CRS migrating your hr and payroll processes to the cloud
Future of payroll and the cloud

While the cloud is fundamentally changing how organisations use data, when it comes to sensitive information such as HR and payroll, caution needs to be applied, this according to Ian McAlister, General Manager of HR (human resources) and payroll specialists CRS Technologies South Africa.

In 2018 Facebook suffered a breach that exposed the data of at least 50 million user accounts. Given the strict privacy laws of Europe, the company is facing fines of as much as $1.63 billion. Examples such as this and the Liberty Life breach in South Africa last year, where hackers gained access to the personal records of millions of clients, do little to assuage concerns that the cloud, for all its benefits, still has significant risks attached to it.

HR to IT spend needs to be managed

“Yes, the much-touted cost benefits of going the cloud route is not something to ignore. With corporate budgets under pressure, everything from HR to IT spend needs to be managed. And with cloud providers offering all these services in a hosted environment, companies can focus less on spending resources on hardware and software upgrades, and more on delivering strategic objectives.

The recent arrival of two multinational data centres in South Africa is also expected to significantly shake up how the cloud is approached, as well as the types of services delivered in the country.

“Fortunately, this focus means services providers will do everything in their power to mitigate the risks of data breaches and other availability concerns. These data centres are also expected to bring other international competitors into the South African market. Local servers mean faster response times and fewer delays in analysing data.”

The cloud route also provides companies with the ability to easily and cost-effectively scale up or down according to the needs of the business.

Migrating to the cloud, solutions are automatically updated

“Instead of purchasing additional servers or expanding an on-site data warehouse, the cloud provider has the required functionality to add capacity,” says McAlister. “For organisations that are growing quickly, being able to easily accommodate new employees as well as more seamlessly manage payroll and HR processes can make a considerable difference in the efficacy of operations.”

And when migrating to the cloud, solutions are automatically updated when new features become available. Companies therefore do not have to worry about patching or updating software.

“The cloud is going to change the business landscape even more over the coming months. But fundamentally it is still about keeping data safe, available, and online using dedicated resources tailored to the needs of the business.”

To read more about this topic, click here to download our free White Paper ‘Enhancing Payroll with the Cloud’.

Outsourcing HR can optimise human capital
Outsourcing HR can optimise human capital

Complex labour legislation is among the many reasons why more companies are choosing to outsource their human resource (HR) function to specialists while they focus on delivering on the core strategy.

Organisations of all sizes can benefit from going the outsourced route as it delivers good return on investment and reduces the risk of human capital.

Curbing cost and reducing risk

In fact, the main drivers of outsourced HR services are built around reducing the cost and risk of the following critical elements:

  • Recruiting unsuitable candidates;
  • Non-compliant employment contracts;
  • Remuneration and deductions calculation errors due to non-compliance;
  • Non-compliant policies and procedures;
  • Non-compliance with the Employment Equity Act (EEA) which can see fines starting at R1.5 million;
  • Flawed disciplinary processes and procedures; and
  • Issues relating to the staff exit process.

When is the right time to outsource?

  • As soon as possible.
    • Employment legislation governs the employer-employee lifecycle, so expert HR services are needed from the start;
  • When you are experiencing growth.
    • As the business grows, so the compliance requirements become more complex. Once the employee count exceeds 50, or annual turnover exceeds the threshold for the industry the company is operating in, it must start complying with the EEA;
  • Regaining core focus
    • It is essential for the business to leave the day-to-day HR issues to the professionals so it can focus on its strategic priorities.
Selecting outsourced services

For an SME, the most important services are the following:

  • Employment contracts;
  • Policies and procedures;
  • Remuneration/deductions;
  • Performance management;
  • Disciplinary procedures;
  • Retrenchment;
  • Employment equity; and
  • Workplace Skills Plan/Annual Training Report.

Procedurally, these can have a huge impact on the business if not done correctly.

Selecting a services provider
  • Expertise
    • Ensure the service provider is registered with the SABPP (SA Board for People Practices), the professional body for HR practitioners in South Africa, as well as the quality assurance body for HE learning provision;
  • Pricing
    • You get what you pay for. The services might be affordable, but this is usually an indication that they are not comprehensive. Many clients end up at the CCMA because they chose to use a cheaper outsourced HR service. Ultimately, this will cost your business more money in the long-run.
  • Reputation
    • Based on testimonials from other clients.
  • Cultural fit
    • The chosen HR service provider must be able to adapt to your needs. The best way to do this is to “become one of their employees” to provide the service. They must develop a one-on-one relationship with each client, underpinned by a personalised service. Agility is key – the ability to fit in with the client’s culture and systems.
Benefits for employers
  • Reduced risk, cost savings (fewer CCMA cases and fewer penalties); and
  • Return on investment (Skills Development Levy rebates).

Benefits for employees

  • Access to a professional and impartial opinion when faced with HR issues, e.g. a disciplinary hearing is chaired by a truly independent chairperson. This ensures that the hearing has a fair outcome and reduces the risk of the employee taking his/her case to the CCMA (which is also beneficial for the organisation).
Migrating your payroll to the cloud
Ever considered migrating your payroll to the cloud?

While the arrival of multinational data centres in South Africa has prompted more organisations to consider moving to the cloud, some are still hesitant to migrate their payroll to this environment. According to Ian McAlister, General Manager of CRS Technologies, the advantages far outweigh any concerns.

“When it comes to payroll, there are three main benefits to consider – scalability, efficiency, and strategic value. These are particularly relevant to private or hybrid cloud models which offer the most benefit to businesses in their transition to this environment.”

From a scalability perspective, the ability of the cloud to support fluctuating work loads ensures a business can grow easily without needing to invest in new infrastructure. Furthermore, companies can scale down their workload during non-peak times of the month and save on operational expenses in the process.

Because solutions and data on a private or hybrid cloud mean users have secure access to sensitive information wherever they have internet connectivity, accessing payroll solutions from there is an increasingly efficient way of doing business. Given how cloud-based platforms must comply with all regulatory requirements around data protection, businesses can focus on their core mandate while leaving the security to the professionals.

In terms of strategic value, using cloud-based payroll solutions not only streamlines work processes because the service providers manage the required infrastructure, it also better enables collaboration between departments and gives organisations a competitive advantage over those still encumbered by on-premise solutions.

“Tying all this together is the ability of private and hybrid cloud models to provide payroll departments with a customised environment that can suit the specific needs of the organisation. The service provider typically is also able to provide the business with add-ons via a partner network that can further enhance the data analysis capabilities of HR and payroll,” McAlister says.

Overcoming obstacles

Of course, this does not mean there are not challenges to navigate when migrating to the cloud.

“Decision-makers are still concerned about the availability and security of data stored in the cloud. With the complexities of the regulatory environment continually shifting the goalposts on how data needs to be protected, organisations must understand the implications of moving sensitive payroll data and the financial and reputational repercussions if this is compromised.”

After all, if customers (and employees) feel unsafe with their service provider (and how it stores records), they will move to a competitor or change companies.

With the likes of the Protection of Personal Information Act (POPIA) in South Africa and the General Data Protection Regulation (GDPR) in the Europe Union posing strict fines on companies not taking the required steps to protect data, businesses are under pressure to ensure they remain compliant. Considering the sensitivity of data associated with HR and payroll systems, having that compromised could significantly impact the business and its employees.

Industry shift

Despite these concerns, numerous international surveys with finance leaders and broader business audiences point to significant momentum building around cloud experimentation and adoption.

According to a global outsourcing survey conducted by Deloitte in 2018, 93% of companies said their organisations were adopting or considering the cloud. In a poll of nearly 3 000 finance and business leaders conducted during a Deloitte webcast, 41% said they had cloud technologies in place or were in the process of implementing. Another 16% said they were assessing cloud options. A further 48% of finance executives polled in the webcast said cloud technology would be critical to the performance of their finance organisation in two years’ time.

This is also reflective of the South African environment.

IDC research shows that 93% of local companies are developing cloud strategies and are either in the implementation phase or planning implementation soon. Furthermore, the IDC predicts that spending on public cloud services will nearly triple over the next five years, up from R4,29 billion in 2017 to R11,53 billion in 2022.

“Adding further impetus to this is that more multinational organisations plan to launch data centres in the country,” says McAlister. “This will address many of the regulatory concerns around where data is stored, as well as the speed of accessing information on servers.”

Partner-led

“Decision-makers must understand that the cloud, for all its benefits, is not a silver bullet that solves all payroll challenges. The organisation must first understand what it hopes to accomplish from the cloud. A business case must be developed, and the strategic deliverables aligned to the model best suited to the task at hand.”

From a payroll perspective, the sensitive nature of the data at hand and the critical importance of these departments for business growth, mean the ideal environments would be either a private cloud or a hybrid model. The public cloud is simply not secure enough for these vitally important data stores.

“Companies need to select a partner capable of delivering either a private or hybrid cloud offering, based on their specific requirements. This partner must have the best practice experience of operating in these environments and be able to assist with change management to educate users on how to get the most value out of their payroll applications in the cloud,” McAlister concludes.

Be wary of recorded conversations
Be wary of recorded conversations – companies may be within their rights to secretly record conversations with employees

Contrary to popular belief, companies may be within their rights to secretly record conversations with employees and use that information against them in a court of law. However, the reverse is also true. Nicol Myburgh, Head of the Human Resource Business Unit at CRS Technologies, says this has the potential to significantly change the dynamic in the workplace.

According to Section 4 of the Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA), it is not illegal to secretly record a conversation you are party to. But it is still illegal to do so as a way of intercepting communications to commit an offence, for example obtaining a person’s bank account information.

“The argument that recording these conversations infringes on an employee’s (or employer’s) right to privacy is outweighed when using the recording in court is in the interests of justice. Of course, there is nothing prohibiting the addition of an explicit clause in employment contracts that mitigates against the risk of having communications intercepted.”

Smartphones and tablets come standard with audio recording features, making it virtually undetectable

Technology has made it incredibly easy to record conversations without other parties being aware of it. Most smartphones and tablets come standard with audio recording features, making it virtually undetectable when somebody runs the app and puts the phone or tablet out of sight.

“Often, these conversations can be used as evidence in disciplinary hearings and other disputes even before they go to the CCMA or court. Further complicating matters is that courts do not hold privacy rights as absolute. Instead, they take other factors into account that can trump privacy rights.”

An example of this is in Harvey v Niland, where evidence was obtained by hacking into the respondent’s Facebook account. Evidence can therefore be presented in various forms and not necessarily only in the form of an audio recording.

Nevertheless, it remains in the best interests of either party to obtain recordings legally. From an employer perspective, fair process must be followed, with the employee being given an opportunity to respond to the evidence presented against them.

If you are a third party, you need informed consent

“From a legal perspective, it should also be noted that either party can record a conversation that they are part of. But if you are a third party, you need informed consent from one of the other parties to legally record that conversation. It is often this consent that confuses people into thinking all parties must agree to have a discussion recorded.”

Of course, if the recording is inaudible then it cannot be admissible. Myburgh says that employers or employees therefore need to ensure that the audio can be heard, and that the data is stored in a safe place to avoid it being lost, deleted, or edited in a way that will also make it inadmissible.

“Companies are operating in a dynamic, technology-driven environment. It should always be assumed that any conversation or meeting will be recorded, like assuming all work email will be read by a supervisor. In this way, both the employee and employer can ensure no mismanagement takes place.”

Why Outsource your HR?

The business case for outsourcing the HR function is straightforward – it provides any-sized business with a dependable resource that can be used to effectively manage HR with less cost, less risk and less pressure on resources, if you have the right partner on board.

We do not simply endorse this business model because it is our speciality; there are practical business reasons for companies to take this route – and research backs this up.

For example, according to the ADP Research Institute the most compelling reasons for companies to consider outsourcing their HR function include: stabilise costs, lower risk, increase employee productivity and drive business results.

It is important to place these reasons in context. As we are all aware, South Africa’s economy is not growing as fast as it should be. At the time of writing this piece, the country’s GDP is forecasted to grow by just 1.5% for 2019.

Times are tough for businesses across the board and especially for SMEs, which are acknowledged to be one of the most active and sizeable contributors to the country’s economy.

SMEs, particularly, are under heavy pressure to operate with limited resources – especially spare capital and skills availability.

New developments effecting HR and technology

There really isn’t a great deal available to mobilise a team of HR experts and utilise their skills at any given time to deal with issues like tax, regulatory changes, new developments effecting HR and technology.

Lower risk is actually a lot more strategic than some would imagine. Smaller operations must do all they can to compete, sustain themselves and be agile – there is little room for mistakes, and most importantly the market is not forgiving when it comes to messing up on HR.

It really is all about choice… empowering the decision maker with a powerful alternative. They can outsource all the HR functions, or just some of them to a partner.

As experts have written, the model is described as “a kind of partnership” where the outsourcing provider acts as a “a co-employer of your staff members”.

Outsourcing the HR function

Outsourcing the HR function to an experienced, credible and established service provider will give decision makers peace of mind and time to focus on the business, and on strategy. They don’t have to worry about whether or not the company is complying with legislation, whether employees are effectively onboarded, or if the latest tax information and compliance has been considered and factored into the operation.

Once again ADP Research Institute has listed several key advantages linked to outsourcing some administration functions.

For example, it alleviates the administrative burden on internal staff, enables more cost-effective administration, and enhances integration across multiple benefits areas.

The question of whether or not to outsource something as important as HR is really not applicable anymore. The model works and continues to gain popularity within ever-increasingly competitive and resource-intensive markets. Today, it is really not about whether or not to outsource, but more when and to whom?

Mauritius 2019/2020 Budget Speech

On Monday, 10 June 2019, the Prime Minister and Minister of Finance and Economic Development, Pravind Jugnauth, delivered the last Budget Speech of the present Government.

Key Highlights of the Budget Speech

  • The budget deficit is estimated to maintain course at 3.2% of GDP for financial year 2019/2020.
  • Public Sector Debt to GDP has increased to 63% in 2018, and Government plans to reduce the debt to 60% before 2021 by using part of the undistributed surplus of the Bank of Mauritius.
  • Real GDP has been increasing at an annual average rate of 3.7% since 2015 and is forecast to rise further to 3.9% in 2019 and 4.1% 2020.
  • The inflation rate and unemployment have decreased over the last years.
  • The tax legislation will be amended to introduce rules on controlled foreign companies (CFC).

Personal Income Tax Measures

  • Income exemption thresholds for all categories of taxpayers for the income year 2019-2020 are being increased as follows:
    • For a taxpayer who has no dependent or one dependent, the threshold will increase by MUR5,000;
    • For a taxpayer with two dependents, the threshold will increase by MUR20,000;
    • For a taxpayer with three dependents, the threshold will increase by MUR25,000; and
    • For a taxpayer who has four dependents, the threshold will increase by MUR45,000.
  • The additional deduction for a child pursuing tertiary studies and relief for medical insurance premium will now be available for a maximum of 4 dependents instead of 3 dependents.
  • The additional income tax exemption of MUR50,000 will be granted to a retired or disabled person having more than one dependent, instead of being restricted to those having one dependent only.
  • The annual net income subject to tax at a lower rate of 10% has been increased from MUR650,000 to MUR700,000.
  • In addition, an individual deriving a basic salary including compensation not exceeding MUR50,000 in his first month, will benefit from a tax credit of 5% of his chargeable income, provided that his annual net income does not exceed MUR700,000.
  • Solidarity levy not applicable to lump sum income received by a person as pension or death gratuity, effective retrospectively as from 1st July 2017. However, the levy will now apply on an individual’s share of dividend in a société (partnership) or succession.

Contact our legislation team at info@crs.co.za if you require any additional information.

© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved. 

The gender pay gap – inequality continues to impact human resources
Gender pay gap inequality still impacts human resources (HR)

Human resource and human capital management experts agree – the fact that women are generally paid less than men in the workplace has a detrimental effect on society.  As one academic put it – “unfair pay practices perpetuate societal inequalities and keep families in poverty”.

As an industry representative organisation run by, and for HR and HCM professionals, CRS Technologies has a vested interest in monitoring the maturity and overall development of HR.

In South Africa equality is enshrined into the country’s constitution and this includes the workplace.

Any bias or inequality, however applied, and based on race, ethnicity, culture, creed, religion or gender, is outlawed. And so, we have to face facts… there is a shared responsibility between the employer and the employee to ensure equality and to enforce the law where inequality exists or is perpetuated.

Remuneration is a very topical issue at the moment, given the lack of representation of women professionals in key sectors such as IT.

Several key themes form the basis for the global gender pay gap

Academics and industry insiders have identified several key themes that form the basis for the global gender pay gap.

According to the SA Board for People Practices, these themes include skills development, careers, modes of work, job changes and pay, wage negotiations and collective bargaining.

The argument made by those protecting the rights of women in the workplace is that skill sets often stereotypically associated with women, including caring and organising, are generally not paid well.

The important point raised by HR practitioners is that it is important to check our personal feelings and bias ‘at the door’ and realise that these could easily become part of the workplace processes and procedures.

There is also the issue of wage negotiations and the role of unions and industry representatives. The argument is that in many instances it is males who are chief negotiators or representatives, which means that they don’t necessarily always have women’s rights and best interests at heart.

Skills availability will remain a challenge to industry and there is some merit in the debate that skills diversity, equality, application and relevance should begin at school level – even primary school level.

The days of some skills sets being only accessible and relevant to one gender over another are over… today, multi-skills, soft skills and professional certification remain in high demand.

Eradicate unfair treatment

We have to bear in mind that HR and employment legislation, including the Basic Conditions of Employment Act, has been put in place to eradicate unfair treatment and that covers remuneration.

The fundamental, especially when it comes to HR and HCM, is that women have as much right as their male counterparts to have their skills recognised, to be remunerated fairly for their skills, their experience, market knowledge and their value to a business as an asset.

That is the premise for what we all strive for – a workplace that enforces and protects equal opportunity, and gender equality.

The draft Taxation Laws Amendment Bill 2019 published for comments

On 10 June 2019 National Treasury published the initial batch of the draft Taxation Laws Amendment Bill 2019 for public comments. The full text of the 2019 draft Taxation Laws Amendment Bill will be published for public comment in mid-July 2019.

This initial batch is intended to ask for comments on two specific amendments that are more urgent and require further consultation. Written comments on the initial batch of the 2019 draft Taxation Laws Amendment Bill are due on 25 June 2019.

The two amendments referred to, are:

Aligning the effective date of tax neutral transfers between retirement funds with the effective date of retirement reforms, which is

1 March 2021.

  • In 2013, retirement fund reform amendments were effected to the Income Tax Act regarding the annuitisation requirements for provident funds. The main purpose of these amendments was to improve the protection of retirement fund interests during retirement, resulting in provident funds being treated similarly to pension and retirement annuity funds with regard to the requirement to annuitise retirement benefits.
  • These amendments were originally intended to come into effect on 1 March 2015, however, further negotiations within NEDLAC have not been finalised, resulting in the effective date for the annuitisation requirements for provident funds being postponed to 1 March 2021.
  • Each postponed requires several amendments to various provisions of the Income Tax Act. One change was accidentally left out in paragraph 6(1)(a) of the Second Schedule to the Income Tax Act, which makes provision for tax neutral transfers between retirement funds.
  • To correct this, it is proposed that urgent changes be made to the Income Tax Act to align the effective date.

Addressing abusive arrangements aimed at avoiding the anti-dividend stripping provisions.

  • This amendment is not applicable to Employers/Employees.

Click  here to view the media statement
Click  here to view the initial batch of the draft Taxation Laws Amendment Bill 2019
Click  here to view the Explanatory Memorandum

 

Contact our legislation team at info@crs.co.za if you require any additional information.

© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

 

Access to a tax advisory service during tax season adds value
Access to a tax advisory service adds value in a substantial manner during the annual tax season.

We all know the drill by now… around this time of the year, tax season, businesses have to ensure compliance with SARS legislation governing the submission of returns.

We also all realise that we are operating in a vastly different economic environment, in which many businesses are struggling with cash flow and unable to pay outstanding tax debt to SARS.

It is not surprising that many business owners choose to take the wrong route as a short-term solution and actually avoid submitting their returns.

Our partner and tax business continuity specialist Tax Debt Compliance is pretty clear when it comes to its advice on this issue: not only is it illegal, but not submitting a return will incur severe penalties and high interest charges for your business.

So what are operators to do? It is a bit of a catch-22 situation – not submitting may ease the pressure on cash flow (albeit temporarily), but it is not a true reflection of the state of the business and will end up costing more – however, submitting may be a stretch too far!

That is why we have partnered with Tax Debt Compliance to provide a tax advisory service.

How does this service help?

Well, it comprises a range of tax relief mechanisms:

  • Negotiation of affordable instalment agreements with SARS on behalf of your business;
  • Compromise applications to SARS which, if approved, will enable your business to settle tax debt at a reduced amount;
  • Tax due diligences to ensure compliance with South African tax legislation;
  • Formulation of tax opinions for businesses considering entering into complex transactions that could hold significant tax consequences.

These are the immediate benefits to clients looking for some kind of intervention and assistance with tax.

Not only does this mean you are actually being proactive in dealing with the challenges, you are also being realistic in terms of where the business is positioned and have a credible way of influencing the outcome.

Our tax advisory service is there to be used and to help… contact us now for more information!

Flag of Kenya
News on Kenya’s National Housing Development Fund

The latest news about Kenya’s National Housing Development Fund (NHDF) is that its implementation has been delayed.

On Monday 27 May 2019 the implementation of the NDHF levy was extended by the Employer and Labour Relations Court, which effectively barred the government from enforcing the disputed 1.5% housing levy.

This levy was supposed to take effect in May, in accordance with a government directive in April making it mandatory for employers to deduct and remit the levy by the 9th of every succeeding month.

It has come to light that the case challenging the levy was initially filed by Central Organisations of Trade Unions (COTU), as well as various other parties, including the Trade Union Congress of Kenya, Consumers Federation of Kenya (CoFeK) and the Federation of Kenyan Employers (FKE).

As a leading human resources and human capital management services provider, established in Africa to keep abreast of these markets across the continent, CRS is committed to informing you – our customer – of changes to regulation. That is our mandate and that is exactly what we will continue to do.

For more information and advice, please contact our legislation team at info@crs.co.za.