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Compliance Requirements If You Have Employees

Do you have employees working for you? Did you know that there are certain compliance requirements for businesses with employees?

In this article, we briefly set out these compliance requirements. Should you need more detail and assistance with your payroll, contact us.

If you have employees in your business, you need to comply with the following bodies:

  • SARS (for payment of PAYE (pay as you earn), UIF and SDL)
  • Department of Labour
  • Workmen’s Compensation
  • All employees need to register as taxpayers (have an income tax number)
  • Industry related bodies, if applicable

1. PAY AS YOU EARN (PAYE)

If you employ employees, you must register for employees’ tax (PAYE) with SARS if the employee’s salary is over the tax threshold, and submit your monthly EMP201 before or on the 7th of the following month. If the 7th is on a weekend day or public holiday, your return and payment must reach SARS on the closest working day before the 7th. If your payment is received by SARS after the 7th, SARS will raise penalties for late payment and interest calculated daily on the overdue amount.

On the EMP201 return, you also need to declare UIF and SDL and pay it to SARS, as SARS is the collection agents for these bodies and pays the funds over to them.

Twice a year (in August and February) you need to submit a EMP501 reconciliation to SARS. In this reconciliation you record who the tax deducted and paid on the EMP201s relates to and what they have earned.

In February this submission will generate IRP5 and IT3A certificates for your employees which they need for their personal income tax returns.

2. UIF

Employers must register themselves and their worker(s) with the Unemployment Insurance Fund as soon as they employ staff.

Employers must deduct 1% of their employees’ pay for UIF. Employers must pay the 1% they deducted from workers, together with a 1% contribution from themselves to the UIF or SARS before the 7th of every month. If your employees’ salaries are
beneath the tax threshold, there is no need to register with SARS. In this instance, the monthly UIF will be paid directly to the Department of Labour. Any employee, including domestic workers, who works for you for more than 24 hours a month must be registered with the UIF.

If you elect to pay the UIF via the SARS PAYE system, keep in mind this only facilitates the payment and not the submission of the UIF return. A UIF return must still be submitted.

3. WORKMEN’S COMPENSATION

An employer must register with the Compensation Commissioner within seven (7) days after the day on which the company employs its first employee.

Workmen’s Compensation is submitted once a year (April/May) and calculated using your total annual salaries, total number of staff and industry liability. Failure to submit returns will lead to penalties and interest charged by the Compensation Commissioner.

This very important insurance is often overlooked, or seen as an additional tax. However, it is in fact quite essential as it provides cover for injuries on duty. If Workmen’s Compensation is not in place, it can open you or your company up to claims should someone be injured on duty.

The compliance requirements discussed in this article all come down to having a proper payroll in place. Bel-Essex Management Services, with its professional, experienced team, is available to assist you with all your payroll needs. Contact us today.