Record Keeping: Part 1
PAYROLL ADMINISTRATORS ARE EXPECTED TO HAVE ALL THE COMPANY’S RECORDS AT THEIR FINGERTIPS
We are the backbone of the company when it comes to reliable retrieval of documentation, and the accurate, speedy conveying of information. We keep the records, and have to know exactly where to find them when asked. Quickly! And we are expected to answer even the most obscure questions regarding these records.
To achieve this, the following facts must be considered:
Know what must be kept, and for how long
According to the Basic Conditions of Employment Act, the following must be kept for at least 5 years; employment contracts, time sheets and pay slips. Included in this are records submitted to South African Revenue Services (SARS) and Unemployment Insurance Fund(UIF). AND not forgetting all the leave records, leave balances and many other instructions sent to the Payroll department. This also includes salary increases, pension fund deductions, medical aid etc.
NOTE: since companies generally prefer paperless record keeping today (so resulting in payroll administration being electronic), make sure there are policies in place regarding the evaluation and destruction of outdated data. Understand the consequences of Incorrect Information.
Paymaster backs up all their records in the cloud, so their clients (big and small business) are able to rest easy knowing they can rely on them for safe record storage.
Make sure you’re aware of the consequences of sending out incorrect information. This should motivate you to be ABSOLUTELY sure that what you send out, is 100% correct. Where consequences are serious, put in a checking system. For example;
- inaccurate reports to management lead to a breakdown in trust.
- inaccurate records mean wrong payments on termination.
- inaccurate EMP201 reports mean tax penalties.
- inaccurate interpretation of policy could result in incorrect payments.
Part 2. Record-keeping
The Payroll professional is a vital keeper of the company’s records. Let’s look at the responsibility that comes with that.
Correctly file/save Information
It is essential you know where everything is. Rummaging through filing cabinets or scrabbling through computer hard drives, will surely tarnish your reputation. The Payroll professional’s ability to retrieve information from online payroll system archives ( including the ability to extract information from historical data bases without restoring back ups) is a convenient way to extract historical reports, for instance. And if you quickly and accurately supply requested information, you will enhance your position as an essential part of the team.
So ask yourself; have I backed up all correspondence? Is old data easily accessible? Are employment contracts etc stored in the cloud?
Know where to locate important information
It really helps if your administrative system is understood by everyone. And that they know where, and how to find restored backups. Do you have handover procedures that ensure the transfer of knowledge can happen efficiently. And an automated online payroll system, such as the software from Paymaster Business Solutions, (with easy-to-find information), will trump paper notes anytime. The ideal is accessible, convenient procedures that enhance the business process.
Know what to present, when, and in what format
Reports need to be submitted for every month, every quarter, and every year. The Payroll professional knows what is required, and when. For example, in South Africa, tax returns are to be submitted by the 7th of every month. They would also be aware that management requires reconciliation reports by the 9th of the month, and the HR manager checks leave reports by the 15th of the month.
To do this, you need to set up the automatic report-generating process on the payroll system. Then the system can electronically distribute all reports, on time! This is a sure-fire way of building your reputation as a trustworthy payroll professional.
At Paymaster we specialize in making sure your payroll and records are processed and stored securely and efficiently. Contact our Helpdesk for more information. Office: 021 712 7333.
Stay tuned for part 3 of a 4 part series next week.
Part 3. Record-keeping
Details on Employee Records to be kept
Employers should clearly understand which employee records must be retained to avoid severe penalties. These records can be maintained electronically and copies of documents scanned and kept online (Paymaster Business Solutions can store these in the cloud for you).
Employment legislation specifies:
- The RECORDS an employer is obliged to retain
- The PERIOD for which these records should be retained
- The PENALTIES to be imposed on employers that fail to comply
The Basic Conditions of Employment Act (BCEA) lists the relevant particulars, that are tantamount to a contract of employment.
The employer is legally obliged to retain particulars of:
- The employee’s job description
- The date on which employment commenced
- The hours of work
- Remuneration particulars
- Leave provisions
- Notice period
The employer has to retain such data for three years after termination of employment. (NOTE: SARS requires you to keep all records for a period of 5 years)
(This statutory provision does not apply to employees who work less than 24 hours a month for that employer.)
The BCEA’s requirements aside, it is advisable to store other particulars, such as the benefits to which the employee is entitled, copyright and patents, and restraint of trade agreements.
The employer should retain these records for three years after termination of employment.
The BCEA stipulates that the records to be retained must contain the following employee details:
- Name and occupation
- The time worked
- The remuneration paid
- The date of birth of any employee under 18 years of age
- A wage and attendance register
The forms must be retained for the stipulated three years from the date of the last entry.
(This statutory provision does not apply to an employer who employs fewer than five people, or to employees who work less than 24 hours a month for that employer.)
Part 4. Record-keeping
See Part 3 for the information on what and how long to keep employee records.
Today we continue this discussion starting with;
Schedule 2 of the BCEA specifies the penalties which may be imposed on an employer for failing to comply with the provisions of the BCEA. The fines range from R100 to R500 per employee.
Labour Relations Act
The Labour Relations Act (LRA) stipulates that unless a collective agreement, arbitration award or determination made in terms of the BCEA provides otherwise, EVERY EMPLOYER on whom a collective agreement, arbitration award or determination is binding MUST RETAIN A COPY of that agreement, award or determination.
The LRA also provides that an employer is legally obliged to keep records in compliance with any applicable collective agreement or arbitration award and is obliged to retain such records in their original form (or a reproduced form) for three years from the date of the event or end of the period to which they relate.
According to the LRA, an employer must keep a record of the prescribed details of any strike, lock-out or protest action involving its employees. LRA regulations contain a prescribed form, which the employer is obliged to complete and submit a copy thereof to the Department of Labour. The employer is also obliged to retain a copy.
The Unemployment Insurance Contributions Act, together with the Income Tax Act, obliges employers to retain records of remuneration paid, tax which has been deducted and unemployment insurance fund contributions and payments for each employee. The records must be maintained in such form, including any electronic form, as may be prescribed by the revenue authorities. These records should be kept for five years from the date of the last entry and must be available for inspection by the South African Revenue Service and Unemployment Insurance Fund officials. An employer who contravenes these statutory provisions will be guilty of an offence and liable on conviction to a fine, to imprisonment for not more than 12 months or both the fine and imprisonment.
The Employment Equity Act (EEA) places a legal obligation on “designated employers” to retain records of its workforce, its employment equity plan and other records relevant to its compliance with the EEA.
It is advisable to keep records of all interviews conducted with job applicants. In terms of the EEA, a job applicant may challenge a recruitment decision on the basis of unfair discrimination within six months of the recruitment decision – a period for which the employer should retain the relevant records.
Employers bound by such legislation are urged to study the provisions of these Acts to avoid penalties.
Paymaster (after many years of professional service to its clients) has the experience and capacity to help make your organisation’s record-keeping easy and effortless. With an automated payslip process, Paymaster keeps all your essential and valuable employee-records online (safely and securely stored in the Cloud). These records are readily and easily available (at the click of a button) at any time.
Great idea: why don’t you elect to process your payroll with Paymaster? We can do it all for you— a fully outsourced and comprehensive solution for your organisation.
Contact Paymaster at 021 712 7333 for help to achieve your Payroll goals.