Tips for payroll compliance
AUTHORITIES: PAYING MORE ATTENTION Keep track of procedural changes that might affect your business.
Non-compliance with labour and tax legislation/regulations (such as paying employees correctly and on time after calculating statutory contributions/deductions) might have a financial impact, for example, paying penalties and interest. It can even impact staff morale which can adversely affect your organisation’s productivity.
Moreover, it’s an area receiving greater attention from authorities such as the South African Revenue Service (Sars) and the National Prosecuting Authority (NPA), who joined forces to combat non-compliance with tax laws, including Paye.
Here are tips to make sure you’re always on top of payroll compliance:
Ensure employee info is up to date
An accurate payroll depends on error-free employee records. Ensure details like contact information, addresses, new benefits, salary increases, and promotions are updated. Certain fixed and financial information is submitted to Sars twice a year.
You can use employee self-service tools to let employees update their details, beneficiaries, apply for leave, file expense claims and more, which removes lots of admin from HR and payroll teams.
Take care around compulsory employee benefits/contributions
Every business offers a selection of benefits to employees regarding paid leave, contributions towards retirement funds, medical aids and making certain statutory payments. It is essential to know what is required by legislation and the additional non-compulsory benefits provided.
You don’t have to contribute towards a retirement fund or medical aid unless specified in a regulating measure for that industry or agreed upon in the employment contract. However, you are required by law to contribute towards the Unemployment Insurance Fund (UIF). Two percent of the employee’s remuneration (subject to UIF) is payable every month – one percent is contributed by the employer and the other one by the employee.
Other legally required contributions include the Skills Development Levy (SDL) and payments to cover Compensation for Occupational Injuries and Diseases (COID). These contributions/payments are paid by the employer, not the employee.
Utilise reporting
A solid audit trail should be a feature of your software. Audit trails are beneficial because they can validate any unusual payments and can track changes to a payroll. Audit trails can also be used if there is any suspicion of fraudulent activities.
Reports indicating variances from previous periods will highlight unusual changes made, which can be investigated further.
Get up to speed with payroll legislation
You can keep track by watching webinars, attending industry conferences and seminars. Be careful when joining social media groups to get advice about staying compliant. Instead, speak to industry experts and find out about payroll procedural changes that might affect your business.
Don’t miss deadlines
There are penalties for companies that submit information late. Remember, when dealing with payroll compliance, you’re not just paying salaries. It would be best if you also considered things like:
► Reconciliation submission deadlines, ► Other statutory reporting deadlines and ► Payment deadlines.
It’s critical to keep ahead of important dates to give yourself enough time to get things done.
► Yolandi Esterhuizen, registered tax practitioner & director: Product Compliance, Sage Africa & Middle East