PAYROLL AND PAYROLL RECOVERY
Salaries are a very large cost component of most businesses in South Africa. The administration of salaries, however, is also very important and is subject to, inter alia, the Basic Conditions of Employment Act as well as the Tax Act. Finkor Secretarial Services can handle your entire payroll (including EMP501 as described below) to help you comply with applicable legislation.
The following information must be provided in writing when the employee is paid (Payslip / payslip):
- Employer’s name and address
- Employee’s name and occupation
- Period of payment
- Any deductions from the salary
- The actual amount paid and
- The employee’s salary rate and overtime scale (eg one and a half time)
- The number of ordinary and overtime worked during the period of payment
- The number of hours worked on a Sunday or public holiday during the period. (Dual time)
Deductions and other actions around Salary Losses: An employer may not deduct money from an employee’s salary unless –
- It is required by statute, eg. LBS and WFF.
- The employee agrees in writing with the deduction of a specific debt;
- The deduction under a collective agreement, law, court order or arbitration award.
- A deduction in respect of damage or loss caused by the employee may only be done with the consent of the employee and after the employer has followed a fair procedure.
- Employers must pay deductions and employer contributions for assistance funds within seven days after the fund.
IRP5 ‘one issuing it:
An employer is required in terms of the Tax Act to issue an IRP5 annually to employees who provide, inter alia, the following information:
- Total earnings for the year versus the correct SARS code, eg. 3601 for salary, 3701 for travel allowance.
- Pay the total amount of PAYE, TRF, and VHF for the employee for the year.
- Period in service.
- Personal contact details of employee.
The IRP5’s total LBS, WVF and VHF are then aggregated and reconciled with the year’s EMP201 returns (the so-called PAYE return) and any differences must be accounted for. This is called the EMP501 reconciliation.
Few people are aware, however, that SARS nowadays requires the EMP501 to be done twice a year:
a. The August submission which reconciles the first 6 months of the tax year. No IRP5s are then issued to employees.
b. The February submission containing the year’s information. IRP5s are issued to employees.