Not enough provision made

must include the following categories of payments:

1 Payments in kind (employer contributions and benefits) that the employee no longer enjoys following termination.

If the employee does not receive a payment in kind during the notice period, the equivalent cash value must be paid as compensation.

For example, if housing is normally provided, and a payment is made in lieu of notice, the housing must still be provided or an equivalent cash payment must be made.

2 Any untaken annual leave days that must be paid for on termination must be paid for at a rate that includes both the normal remuneration value as well as the average of the variable remuneration value.

The normal remuneration is an additional value that is included because the employee did not enjoy the benefit of “paid” annual leave while still employed.

3 Non-discretionary bonuses must be pro-rated and included because the employee will no longer be employed at the time when the bonus will have been paid out.

In conclusion, remember the principle: employees should not earn less on annual leave than when at work or they are financially prejudiced – balanced by the fact that the employer is not expected to pay “twice”.

• Cooper is a tax expert and director of legislation at Sage. He chairs the Payroll Authors Group of South Africa, which liases with statutory bodies on behalf of payroll system suppliers when dealing with proposed or problematic areas of employment legislation. He has an in-depth understanding of the impact of legislation on the human resources and payroll software industry.