Edu BlogJanuary 31, 2023

Choose a South African HR and payroll system

Why small businesses should choose a South African HR and payroll system

Small business owners are often caught up in the admin and bureaucracy of running a business. Managing a team of employees, for example, and ensuring that they get paid accurately and timeously every month requires a lot of effort and time.

From distinguishing between permanent employees and contract workers, gathering time and attendance reports, keeping track of overtime worked and paid leave taken, to properly administering employee benefits, there’s a lot to do.

This is why many small business owners rely on HR and payroll solutions and/or services for the management of their human resource and payroll functions. But choosing an HR and payroll vendor is not an easy task and the question often asked, especially by South African small business owners, is…

Should I invest in a locally developed HR and payroll system, or go with an international solution?

This article examines four reasons why South African companies should strongly consider a locally developed human resources and payroll system rather than an international version.

Complex payroll legislation

South Africa’s regulatory environment is complex, to say the least. There are the numerous laws affecting payroll in the country, with which all businesses have to comply. No fewer than ten acts regulate the employer-employee relationship in South Africa, and each one incorporates specific rules for payroll.

Additionally, industry sectors have their own conditions of employment, while the agreements reached between employers and bargaining councils further complicate the payroll process. This places a heavy burden of responsibility on business owners, who are ultimately responsible for any infringement of these laws and must deal with the consequences. One mistake can result in having to fork out a substantial amount in interest, fines and penalties, not only from the South African Revenue Service (SARS), but also the Department of Employment and Labour.

Locally developed HR and payroll solutions tend to cater better for legislative compliance in South Africa. Because the human resources and payroll functions are governed by legislation, local solution providers ‘speak the same legislative language’ when interacting with their users.

Localisation

A particular HR and payroll solution may work well in other countries, but this doesn’t mean that it will translate well to South African – or even African – requirements. Implementing an international HR and payroll solution is challenging, as the system has to be localised to South Africa’s unique market conditions. This can be a significantly costly exercise, and the time and resources it requires to adapt international offerings to local requirements can be better spent focusing on more strategic deliverables.

Customisation

International HR and payroll solutions are sorely lacking when it comes to granular functionality. Most international systems generally do not cater for local market conditions and have to undergo considerable adaptation to meet these requirements. Because the South African market is considerably smaller than other territories, any required customisation tends to rank low on the priority list of multinational solutions providers.

Global expansion

When the time comes for a company to expand its presence to international locations, a global payroll system is called for. Having a reliable, integrated payroll system that can manage payroll for globally located employees from a single platform is critical for international companies.

Because locally developed HR and payroll solutions offer a high degree of flexibility, implementation in other countries, especially those on the African continent, is more affordable.

There are many similarities between South Africa’s legislation system and that of other African countries. And because South Africa’s regulatory system is generally more complex than in other parts of the world, expansion into markets such as Europe, Asia and even the Americas is a relatively straightforward exercise, even if the legislative systems in these regions differ from South Africa’s.

South African business owners expect a lot from their HR and payroll solutions – including comprehensive functionality, ease of use, and the ability to intelligently tap into the wealth of data that HR and payroll solutions provide. Local offerings have proven to excel when it comes to delivering on these requirements. This is why a homegrown HR and payroll solution is a logical choice for small businesses.

 

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