Payslip, Pay Stub, Remittance Advice, Remuneration Statement. Call it what you will, but by definition, it is formal confirmation that employers are legally bound to provide to an employee at the end of a pay period, which details the amount of pay accrued to the employee for the period, any company specific deductions and contributions, any obligatory statutory deductions and of course the tax that was due on those earnings for that period.
What employers sometimes forget, is that there is a legal requirement when it comes to the provision of an actual payslip and even more importantly, what needs to be visible in the payslip. In terms of Section 33 of the Basic Conditions of Employment Act, employers must provide workers with the following information, in writing, when they are paid:
- Employer’s Name and Address
- Employee’s Name and Occupation
- Period for which payment is made
- Total salary or wages and any other allowances paid
- Any deductions
- The actual amount paid
If relevant to the calculation of pay:
- Employee’s pay and overtime rates
- Number of ordinary and overtime hours worked
- Number of hours worked on a Sunday or public holiday
- The total number of ordinary and overtime hours worked in the period of averaging, if a collective agreement to average working time has been concluded.
The employer must also give the relevant payslip, as above, to each employee:
- At the workplace or at a place agreed to by the employee (sometimes called a Pay point); and
- During the employee’s ordinary working hours or within 15 minutes of the commencement or conclusion of those hours.
We often see payslips issued by employers that do not meet these basic requirements. Employers often neglect to add the business address, or the employee’s occupation. When applying for new accounts or loans at a bank, employees are often turned away due to their payslips not reflecting this information. This can be frustrating for employees as they now have to request an amended payslip from their employer and return to the bank for a second time (often during working hours).
Over and above these basic payslip requirements, we generally recommend a few additional non-financial items be included on the payslip. These are, but not limited to:
- Employee Number
- Employee’s Identity or Passport Number
- Engagement/Employment Date
- Employee’s Address
- Income Tax Number
- Annual Leave Balance
- Employees Bank Account Number
These additional items not only assist the employee when a payslip is required to be produced as proof of income, but also assists the employer in the long run. SARS’s requirements for IRP5 certificates include these items, and, if the employee has sight of them on their payslip, they can request changes to these items when needed, thus ensuring that their personal and statutory information held within the employer’s payroll system, is kept up to date.
Most bargaining councils take payslips very seriously and if the employer does not meet the relevant payslip requirements, they can find themselves facing arbitration with the bargaining council, which could result in financial penalties against the employer.
When it comes to financial information, this can vary quite a bit between employers. However, as a rule of thumb, we always say that having more, rather than less, financial information on your employee’s payslip is good business practice. Types of financial information could include:
- Incomes (Basic Salary, Overtime, Commission, Bonus)
- Allowances (Car/Travel)
- Company Contributions (Pension/Provident Fund, Medical Aid)
- Fringe Benefits (Use of Company Car)
- Employee Deductions (Pension/Provident, Medical Aid, Loans)
- Statutory Contributions (UIF, SDL)
- PAYE Deduction (Including Medical Aid Credits)
- Nett Cash Pay
- Loan/Garnishee Balances if any
This detail can sometimes be quite a bit of information for some employees to comprehend. For instance, employees want to “add up” their incomes and often make the mistake of including fringe benefits, or company contributions in the calculation. The total “income” they have calculated then does not agree with what they are being paid. These employees need to be educated on the make-up of their payslips, so they fully understand its contents.
Distribution of employee payslips can be done in various ways, for example, printed and handed out to employees, distributed through an online employee self-service portal (both on PC and mobile platforms), emailed, or even SMSed to employees’ mobile phones. Most payroll systems today produce compliant payslips with distribution in some or all the ways listed above.
Where are payslips heading in the future? Employees want more information about their employment, and we have seen a move by some large corporates to introduce what is called an “Employee Benefits Statement”. These statements are online portals (ESS/MSS) detailing the full benefits of employment with the organisation for that particular employee.
At the end of the day, employers need to understand their employees’ requirements when it comes to payslips, whether it be a basic payslip or a detailed Employee Benefits Statement. Keeping in mind there are legal requirements when it comes to payslips and the potential financial implications when these requirements are not met.
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