10 Hats Worn by Payroll Professionals: Hat 1 — The payroll professional as implementer of legislation

Legislation drives the payroll profession

Legislation drives the payroll profession. Proud payroll professionals don’t do anything that is not prescribed by law. Based on what legislation prescribes, payroll professionals calculate basic pay, overtime and sick leave. I don’t think there is anything that payroll professionals do that doesn’t find its origin in legislation.

Moving towards automation

The world is moving towards automation. We are told that software will solve all our problems. By and large, this is mostly true: Modern payroll software programmes do “hard code” a lot of what legislation requires.  Tax-deduction tables as well as a host of statutory deductions are good examples of this—it all happens automatically.

Exceptions need an accountable payroll professional

I agree that good software is a non-negotiable component of an efficient payroll department. However, there are exceptions when automation simply is not enough. For this reason, sometimes you need a payroll professional to interpret and implement specific nuances embedded in legislation. This article, argues that the skill and knowledge of the payroll professional makes all the difference.

For example, when legislation prompts an exception needing something to change on the payroll, we need to check and double-check any new calculations being used. Thereafter, the payroll professional explains the changes to his/her management team. Following this, the payroll professional is better-prepared to implement and create earnings-and-deductions calculations that are in line with the most accurate interpretations of the relevant legislation governing these calculations. Finally thereafter, the payroll is then ready to be successfully signed-off at the end of every month.

In short: payroll professionals are rightly to be held accountable for the correct interpretation and implementation of any legislation pertaining to the employment relationship between employer and employee.

South Africa: 7 Laws governing the employment relationship

In South Africa there are 7 pieces of legislation that govern the employment relationship. Importantly, there are more than 700 Department of Labour (DOL) inspectors visiting businesses to make sure that there is full compliance with every aspect of these pieces of legislation. When a DOL inspector visits a business entity, the first internal department that they’re most likely to visit, will be the payroll department.

Within the payroll department, the payroll professional will be asked to produce records that show:

1. That the company is able to prove that it complies with the terms of the Basic Conditions of Employment Act (i.e. leave days, working hours, lunch hours, overtime, notice pay and more).
2. That the company is able to prove that it complies with any industrial council agreements (i.e. minimum wages, provident/pension fund and medical aid deductions).
3. That the company has records of the prescribed monetary deductions for the Unemployment Insurance Fund (UIF), and that these deductions are submitted—on time—to the Receiver of Revenue Service (SARS). Don’t forget to submit the monthly report that the DOL requires.
4. That the company has records of all employees’ work contracts, and that payment of all employees are accurately paid and administered. Similarly, the company must produce records of all required authorisations and instructions relevant to the processing of employees’ salaries.
5. That the company duly checks (and double-checks) relevant Skills Development Levy (SDL) deductions.
6. That the company is fully compliant with all provisions of the Employment Equity Act (i.e. the payroll department must keep all these related records).

South Africa: Receiver of Revenue Services (SARS)

In South Africa, the Receiver of Revenue Service (SARS) requires that:

1. All Emp201 submissions are processed on time, every time. Ed. Yes, it must be accurately calculated and processed too.
2. There be evidence that the company has submitted its bi-annual and annual submissions—proving to SARS that the company is adhering to and implementing all relevant legislation governing tax deductions.
3. All legislative aspects relevant to car allowances, travel allowances, pension funds, medical aid tax credits and employment tax incentives have been accurately interpreted and implemented.

Payroll professionals — Implementors of legislation

It’s the payroll professional’s responsibility to make sure that the payroll is set up and managed correctly, so that when called upon by management—or any other outside organisation—they we can prove that the company they are representing ‘is legal’ and compliant with all aspects of SARS and the employment relationship legislation. Automated payroll software cannot be held accountable for, or be expected to ‘take the blame’ for non-compliance with South African employment relationship legislation. The onus is upon the payroll professional to ensure that—using all his/her expert knowledge and experience—the payroll that he/she manages is fully compliant with the ‘laws of the land’.

After a job well done — Payroll professionals stand proud

I wish to extend a hearty well done to all payroll professionals (i.e. administrators, supervisors, managers) whose payroll departments are fully compliant. You can stand proud and say: “I am a committed and willingly accountable payroll professional.”

Without the payroll professional, keeping employees motivated and focused would be a lot more challenging for most management teams.

Next month March — Watch this space and join us again, as we look at the second hat in the series, 10 Hats Worn by Payroll Professionals — Hat 2: Interpreter of policy

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If you wish to know more about Paymaster People Solutions stable of payroll services, visit: www.Paymaster.co.za