days a week 9 hours a day maximum of 45 hours a week

b. More than 5 days a week 8 hours a day maximum of 45 hours a week

2) A meal break of 60 minutes must be given after 5 hours of work. This may be reduced to 30 minutes by agreement or removed if the employees

work less than 6 hours a day

3) There must be a rest period of at least 12 hours between work days and at least 36 hours between work weeks (should include a Sunday unless

otherwise agreed)

4) Night work – workers working between 18H00 and 06H00 must be paid an allowance and must have transport available to them

5) All employees earning less than R 172 000 are now entitled to earn overtime (or be given time off in lieu of overtime paid) according to the basic

conditions of employment act

6) They are also entitled to Sunday pay and payment on public holidays

What should I do

The critical group are those employees who were earning more than R 149 736 and now will be earning less than the R 172 000 per year.

1) These employees should be consulted with, as by law, there working conditions and conditions of employment have changed and where applicable a new remuneration contract should be agreed

2) The company policies and procedures may need to be amended

3) Please check your time and attendance settings for those employees who are eligible for overtime

4) Change any settings that may be required on the payroll

Should you have any questions or need help phone Ian 082 8985006 or email ian@paymaster.co.za

Recruitment and Selection

by with No Comment EmployeesRecruitmentSelection

Last week we dealt with Job descriptions. We mentioned that the job description is a very important document in the recruitment and selection process. This week we look at the recruitment and selection process.

The recruitment and selection process is one of the most subjective processes in Human Resources. An applicant may go through an interview and not tell the truth about him or herself without being detected by the unsuspecting employer. The employer, most of the time, only discovers this months after the applicant has been employed. The cost of training, counselling and even disciplinary steps that is to be taken by the employer to try and rectify the situation is expensive and time consuming.

At NJ Consult we believe in an old saying: “Prevention is better than cure”. Although in this day and age the recruitment and selection process is, to some extent, still subjective we try to minimise the risk to the employer as far as possible by introducing the following:

1) A properly drafted job description, the first step in the process. The job description consists of three areas: the identification of key performance areas (KPA’s) academic qualifications, skills and abilities required by the job. It further describes the responsibilities of the incumbent as well as the standards for each individual KPA that is to be achieved by the incumbent.

2) The drafting of an advertisement is the next step in the recruitment process. The wording of the job description will form the basis of the advertisement as it stipulates the required specifications. The advertisement with the correct wording will mostly attract the right people to apply for the job.

3) When drafting the list of questions for the interview the job description also forms the basis for the list of questions. At this stage the Employment Equity Act also plays a big role as no questions that might discriminate is allowed by the afore-mentioned legislation.

4) As part of the interviewing process a written test is a good idea. The reason for this is that you cannot trust the answers as supplied during the interview by the applicant before you put it to the test. The level of difficulty of each test will obviously depend on the level in which the job falls within the organogram of the company.

5) Psychometric testing is an additional tool to the disposal of the company to try and establish if a candidate is to be appointed. NJ Consult is not a registered Psychometric but will supply the employer with one if so required. Although this option might be expensive it comes in handy when senior vacancies are to be filled.

6) The drafting of a contract of employment with a probation period is preferred. The purpose of the probation period is to put the company in a position to ascertain whether or not the incumbent is able to do the job and fits into the company profile.

7) Using the performance appraisal system to monitor the incumbents progress during a period of probation and thereafter is a scientific way to establish if the employee is achieving the minimum standard. The afore-mentioned system also allows for a proper process and documentation to be in place and will assist the employer in a disciplinary process.

Please contact us if you have any questions with regards to the above-mentioned information.

Next week we will be discussing the use of a very easy to use Performance Appraisal System.

Termination of service some rules

by with No Comment EmployeesTermination

Notice Period:

Worker employed for… Notice Period
6 months or less 1 week
More than 6 months, but less than 1 year 2 weeks
1 year or more 4 weeks

Unless :

The employment contract stipulates a longer notice period

A collective agreement has reduced the 4 weeks notice to 2 weeks

Notice must be given in writing

Any notice either by the employee or the employer must be in writing except where the employee is illiterate. Where an employee does not understand the notice this must be explained to them in an official language that they understand

Notice cannot be given or run concurrently

· During any period of annual leave

· During any period of sick leave

The principal her is that employers won’t force their employees to take annual leave and so avoid having to pay the employee for the outstanding leave. It is also to protect the employer from employees taking unnecessary sick leave and so avoid coming to work. So use your management discretion when dealing with this issue.

Example: if an employee (a habitual sick leave user) takes sick 2 days sick leave in their notice period and does not bring a doctors certificate you may want to consider making this unpaid leave.

However I would advise you to consult a labor consultant before making any decisions.

Pay Instead of Notice

Employers may decide to waive the notice period, but the worker must still be paid for the notice period. Should the employee not work their full notice then the days not worked may be deducted from the notice pay.

Notice and Accommodation

Workers who live on the premises of the employer may stay in the accommodation for 1 month if the employer ends the contract of employment prematurely.

Certificate of service

On termination of employment an employee is entitled to a certificate of service stating—

(a) The employee’s full name;

(b) The name and address of the employer;

(c) A description of any council or sectoral employment standard by which the employer’s business is

covered;

(d) The date of commencement and date of termination of employment;

(e) The title of the job or a brief description of the work for which the employee was employed at date

of termination;

(f) The remuneration at date of termination; and

(g) If the employee so requests, the reason for termination of employment

Employment Contracts What You Need To Know

by with No Comment ContractsEmployees

The Basic Conditions of Employment Act requires that employers give workers certain details of their employment in writing. these details include clauses that regulates leave, working hours, employment conditions, deductions, pay slips, and termination

Written Particulars of Employment

At the start of employment, employers must give workers a document containing the following information…

Based on Legislation in Section 29, of the Basic Conditions of Employment Act

Employer and Worker Details

  • Employer’s full name
  • Employer’s address
  • Worker’s name
  • Worker’s occupation, or a brief description of the work (we recommend an agreed job description)

Employment Details

  • Place/s of work
  • Date of employment
  • Working hours and days of work

Payment Details

  • Salary or wage, or the rate and method of calculating wages
  • Rate for overtime
  • Any other cash payments
  • Any payments in kind and their value
  • Frequency of payment
  • Any deductions

Leave Details

  • Any leave to which the worker is entitled

Notice/Contract Period

  • Period of notice required for termination; or
  • Period of contract

New minimum wage for domestics

by with No Comment DomesticsMinimum Wage

New minimum wage for domestics

Cape Town – The minimum wage of domestic workers will rise from next month, Labour Minister Mildred Oliphant announced on Friday.

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, her department said in a statement.

“[The] minimum wages for domestic workers who work more than 27 hours per week will be… [in] Area A: R9.63 hourly, R433.35 weekly (for a 45-hour week) and R1 877.70 monthly (for a 45-hour week).

“[In] Area B: R8.30 hourly, R373.50 weekly (for a 45-hour week) and R1 618.37 monthly (for a 45-hour week).”

Area A is defined as all urban areas with municipalities, such as Buffalo City, City of Tshwane, Emalahleni (Witbank), Johannesburg, and others. Area B includes those municipalities not included in Area A.

The wage adjustment was part of an annual binding determination made by the minister in terms of the Basic Conditions of Employment Act.

According to the statement, the minimum wages of domestic workers who work 27 hours or less a week will rise to:

– in Area A, R11.27 hourly, R304.29 weekly (for a 27-hour week) and R1 318.48 monthly (for a 27-hour week); and,

– in Area B, R9.80 hourly, R264.60 weekly (for a 27-hour week) and R1 146.51 monthly (for a 27-hour week.

Last year’s (2012) hourly rate for Area A was R8.95, and for Area B, R7.65.

The department 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.

“Overtime must be paid at one-and-a-half times the employee’s normal wage, or an employee may agree to receive paid time-off,” it said.

Payroll and Employee Tax

by with No Comment EmployeesPayrollTax

Payroll and Employee Tax

To be a truly world class, long surviving payroll department, you had better have a fantastic understanding of all the elements that effect the employees net pay. The biggest of these is the tax deduction. You will be abused and sworn at if the employee is incorrectly taxed and has to pay in or pay off additional amounts to the Receiver of Revenue.

5 ways to make sure we tax our employees correctly:

  1. Start with pro forma payslip
    When the new employee start work at your company, print a pro forma payslip that details what is being paid and what is being deducted. The net pay should be highlighted and the new employee should sign that he accepts this as correct. This gives you a chance to spend time explaining the payslip to the employee and spotting any errors that may have been made
  2. The correct earnings and deductions codes must be used
    We all know that each earning and deduction has an IRP 5 code. The receiver will assess the employee based on those codes. Make sure your codes are correct or the wrong assessment can be had. Some payroll software programs have the codes automatically linked.
  3. Car allowances, company cars and subsistence allowances and cell phone allowances
    Ah yes my favourite. Forever an issue. Make sure that you understand this legislation and that the employee clearly understands what is required. Get him/her to sign the pro-forma payslip that shows the car allowance or subsistence allowance as well the company policy that clearly spells out the responsibilities of the employer and the employee. If you are unsure, then ask someone you can trust.
  4. Medical aid
    Make sure we have the right dependent entered onto the system and new borns are added.
  5. Trust in your payroll software
    Make sure you are using trusted payroll software. Excel is great for spreadsheets but not ideal for payroll. Your payroll should be processed on a professional system. The cost of not doing so could be a lot higher than you think.

The Garnishee Order Not So Simple!

by with No Comment Garnish Orders

The Garnishee Order Is Not as Simple As It Looks.

We are all familiar with the Garnishee order, that legal document that instructs us, the employer ,to deduct from one of our employee’s wages an amount of money every month and pay that over to another company (normally a law Firm) . I have always believed it was a simple procedure until I started reading and investigating exactly what was required of me.

  1. The company can be held liable for the outstanding debt if the garnishee was correctly served and the company failed to deduct the money.
  2. We need to pay the money over to the company demanding payment by the last day of each month or face penalties and interest (this will be added to the employees account)
  3. The company can withhold an administration fee (5%) but this is the added to the employee’s debt (is this ethical)
  4. I believe we have to communicate with the employee and tell them about the garnishee but also let them know what their rights are. It is our duty as employers to assist our employees in any way possible (download sample garnishee letter)
  5. Lastly you do not need the employees consent to deduct this money from his salary.

So what must I check when I receive a garnishee order?

Has the employee consented to the garnishee order?
This consent must be in writing. This consent is very often given when the contract to lend the money or buy the item on H.P is signed. But it is worth checking.

Does the employee work for me?
If the employee works for you then we need to communicate to the employee that he has a garnishee order against his salary. If the employee does not work for you or no longer works for you then you must notify the clerk of the court that issued the garnishee order as well as the company demanding payment that this person is not in your employment.

Is this garnishee legal and binding?
A.The law stipulates that a garnishee order must be obtained in courts within the jurisdiction of the alleged debtor’s home or workplace.
B.Is this the right person, right identity number and address?

Is this garnishee affordable?
The law makes provision for the garnishee to be affordable and it the magistrate is meant to ensure that the employee can afford to pay the amount before he issues the garnishee order. In practice this does not happen very often and therefore it is our duty to assist our employees where we can. If the employee feels that the garnishee is unaffordable he can appeal the garnishee amount.