Category: Human Resources


Accurate and easily available monthly income statements and balance sheets are critical for the success of any business. Most businesses separate their payroll and accounting departments but for ease of administration it makes good business sense to be able to seamlessly move information from the payroll into the accounting system.

“Instead of having to import and export information, the seamless integration functionality in Sage Pastel My Payroll Online with Sage Pastel My Business Online streamlines and simplifies the process of transferring payroll information to the accounting system. Information is reconciled and despatched with a mouse click.”

“Seamless integration between payroll and accounting systems whereby payroll expenses and liabilities are updated in the accounting system, improves business processes,” says Sage Pastel My Payroll Online business manager Karen Schmikl.

The integration functionality is accessible at no charge to users of the Sage Pastel My Payroll Online  system. It keeps track of any changes to the payroll affecting the journal, notifying users when alterations are made and thereby ensuring that the payroll and accounting systems are always synchronised.

Should users forget to post a processing period they are able to rectify the omission without having to conduct a tedious restore and back-up operation.

Schmickl adds that security functionality ensures that users are valid,  meaning that only users entitled to post journals are able to do so, thus securing access to the information. Back-ups are done every day and with the roll-over of each reporting period.

“With Sage Pastel My Payroll Online accountants don’t have to manually import information and reconcile it, saving time and costs. Companies using the Sage Pastel My Payroll Online system can obtain the online integration at no cost. The time saving and efficiency benefits from this seamless integration are very tangible.”

For the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn.

Companies need to ensure that they are geared to provide SARS with their annual PAYE reconciliation submission before the end of May.

The first step companies should make is to ensure that they download the latest version of the e@syFile™ Employer system which has been loaded on the SARS website www.sarsefiling.co.za.

“It is most important that companies download and install this software before conducting their PAYE, SDL and UIF reconciliations to ensure accuracy and compliance with SARS requirements,” says Philip Meyer, technology director  at Sage Pastel Payroll & HR.

While SARS will not reject tax certificates that do not have an income tax number, the e@syFile™ Employer system will issue the submitting company a message declaring that penalties can be raised on the employer as a result of the missing information.

Meyer stresses that employers must confirm that the company will comply with the SARS penalties procedure before their companies are able to continue with their reconciliation and submission.

“SARS has also increased employer penalties applying to employee tax certificates that do not have a registered tax number. So it makes financial sense for companies to ensure that they register all unregistered employees with SARS before they submit tax certificates for reconciliation. Even employees that are below the tax threshold need a registered tax number,” adds Meyer.

Companies wanting to register employees for a tax reference number can either go into a SARS branch, or can log onto the e@syFile™ Employer system and load their employees manually. To follow the verification status of the tax reference number, companies can use the ITReg functionality of the e@syFile™ Employer system and follow a synchronisation process to obtain a CSV file with their employees’ tax reference numbers.

“However, companies using an automated payroll software solution can obtain employee tax reference numbers via the Bulk ITREG functionality and the e@syFile Employer system to simplify the reconciliation. Those using automated payroll solutions need only capture employees’ information and their payslip details,” adds Meyer.

During the year end procedures, the electronic tax certificates are generated automatically in the IRP5.13 file. This file can be imported directly into the e@syFile™ Employer system and the payroll EMP501 Reconciliation Report to complete the PAYE, SDL and UIF reconciliations. Meyer points out that this saves businesses considerable time and cost compared to manual calculation and capturing.

“Payroll departments should not issue tax certificates to their employees until they receive notice from SARS that the reconciliation is both complete and correct.”

by Anja Hartman, HR Director at Sage VIP

Anja Hartman

Anja Hartman

The impact of employees that intentionally refrain from adhering to company rules, as well as the cost, time and energy wasted to solve such issues are counter-productive. For this reason, organisations should try to avoid the appointment of a ‘toxic’ employee as far as possible.

At VIP a simple rule is used when recruiting employees: “hire the smile and teach the skill”. VIP has a very strong value-based culture and instils it from the day that the employee starts with the company.

Companies have the right and responsibility to manage its business in a profitable way. Employees must therefore be managed in such a way that it will enhance efficiency and profitability, which implies creating and implementing regulated standards of behaviour.  In order to be effective, the employee needs to know which actions are regarded as unacceptable and the reasons for it.

The difference in how you approach a ‘toxic’ and underperforming employee lies in the question:  Are they willing and/or able to do the job?  It is almost always related to either their attitude or skill.  The underperforming employee is usually willing but not able to do the job while attitude is often found at the core of ‘toxic’ behaviour.

Underperforming employees are often incapable of doing the job for which he/she has been employed due to lack of skill, knowledge or ability. Companies should place their emphasis on matching the talent of the candidate with the role requirements during the recruitment and internal movement processes. A misfit of these key indicators often results in underperformance.

Underperformance can also be referred to as circumstance of ‘no fault’ on the employee’s side and should be addressed by means of counselling procedures, such as:

  • Step 1: Assessment – Review the content and standards of the job, evaluate the performance and pinpoint shortfalls. Identify and discuss the reasons for the sub-standard performance. Assess the employee’s competence against the job standards.
  • Step 2: Action plan – the manager and employee agree on the appropriate plan of action to rectify the situation.
  • Step 3: Review – decide on a reasonable date to review and monitor the improvement and establish if the underperformance has been resolved. A secondary review date can be set.
  • Step 4: Counselling enquiry – If it becomes clear that even after further counselling, the employee still does not perform in accordance with the required standards, or does not prove that he/she is capable of achieving the required standards, a counselling enquiry is called. A counselling enquiry is the medium through which the fair and just procedures required by law are conducted. A dismissal without an enquiry is deemed to be unfair.

The above-mentioned guidelines and steps do not refer to those situations where the employee is capable to perform in accordance with the standards set, but intentionally or negligently refrains from adhering thereto.

When an employee’s conduct is not in line with the rules, regulations or values of the company, it is dealt with as misconduct in accordance with the company’s disciplinary code and policy. It is however impossible to list all possible situations in the disciplinary code and it should therefore not be seen as an exhaustive list of conduct that the company will address by way of disciplinary action in the form of a disciplinary hearing.

The guidelines for a disciplinary hearing:

  • Step 1: Investigation – investigate the facts before embarking on formal action.
  • Step 2: Notification of the hearing – sufficient written notification of the hearing should be given. Employees have the right to internal representation and if required, an interpreter.
  • Step 3: Conducting the hearing
  • Step 4: Applicable sanction – if the employee is found guilty a decision is taken after mitigating and aggravating circumstances are presented.
  • Step 5: Notification – the employee is notified of the outcome, if they are dissatisfied with the outcome they may appeal.

Payroll and HR software specialist Softline Pastel Payroll has a Connected Services division that enables SME companies to extend their desktop payroll with an online solution that will ease the growing burden of HR managers and payroll administrators.

Connected services includes a web-based self-service tool that enables employees to manage and maintain their own information online and thereby carry some of the overall HR administration responsibility as they are able to make on-line applications for leave, loans, bursaries, travel claims, view their payslips and update personal information no matter where they are so long as they have an internet connection.

“The internet is here to stay and its capacity and connectivity have tangibly improved recently, providing an increasingly compelling service at progressively competitive prices although South Africa still has some way to go in terms of truly competitive pricing,” says Philip Meyer, technology director at payroll and HR software specialist Pastel Payroll, part of the Softline and Sage Group plc.

“Generally accepted standard online applications – those which many people are comfortable using on a daily basis such as internet banking and online flight reservations systems, news feeds and social media sites are all being complemented by steady streams of new online business applications and services.”

Meyer says the adoption rate of online business software for new entrants into the market is increasing, posing the question of how to bridge the gap between the growing trend towards online software adoption and the traditional desktop application users in the same market segments.

“The adoption of what many consider to be commoditised uses for the internet is seen as a steady evolutionary process and the switch from legacy desktop applications to the cloud is proving to be a gradual adoption rather than a rush to jump on the bandwagon.”

The advantages and conveniences of connected services can aid and expedite the many benefits of dual-deployment business software models such as client-side hosted applications with significant connected services capabilities and functionality together with a seamless upgrade path to ultimately complete cloud-based models facilitated by vendors.

Connected Services has workflow capabilities based on the organisation chart or a specific workflow order per online form. Once an employee applies for leave online and the manager approves it, the payroll system is automatically updated. The software also provides for leave scheduling, which is particularly practical over traditional December holidays when “skeleton staff” are required. The program helps to manage minimum staff levels by providing system warnings.

Meyer reckons frictionless updates are another example of connected services that enable traditional desktop applications to seamlessly update over the internet with minimal intervention from the end-user of the software. “Customers no longer need to visit a website to download and install updates manually and install CD versions, the software now does it all for them. The days of CD-based updates and disruptive installation and implementation cycles are over.”

Another component of Connected Services allows HR managers and payroll administrators to receive RSS feeds to their desktops notifying them of legislative and tax changes and new system software releases so that the company is always on track and up to date.

“The internet and, more specifically, cloud-based and online business applications constitute some of the most compelling opportunities for streamlining the way business is conducted in the 21st century. It is reassuring that the optimisation of internet capabilities will almost certainly not amount to a one-size fits all models.

“It is rather the incremental evolution of traditional desktop software, leveraging the internet where it is appropriate and business enhancing, that will play an important role in the evolutionary shift to complete cloud-based business software provisioning, billing and deployment. This will provide a flexible and extensible migration path to the cloud taking into account preferences of individual business requirements, as will pure cloud-only offerings,” concludes Meyer

By Sandra Swanepoel, a Director of Softline VIP, part of the Sage Group plc.

Sandra Swanepoel

Payroll software is a mission critical function to any business.  There is a definitive necessity for any business to ensure that all changes, upgrades or installations of a new or existing payroll system are done in conjunction with a service provider that can deliver.

The relationship between the employer and employee is delicate and can easily be derailed if the payroll system should fail.  Making the correct choice is crucial.  The company’s software as well as its internal processes will suffer a major setback if the payroll installation is not done correctly.  The process needs to be underpinned by thorough training and supported by a concrete change-management process that documents all the procedures that need to be incorporated into the payroll solution.

The choice of a payroll system should be made with a long-term objective in mind.  To make this a reality, the company needs to consider the longevity of their payroll software investment.

It is of cardinal importance to ensure that the software is stable.  It is a very difficult aspect to ascertain during a demonstration.  There is however nothing stopping you from asking your prospective payroll software provider to provide you with client names as a reference.  This will help you to establish whether the payroll software that you are considering has a history.  Also ask them how often their software is updated; too many updates will point to an unstable product.

Another crucial aspect to consider is support.  If you install the product now, will the service provider’s support staff be available during peak times?  The company’s financial year-end is generally considered to be the busiest period for payroll administrators.  Support staff are normally flooded with queries or requests at these times and you want the assurance of knowing that your service provider is up for the challenge.

Investing in sustainable technology would be wise.  We live in a fast-paced business environment where technology changes rapidly.  You will want to invest in something that is up to date and current.  A good gauge would be to ask what technology your service provider is using and how often a new product is launched into the market.  If the product is versatile and adaptable, you should not have to change or update your payroll software too often.

One of the biggest concerns in the payroll software industry is leave management.  A company can stand to lose a great deal of money if their employee’s leave is not calculated and managed correctly.  Ensuring that the company’s payroll system operates its leave policy within the parameters set out by the basic conditions of employment act should be a given.  Companies that utilise an employee self-service strategy, often reap the benefits of having an electronic and accurate system that ensures that there are no mislaid leave forms.  It also facilitates a timeous leave approval process.

Having payroll software that is in tune with the country’s statutory changes and legal requirements is fundamental.   Ask whether your service provider keeps track of all the changes in the country’s laws.  Adherence to the parameters of the basic conditions of employment act is crucial to the maintenance of amicable employee relations in addition to complying with legislation.

Making the correct choice when it comes to HR and payroll software is therefore crucial.  Keeping these basic guidelines in mind, will ensure that your company makes a decision that it will not regret.

By Steven Cohen, managing director, Softline Pastel Accounting

Image

Steven Cohen, MD Softline Pastel Accounting

Softline Pastel, as I’m sure you know is an ardent supporter of the development of SMEs and like all businesses we started out small. The company, which was founded in 1989 in Johannesburg, is now a leading developer of accounting and business software supplying 52 countries including 18 in Africa. The past 22 years haven’t all been plain sailing and I believe it’s worth sharing some of our mistakes and successes to highlight the fact that entrepreneurship isn’t always easy but it’s certainly rewarding.

We started out as three partners and two employees. Our strategy was to grow the business organically but also incorporate some acquisitive growth by using cash to buy smaller businesses with strong synergies. This way we slowly acquired new customers and from there, more employees.

Organic growth is slower than acquisitive expansion but is less risky in the long term as it comes from within the company and the management team can form strategic goals from which to guide the enterprise. This method also gives the company a chance to test its own business model while relying on independent finances. Purchasing other businesses has its merits, particularly in terms of gaining new customers and revenue quickly but it may come with challenges including shareholders that you don’t want. Integrating two businesses also involves streamlining different cultures, systems and work ethics into one entity with common values and goals – not always an easy task.

Naturally, we’ve made mistakes along the way but what’s important is what we’ve learned from them. During our growth phase we were constantly fraught with anxiety about the next move and about our overheads. We realised early on that running a business is stressful, but it’s imperative not to let this strangle your ideas. Think big, keep your feet on the ground and work on your emotional intelligence to be able to treat mistakes as growth opportunities! At the end of the day you’re an entrepreneur because of your willingness to take risks.

One of the worst mistakes entrepreneurs make is to become so absorbed in their business ideas that they forget to monitor day to day finances. Don’t underestimate the importance of tracking your cash flow and accounting balances all the time; financial statements are going to be your business’s lifeblood and should never be disregarded. In fact, entrepreneurs, it’s imperative that you know your financial terminology to ensure that you understand the nitty gritty of your business. And apart from balancing the books, I really recommend the use of information systems to help you track and report your daily operations – this just gives such insight into the overall state of your business.

When it comes to hiring employees, I’ve learned that it’s better to pay more money for a good person with the right overall fit for your organisation including the appropriate work ethic, rather than a person who is just good on paper. Business owners may be tempted to pay top dollar for the most knowledgeable and skilled employee without taking note of whether their work ethic and other cultural traits fit in with the business.

When managing new recruits, lead by example and let your staff make a few mistakes along the way. Make them love coming to work by giving them responsibility and keeping them informed and educated. It’s also really important to recognise the ones who go the extra mile.

And don’t forget your most valued asset: your customers. Looking after them will build your credibility so keep your promises and always get back to people. But don’t just rely on the customers you have – always work to increase the size of your customer-base.

While addressing your weaknesses is important, don’t forget to remember what you’re doing right. In our start up phase there were a number of things that I can say were right. We managed to sell our value proposition confidently and always remained ahead of our competitors and industry challenges. To do this we read, read and read but always drew our own conclusions and then shared this information with employees.

At the end of the day, invest for sustainability because your business needs to outlive you. Keep on moving forward as procrastination is the enemy of progress and lastly, give back to the community: it makes you feel good and you are growing your future customers.

Of all the elements that need to be considered if a company is to be able to select the best candidate for a specific position, the most difficult to gauge or judge correctly is the culture fit.

“It’s also one of the most important elements in any evaluation of potential employees,” says Grant Lloyd, managing director Softline Pastel Payroll.

Companies need to have a feel for and have an understanding of the company culture. Lloyd says culture is usually driven from the top down and is established by the upper echelons of management. However, it is never cast in stone and can change with the appointment of a new CEO or management team.

“There are many influences on company culture, including the alignment of the company vision, the business objectives and the business ethics,” says Lloyd. “Whoever is conducting the recruitment needs to have a feel for the company vision, objective and ethics because they not only shape the company culture but also the various job descriptions and purposes aligned to them within a specific department.”

Key performance areas (KPAs) and key performance indicators (KPIs) are also important in assessing the culture fit and ensuring the candidate will be able to deliver what the business needs.

“This is complicated by the fact that not all companies have integrated the business culture and the company values with their KPAs. While these historically were used to measure individual performance, the process is now open to much wider interpretation,” adds Lloyd.

“Employers need to clearly understand the purpose behind each individual recruitment and employment process. The information for this understanding must come from the person that the new recruit will be working for.”

People involved in the hiring process often sway towards taking on someone with a similar personality to their own, which is not necessarily the best fit and hence it is important to also involve line managers and team leaders to provide another perspective.

He adds that people often perceive themselves incorrectly and that the characteristics most sought after in recruitment are trust, respect, honesty, accountability, integrity and consistency.

Honesty throughout the recruitment process is paramount because it saves time and money for both parties. The company should state exactly what it is looking for and the applicants need to present themselves honestly. A complication is the fact that divisions within companies tend to develop sub-cultures and the candidate fit has to match.

“Personality traits also need to be examined, and this is a whole science in itself. But it is an important area and it is very useful to know a candidate’s personality as it is invariably a strong indicator of suitability and culture fit,” says Lloyd.

By Karen Schmikl, Legislation Manager at Softline VIP, part of the Sage Group plc.

Image

Quite a few changes were made during Finance Minister, Pravin Gordhan’s Budget Speech on Wednesday, 22 February 2012 that will have a direct impact on payroll administrators across South Africa.

Medical Aid

The most noteworthy is a change in the taxation of medical aid contributions from March 2012.  Payroll administrators will have to ensure that their payroll systems are updated as from 1 March 2012 to reflect the changes stipulated. Not implementing these changes in the first period of the new tax year will result in incorrect PAYE, SDL and UIF contributions.

Medical tax credits replace the medical aid cap amounts used over the past few years.

  • Individuals who are 65 years and older still have the benefit of a medical aid tax deductible deduction, subject to no limit.
  • Employees who are younger than 65 however, no longer have the benefit of a medical aid tax deductible deduction. They do however qualify for a monthly medical tax credit (MTC).
  • The MTC will be deducted from the tax calculated for the employee for each month the employee contributes to a medical scheme, reducing the employee’s tax due each month.
  • The MTC is calculated in relation to the number of beneficiaries on the medical aid – the values are R230 for the main member, R230 for the first dependent and R154 for each additional dependent

The result of this change is a more equitable benefit for all individuals who belong to medical aids. Lower income employees will ‘see’ a greater tax benefit than higher income employees when comparing February and March tax amounts.

Tax Tables

The tax tables for individuals and special trusts for the year ending 28 February 2013 were updated.

Taxable Income (R)  Rate of Tax (R)
0 – 160 000 18% of taxable income
160 001 – 250 000 28 800 + 25% of taxable income above 160 000
250 001 – 346 000 51 300 + 30% of taxable income above 250 000
346 001 – 484 000 80 100 + 35% of taxable income above 346 000
484 001 – 617 000 128 400 + 38% of taxable income above 484 000
617 001 and above 178 940 + 40% of taxable income above 617 000

The tax rebate amounts have also been changed.  The primary tax rebate amount has been adjusted to R11 440, while a secondary rebate for persons of 65 years and older is pegged at R6 390.  A tertiary rebate for persons of 75 years and older is set at R2 130.

The adjustment to the tax threshold amounts, effectively nullified Standard Income Tax on Employees (SITE) limits.  Below the age of 65, the tax threshold has been set at R63 556; Ages 65 to below 75 now have a tax threshold of R99 056; while Ages 75 and over have a tax threshold of R110 889.

Subsistence Allowance
An employee is entitled to receive a subsistence allowance when the employee is obliged to spend at least one night away from his or her usual place of residence.  The value of the deemed allowance or advance where the accommodation is in the RSA has been amended to R303 per day for meals and incidental costs and R93 per day for incidental costs only. The schedule of rates for accommodation outside the RSA will be gazetted towards the end of the month.

Travel Allowance

Travel allowance costs have also been adjusted.  The SARS deemed rate per kilometre increased from R3.05 to R3.16.  The fuel and maintenance cost values have furthermore been amended and it is advisable to recalculate the value of all employee travel allowances from March 2012.

Value of the vehicle (incl. VAT) Fixed cost Fuel cost Maintenance cost
 (R) (R p.a.) (c/km) (c/km)
0 – 60 000 19 492 73.7 25.7
60 001 – 120 000 38 726 77.6 29.0
120 001 – 180 000 52 594 81.5 32.3
180 001 – 240 000 66 440 89.6 36.9
240 001 – 300 000 79 185 102.7 45.2
300 001 – 360 000 91 873 117.1 53.7
360 001 – 420 000 105 809 119.3 65.2
420 001 – 480 000 119 683 133.6 68.3
exceeding 480 000 119 683 133.6 68.3

The changes lined out in Finance Minister, Praveen Gordhan’s Budget Speech will have far reaching effects on any payroll system.  It is advisable for employers to take note of these changes and to confirm that they are being applied to their payroll system in order to keep the company current and up to date with legislation.

Rob Cooper, a Payroll tax expert at Softline VIP, part of the Sage Group plc says that 2012 will prove to be the starting year for a number of major new employment legislation initiatives.

Read about all the proposed changes in legislation regarding contributions to medical schemes, the Youth Subsidy project, retirement funds and annuities in the full article on the Softline website

Looking further ahead, SARS is still investigating the possibility of implementing a social security tax. “The legislation surrounding social security tax is however still on the table. In essence, the legislation will combine UIF, the road accident fund, social grants and the compensation fund under a ‘social security’ umbrella that will function as a holistic entity. It will effectively modernise and streamline the process” explains Cooper.

SARS is also looking at amending labour legislation. “There are quite a few aspects surrounding labour legislation that are currently under review,” says Cooper.

• Close down or regulate labour brokers

• Redefine an employer

• Introduce the concept of ‘decent work’ into legislation

• ‘Widen’ the definition of an employee

• Introduce a national ‘job placement’ system

Cooper says the labour legislation should be in draft form by no later than April 2012 and unless there is huge public opposition, could be promulgated into law by December 2012. The Minister of Labour is currently pushing very hard to move even faster than these dates.

“2012 will certainly be an interesting year as far as HR and Payroll administrative changes are concerned. It will therefore be advisable for practitioners in the field to stay abreast of changes in the New Year” concludes Cooper.

Technology has radically changed the world of business. It has also affected the recruitment industry and traditional recruitment agencies face a limited future unless they embrace the changes that are being driven by technology.

Grant Lloyd, managing director at Softline Pastel, a member of the Softline and Sage Group plc, says there are several factors that are leading to a situation where many companies are re-evaluating the way that they recruit employees.

He adds that Pastel People Placements, the specialist recruitment division within Softline Pastel, is of the opinion that internal recruitment is often more cost-effective than using a recruitment agency. Traditional recruitment agencies charge a placement fee calculated between 15% and 17% of the new employee’s annual total cost to company (TCC). If the job carries a R400 000 annual cost to the company and the recruitment agency charges a 17% placement fee the agency’s placement fee amounts to R68 000.

“In these times, most companies would consider that expensive. But to be fair, although it appears to be easy money, people recruitment and placement is an unforgiving, demanding task and the product is unpredictable. Selling tangible products is considerably easier than promoting human capital.”

Networking has never been as easy as it is today and Lloyd points out that social networking sites such as Twitter and Facebook are being increasingly used by candidates looking to change jobs or gain entry to a new field of business.

“The conventional recruitment agencies need to monitor these trends and make use of them,” says Lloyd. “Today’s successful companies have out-of-the-box thinkers and use technology to look forward and take advantage of opportunities.”

He points out that many companies with websites now have a dedicated careers section which enables job-seekers to apply directly via the website for various positions that the company has open. With an effective, competent HR section, companies can save considerable recruitment charges, provided they have the necessary recruitment skills and tools.

“Practical testing of candidates in software competency and skills levels, both in theory and in practice should be part of any company’s recruitment drive. The base for all of this is getting the balance right between theory, academic experience and software proficiency. Candidates with only practical experience rely on software to do it all for them. A combination of academic prowess and practical competency is the best option.”

Predictive Index (PI) testing, which examines potential employee personality, character, traits and culture fit, is also important,” says Lloyd.

“Areas that add value in in-house recruitment are workshops that test commuinication skills, comprehension, life skills, interactive skills and general knowledge. Patience levels, people tolerance and personal interaction skills are also important in correct candidate selection.”

Recruiting correctly first time must be the ongoing goal because making the wrong selection is invariably costly. Lloyd adds that it is also just as critical for companies to retain good employees.

Most in-house recruitment companies lack proper screening tools. One-on-one interviews are not sufficient to determine if the job-seeker is a good fit for the specific job or the company. As long as recruitment agencies are keeping abreast of technology trends and add value to companies by ensuring that they put forward the most suitable candidate, and retain the candidate for the long term, there will most definitely be a future for external recruitment agencies.