The Big 6
No, we are not confused about the number of large mammals one is absolutely required to see when on safari in Africa. In this instance we are referring to the 6 main legislative acts which have an influence on payroll administration in South Africa, by virtue of the effect they have on either the treatment or the remuneration of employees.
Payroll Legislation – the Big 6
Find below the 6 main legislative acts helping with the tasks associated with payroll administration in South Africa. These are
- The Basic Conditions of Employment Act
- The Labour Relations Act
- The Skills Development Act
- The Occupational Injuries and Diseases Act
- The Unemployment Insurance Fund Act
- The Income Tax Act
Although the ultimate goal and intention of each of these acts may vary, they variously and collectively have 2 aims in common:-
- To ensure the fair and equitable treatment of all South Africans before the law in matters relating to all aspects of employment
- To ensure the fair and equitable remuneration of all South Africans
The fair and just employer has his job cut out to remain informed of and compliant with the various stipulations of these laws. As is often the case with individuals and their personal income tax, companies find it easiest to just pay what appears to be demanded, without trying to determine if there are any valid, reasonable and perfectly justified deductions or rebates due to them.
For smaller enterprises especially, the direct costs associated with establishing and staffing a full payroll administration department in-house are prohibitive. As a result, the benefits available to all employers are sometimes lost to these companies, especially in terms of grants and rebates available under the The Skills Development Act.
Skills Development in Action
I love hearing of a situation where a company identified potential in an employee and then helped develop that employee into someone far better skilled and of more value in the economy than was previously the case. One of my clients had a cleaning lady who was very well presented and very outspoken about the fact that she did not intend mopping floors for the rest of her life. Although her options for improving her situation were limited by her low-level income, she read extensively thereby providing herself with a depth of general knowledge which is somewhat unusual for someone of her socio-economic standing.
Before too long, the position of receptionist became available in the company and she was able to apply for this vacancy and actually get the job. As is often the case with reception duty, there were lengthy stretches of relative inactivity and during these she would ask for extra work, which started with filing and eventually progressed to assisting with data capture for the finance department.
Very soon she had absorbed enough knowledge to ask and be allowed to complete a bookkeeping diploma financed by the company, which qualified the company for an Employment Tax Incentive (ETI). These days, she is operating as assistant bookkeeper and knowing her as I do, it will not be long before she is ready, both in terms of experience and qualifications, to run a bookkeeping department on her own.
ETI (Employment Tax Incentive) and Other Benefits for Employers
A payroll administrator would identify that this situation and the expenses incurred by the company in developing this employee would qualify them for a number of possible grants and/or tax credits, yet very few companies in a similar situation actually claim any of these. This is where the value of outsourcing your payroll function to a well-qualified payroll administrator such as InterAcc Online becomes most apparent.
It is no small wonder that so many companies choose to outsource their payroll function before any other support function. A payroll administration company will have available at their fingertips all the knowledge and expertise regarding these acts, including all amendments and updates published from time to time by the relevant statutory body so that they are perfectly positioned to ensure their clients get the best possible benefit out of these grants and incentives.
Payroll Cost Savings for Small to Medium Enterprises
The larger benefit to smaller enterprises, however, lies in the fact that these companies save money by collectively using and contributing to the time (labour) and resources (software, office space) of the payroll administrator and do not have to expend valuable resources on establishing their own payroll departments which may often end up under-utilised.
The peace of mind offered to the entrepreneur or company management in this scenario is of immeasurable value, especially in the time and focus it allows to be applied to the core business of the company.