A new remuneration limit published in the Government Gazette after being approved by Finance Minister Pravin Gordhan directs employers to adjust their UIF contribution calculations to comply with the new limit from 01 October 2012.

From now on employers must apply a new annual remuneration limit of R174 464 when calculating the 1% contribution deducted from employees and the 1% contributed by employers.

“As a result, employees earning R14 872 or more a month (R178 464 a year) will now contribute a maximum of R148.72 and their employers will contribute an equal amount,” says Philip Meyer, technology director of payroll and HR software specialist Pastel Payroll, part of the Softline Group and Sage Group plc.

“At the moment the earnings limit is set at R12 478 a month or R149 736 a year. The new limit means that employees whose earnings exceed the current limit will see a reduction in their net pay from October 2012 as their UIF contribution deduction will be slightly higher to accommodate the remuneration limit increase.

“Employers will see a similar effect as their portion of the UIF contribution increases to ultimately result in an increase in salary related expenses.”

Meyer adds that companies without payroll software solutions will have to manually change or update their payslip calculations to apply the new UIF limit before processing any salaries or wages for October.

“For our Pastel Partner Payroll software users a ‘frictionless’ update is being released to ensure users of the software can process their payrolls using the latest UIF remuneration limits, therefore no CD installations are required.”