PAYE BRS for Employer Reconciliation (2019 release) version 18.0.3 published

The latest PAYE Employer Reconciliation Business Requirement Specification (BRS) was published on Tuesday, 30 July. The requirements in this version of the BRS will become effective from September 2019 until it is replaced by an updated version.

Minor changes were made in the PAYE BRS V18.0.3. The detail of these changes is highlighted in purple in the BRS.

A summary of the sections where changes were made are as follows: Employee pay periods section:

Employee pay periods section:
• ETI employment date (code 3190)

Directive information section:
• Directive number (code 3230)

Employee Remuneration section:
• Income received
• Employment Tax Incentive code (code 4118)

Employment Tax Incentive information:
• Minimum wages (code 7003)
• Monthly calculated ETI (code 7004)

To view the new BRS, follow the link.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

Ghost employees could cost you your business

Payroll fraud: he occurrence of Ghost employees could cost you your business

The occurrence of ghost employees on a company’s payroll system ranks as the most difficult type of payroll fraud to detect, particularly in larger companies where no proper controls exist. Over time, this can pose a serious threat to the organisation’s profitability and sustainability, declares CRS Technologies general manager Ian McAlister.

“A ghost employee is a fictitious person on the company payroll who does not actually work for the organisation,” he explains. “It could be someone who left the company or passed away, or even a fictitious person with a fake ID number but valid bank account into which a salary is paid each month. The holder of the bank account is usually the perpetrator of the ghost employee fraud.

“Another example is when a real employee appears twice on the payroll. This is done by using a different ID number to create a clone of someone. The employee’s salary is then split between the two identities but only one identity receives a tax certificate, enabling the perpetrator to declare less than what he/she actually earns to the tax collecting authority.”

Automated payroll solution that will reduce opportunities for creating ghost employees

It goes without saying that failure to detect ghost employees can result in considerable financial loss over time. Consequently, McAlister says companies should seriously consider implementing a robust automated payroll solution that will reduce opportunities for creating ghost employees.

“The payroll solution should feature ID number verification so that if someone tries to enter a ghost employee on the system, it will immediately reject the ID number as invalid. The CRS solution, for example, incorporates ID numbers which are attached to each employee. Each number is unique and cannot be duplicated. This means that an employee cannot appear twice on the same system.”

Audit and risk management policies that facilitate the development of controls to aid in the prevention and detection of any type of payroll fraud are also extremely important, McAlister continues. He recommends carrying out audits at least once a quarter to ensure that the number of employees on the payroll actually exist and equal the number of people employed.

“Perform frequent spot audits to check that employees’ earnings, allowances and other remuneration additions are correct and in accordance with their employment contracts.  Any changes to an employee’s earnings must be approved by a senior manager and not the payroll administrator. If possible, a multiple-party approval process should be followed to mitigate collusion. It is also advisable to run comparison reports between various payroll periods. Any  variance of more than a predefined percentage occurs should raise a red flag.”

All the perpetrator has to do is sit back and collect the payments

McAlister points out that ghost employee fraud does not have to be perpetrated by the person who controls the entire payroll system. “Mostly it is done by the individual who authorises payroll payments or controls the addition or deletion of employees from the system. Once the ghost is created, payments are generated to the ghost without the need for additional action or review by the payroll team. All the perpetrator has to do is sit back and collect the payments.

“This being said, an indication that some type of payroll fraud is being committed could be when the payroll manager or administrator always arrives early and leaves late, and never goes on holiday or takes sick leave. Being away from the office will force them to give their work over to someone else, who may discover their crime.”

For businesses that cannot afford the luxury of an internal audit department, McAlister recommends entrusting their payroll to a third-party professional. “CRS’s outsourced payroll services includes multiple levels of accountability where different people manage different payroll duties. Fraudulent activity is further prevented by rigorous internal controls.”

Payroll is often a business’s biggest expense. Organisations need to understand the potential devastation ghost employees and other types of payroll fraud can cause and take the necessary steps to safeguard against it,” McAlister concludes.

Company Culture trumps technology

Technology has made our lives easier, but still company culture trumps technology

There is no arguing the fact that technology has made our lives easier. It has also resulted in organisations being able to deliver more innovative solutions in the workplace to provide for a more compelling environment. Nicol Myburgh, Head of the HR Business Unit at CRS Technologies, cautions that this should not happen to the detriment of the company culture.

Technology in the workplace can create many temptations among employees. Social media is a perfect example where employees spend most of their time on their favourite networking platforms instead of working. Even more concerning is how prevalent viewing pornographic material has become in the workplace,” he says.

Myburgh believes there is a growing trend among companies to focus on technology innovation and neglect the human element.

“This is happening more today than ever before and can be partly ascribed to an increasingly intensive and regulated labour environment. Employers want to move away from staff and acquire tech-driven solutions to replace people, all in a move to alleviate having to deal with issues created by unions, employee complaints, and poor performance.”

Local examples are plentiful, but it is especially in the banking sector where this becomes apparent as leading banks look to close branches in favour of investments in digital banking solutions. It all comes down to the bottom-line – technology is cheaper to maintain than the people driving it.

Return to culture

So, how can companies still reinforce their culture without relying on technology, tools and mobile apps?

“It must always be remembered that the company culture is the personality of a company and is determined by the people who work there,” says Myburgh.

“Without it, a business cannot be expected to have employee engagement and growth potential. Moreover, management needs to be aware of how technological innovation has impacted on changes taking place in the company culture. Much of this revolves around the way people do things. For example, the office hours of a traditional business used to be from 08:00 to 17:00 but embracing a mobile workforce has resulted in more people working off site, thereby fundamentally changing the culture of the organisation.”

Technology does provide benefits and opportunities, but it should always be driven by putting the people first. Staff events and team-building activities are excellent ways to promote interaction and reinforce the company culture.

Maintaining focus

Technology and applications are just tools – a means to an end. Organisations can do more to ensure their focus remains people-centric.

“This is where company culture comes in. It revolves around making the environment a pleasant place in which to work. The technological tools merely facilitate companies being geared towards their people. Some individuals want to interact with their colleagues face-to-face, while others prefer to use an app. It all depends on the person’s perception of what it means to be people-focused. Technology can therefore be used to give voice to the individual needs of employees instead of simply being a one-size-fits-all approach,” Myburgh concludes.

Nicol Myburgh

Nicol Myburgh, Head of the HR Business Unit at CRS Technologies

Retrenchments not an opportunity to eliminate dead wood – avoid these retrenchment mistakes

With the unemployment rate of economically active South Africans reaching 27.6% in the first quarter of this year and media reports filled with job cuts across industry sectors, companies need to be cognisant of any potential retrenchment mistakes to avoid, says Nicol Myburgh, Head of the HR Business Unit at CRS Technologies.

“It is interesting to note that the word retrenchment has no legal definition in the country. The process is documented in Section 189 of the Labour Relations Act and is consequently referred to as a Section 189 dismissal or operational requirement dismissal.

Process to get rid of non-performing or ‘problem’ employees

According to Myburgh, employees can be dismissed for misconduct, incapacity (either medical or poor performance), or operational requirements (retrenchment). Each one of these follows a vastly different procedure.

In the case of retrenchment, many employers use this process to get rid of non-performing or so-called ‘problem’ employees. Often, they do not even appropriately consult with the individuals they plan to retrench.

“There is a difference between consulting with and telling people they will be retrenched,” Myburgh explains. “The former is a discussion that intends to reach consensus to deliver value for both parties. While not quite a negotiation, it comes close to it. This involves discussing in good faith the process, selection method, financial factors, termination, and so on with the affected employee.”

But what can be considered a fair retrenchment selection method?

The LIFO (last in, first out) principle is the most objective and involves choosing shorter serving employees for retrenchment before their longer serving colleagues, says Myburgh. “Another method is to create criteria for the selection, assign values to each one, measure staff accordingly and dismiss everyone who fails to meet the criteria. Of course, the problem with this process is that it is possible for employers to manipulate the criteria so that they can get rid of ‘problem’ employees. If this is raised, the onus is on the employer to prove this is not so.”

“Businesses must always keep in mind that retrenchment is not about the people but rather the positions. If the correct procedure is not followed, especially when unions are involved, it can cost organisations significantly more money in the long term.”

Discussing packages

When it comes to structuring retrenchment packages, decision-makers need to understand the human element and not blindly look at the numbers.

To this end, the legal minimum requirement for a retrenchment package is one week’s salary for every completed year of service. The Act is silent on partial years worked, but some companies pay out pro-rata for the partial year, while others completely disregard it. It is up to the employer to decide what it wants to do in this regard.

“On a more positive note, employers can consider offering voluntary retrenchment packages,” Myburgh points out. “Typically, these are usually higher than the legal minimum requirement and employees can choose to accept or reject the retrenchment offer. This can serve to smooth the retrenchment process which is often fraught with emotion, especially on the part of the employee being retrenched.”

Regardless of the process followed, retrenchments can have a negative impact on the staff who remain.

“Once retrenchments start, the trust employees have in the business is broken. Management must therefore be completely transparent regarding the future of the company, its structure and financial well-being. Employees should be constantly reassured about their future with the organisation,” he concludes.

Rwanda Budget Speech for 2019/2020
The 2019/2020 Budget speech was delivered on 13 June 2019 by the Minister of Finance and Economic Planning, Dr Uzziel Ndagijimana.

The theme for the 2019/20 budget is “Transforming lives through Industrialisation and Job Creation for Shared Prosperity”.

Highlights:

  • Rwanda’s budget will increase by 11% in the next year, while the government projects slower growth. About 86% of the total budget will come from internal sources.
  • Government has proposed to increase the national budget from 2.5 to 2.8 trillion Rwf for the fiscal year 2019/20.
  • Rwanda’s GDP grew by 8.6%, compared to the initial projection of 7.2%.
  • The global economy registered a decline in economic growth from 3.8% in 2017 to 3.6% in 2018.
  • The Rwandan economy is projected to grow by 7.8% in 2019, by 8.1% in 2020, and by 8.2% in 2021.
  • Inflation was maintained below the 5% medium-term inflation benchmark. The average headline inflation was at 1.4% in 2018, from 4.8% recorded in 2017.

Key tax measures

  • Revision of the law on tax procedures, stating that every person carrying out commercial activities would have to use the new Electronic Billing Machine (EBM) for all, expanding the coverage to non-VAT registered persons and improving tax compliance.
  • The Rwanda government has also proposed changes to the tax penalties regime to cap penalties arising from audits and investigations to a maximum of 20% on any understatement exceeding 10% of the declared tax. Previously the penalties were progressive, rising to 50%.
  • An additional proposal has been introduced to reduce the 60% late filing and 50% late payment penalties. The proposed penalties will be computed based on the default period.
  • Rwanda has signed double tax agreements with Turkey and the UAE.
  • No changes to personal income tax rates were proposed.

 

Uganda Budget Speech for 2019/2020

The 2019/2020 Budget speech was delivered on 13 June 2019 by Hon. Matia Kasaija, Minister of Finance, Planning and Economic Development.

The theme for the 2019/20 budget is “Industrialisation for Job Creation and Shared Prosperity”.

The budget prioritised the following four strategic areas:

  • Enhancing key primary growth sectors
  • Increasing infrastructure access and reliability
  • Human capital development
  • Maintaining peace, security and improving governance

Highlights

  • GDP grew from 5.7% to 6.1% in 2018/19.
  • The budget deficit as a ratio of GDP for the new financial year is projected at 8.7%, compared to 5.8% this year.
  • Government debt rose to Shs. 42,760 Billion (equivalent to US$ 11.5 Billion) as at end December 2018.
  • The average Inflation was 3.4%, within the policy target of 5% per annum.

Key fiscal measures

  • To strengthen tax administration and restore public confidence in the tax system, the following interventions will be implemented over the next five fiscal years:
    • Review tax policies for greater simplicity, efficiency and sustainable revenues.
    • Involve taxpayers more fully in the tax policy formulation process.
    • Promote an attractive business environment to potential investors, including the provision of a business-friendly tax environment, and eliminating distortions to private sector investment decisions.
    • Support investment in human capital by granting incentives to businesses which provide apprenticeship in priority sectors, accredited training and education based at the workplace.
    • Eliminate revenue leakages and enforce tax obligations by re-examining rules and restricting tax exemptions.
    • Enhance Uganda Revenue Authority’s administrative efficiency through additional staff recruitment, better training, and modernisation and expansion of ICT capacity.
    • Enhance compliance through registration, improved taxpayer services and education.
    • Develop a simplified tax regime for small and medium enterprises, including informal sector businesses to encourage tax compliance.
    • Strengthen the revenue-raising capacity of local governments by broadening the range of revenue instruments available to them.
  • The reward payable to a person who provides information leading to the recovery of a tax or duty has been reduced from 10% to 5% of the principal tax recovered.

No changes to personal income tax rates were proposed.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

Monthly fixed cap for social security contributions increased

Two significant changes regarding the mandatory monthly contributions due from employees and employers have been introduced by the Egyptian government.

Only Egyptian nationals are required to make contributions, unless a reciprocal social security agreement with another country applies. Both the employer and employee must contribute to the scheme and remit monthly contributions to the Social Insurance Organisation.

Contributions to social security are made up of two components:

  • Fixed contributions for salaries under a certain earnings threshold
    Effective 1 July 2019, the cap for the monthly fixed basic salary contribution rate is raised to EGP 1,670 (from EGP 1,510). Employee and employer contributions at the fixed basic rate are 14% and 26%, respectively.
  • Variable contributions for salaries above that threshold
    In January 2019 the monthly cap for variable social security contributions were raised by 20% to EGP 4,040. Both employees and employers contribute to variable social security at a rate of 11% and 24%, respectively.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

Reduction of official interest rate announced

The Monetary Policy Committee (MPC) of the South African Reserve Bank has decided to reduce the repo rate for the first time since March 2018. The announcement was made on Wednesday, 18 July 2019.

The repo rate is reduced by 25 basis points to 6,5% per year, effective from 19 July 2019. This means that the rate at which the SARB lends to your bank has decreased from 6,75% to 6,5%.
For employers, the official interest rate applicable to payrolls will be 7,5%, taking effect 1 August 2019.

The definition of “official interest rate” in the Seventh Schedule of the Income Tax Act means:

 

• In the case of a loan which is denominated in the currency of the Republic, the South African repurchase (repo) rate + 100 basis points; or

• In the case of a loan which is denominated in any other currency, the South African repurchase rate applicable in that currency +100 basis points.

 

Where a new repurchase rate or equivalent rate is determined, the new interest rate applies for the purposes of this definition from the first day of the month following the date on which that new repurchase rate or equivalent rate comes into operation.

The first of the new parental leave laws will be implemented at the end of July.

President Cyril Ramaphosa signed the Labour Laws Amendment Bill into law in November 2018, but its enactment has been delayed to allow the Department of Labour to configure its systems to facilitate the new Unemployment Insurance Fund benefits. The new legislation lays the foundation for parental leave, adoption leave and commissioning parental leave for specific employees.

According to the department, the scheduled dates for system readiness are:

  • Parental benefits – 31 July 2019
  • Adoption benefits – 11 October 2019
  • Commissioning parental benefits – 20 December 2019

Once the system is ready and the legislation has been approved, the new amendments will come into effect.

 

Addressing global payroll management

Addressing global payroll management is a complex undertaking

Managing payroll is a complex undertaking, driven by a country’s regulatory environment. When it comes to doing this on a global scale, however, the business must address the myriad of tax regulations in all the jurisdictions in which it operates, says Ian McAlister, General Manager at CRS Technologies.

“While expanding operations into new territories brings compelling advantages to the company, it is important to be cognisant of local nuances such as language, culture and legislative requirements. There is no one-size-fits-all approach when it comes to payroll management around the world. What works (and is expected) in one country might not even be relevant in another.”

Payroll is a vital business function

While using the cloud as a vehicle to help manage this from a central location has addressed some of these challenges, it is not the silver bullet that many make it out to be. Rather, it is just one component of a much more complicated environment that is continually evolving.

Payroll is a vital business function. The advantage of migrating this to the cloud is the efficiency that comes with having sight of an organisation’s global payroll in a centralised location. This ensures that there are fewer administrative tasks to be concerned about and allows more time to focus on delivering strategic value across the organisation’s footprint.”

Yet for all the attention placed on outsourcing payroll solutions, offering self-service employee platforms, and even recruiting more digitally savvy payroll managers, McAlister says it is vitally important to have the fundamentals in place.

“In fact, many payroll managers cite keeping on top of legislation in multiple tax jurisdictions as their biggest challenge. A global survey found that 41% of respondents consider this the most important obstacle to overcome, followed by managing multiple deadlines, processes, contracts and reporting.”

Global payroll delivers significant business value

Despite this, managing a global payroll delivers significant business value. This includes having access to more relevant information on the state of operations in every territory, resulting in a cohesive view of the health of the organisation. It also enables decision-makers to identify problem areas much quicker than in the past and allocate resources accordingly.

“As this results in an improved, collaborative environment, a global payroll approach must keep three critical components in mind – technology, compliance and change management. Technology revolves around assessing what is currently being used and how best to adopt other solutions. Secondly, it goes without saying that compliance must be adhered to, irrespective of the location, so the solution must be able to offer the flexibility required to do this. Finally, getting employees to use the solution and all the relevant features will be integral to its success,” says McAlister.

This is where using technology in conjunction with a people-centric approach becomes important.

“Too often, businesses simply throw technology at the problem, but using cloud-based solutions are merely one piece of the puzzle. There is still a need to have people on the ground with the necessary skills to unlock the potential created by the technology. The one cannot happen without the other,” McAlister concludes.

Never underestimate the dangers of burnout

Why employers should never underestimate the dangers of burnout

Burnout is now officially recognised by the World Health Organisation (WHO) as a clinical syndrome, legitimising the physical and mental impact that overwork can have on employees. Nicol Myburgh, Head of the HR Business Unit at CRS Technologies, believes that companies should familiarise themselves with the symptoms of burnout to minimise the potential impact on employees and the business.

“In the fast-paced corporate environment, employees feel they must keep up or risk being overlooked for promotion or a salary increase. Even artisans are under immense pressure due to long hours, demanding customers, and the constant battle to make ends meet,” he says.

Adding further impetus to concerns around burnout is the fact that digital transformation is resulting in jobs becoming more specialised. This is putting even more pressure on people to get their work done as effectively as possible. And in South Africa, with retrenchments a constant fear in the current uncertain economic climate, employees are expected to take on more responsibilities with fewer human resources on hand.

Symptoms

According to WHO, burnout is characterised by three dimensions:

  • Feelings of energy depletion or exhaustion;
  • Increased mental distance from one’s job, or feelings of negativism or cynicism related to one’s job;
  • Reduced professional efficacy.

Burnout is the result of chronic workplace stress that is not successfully managed. Despite the recent classification, it is by no means a new phenomenon and people have been struggling to deal with it for as long as they have had jobs. However, thanks to the connected generation, the issues surrounding this clinical syndrome are now out in the open and decision makers can no longer ignore it.

Education vital

“Despite this, few industries take burnout seriously,” says Myburgh. “Often, it is only if a job relates directly to a person’s safety that managers treat burnout with the respect it deserves. In the corporate environment, employees are typically squeezed until every ounce of their energy is depleted.”

Consequently, education is critical.

“This can involve researching the impact burnout has on the business, running workshops and acknowledging the fact that it is a legitimate problem. People who suffer from burnout should never be told to ‘get over it’ or ‘snap out of it’. Instead, it needs to be managed properly and with consideration for the sufferer.”

Burnout can be viewed as a precursor to depression and if not taken seriously, can lead to other mental health issues that can also negatively impact performance at work.

Minimise burnout

There are several steps employers can take to minimise the risk of their staff suffering from burnout. This includes the obvious step to stop overworking them. Additionally, identify the signs before it is too late, be observant when managers engage with people, and offer counselling if required.

Employees can also do their bit to prevent themselves from burning out.

“People must feel that they are in an environment where it is safe to talk about the feelings they are experiencing,” says Myburgh. “They must be able to have a discussion with their line managers if they are feeling overworked or unable to cope with the demands of their jobs.

“People must also learn to maintain a better work life balance. Yes, the temptation to work from anywhere is there, but this can turn a nine-to-five job into a 24×7 position, which can lead to burnout. Participating in relaxing activities away from the workplace is vital and in extreme cases, burnout sufferers should consider removing themselves from the situation causing the burnout, if this is possible.

“These are difficult times for employees and employers alike. Competitiveness is at an all-time high, resulting in an ongoing pressure to constantly perform at optimum levels. But if the signs of burnout are not heeded, burnout could become seriously detrimental to employees’ general health and wellbeing,” Myburgh concludes.