The Payroll Compliance Pack

About this guide

Payroll is where small employers get into trouble quickest, because every month has a deadline and every year has a reconciliation that must balance to the cent. This pack covers what a South African employer must register for, declare, reconcile and retain.

It starts with registration — PAYE, UIF with both SARS and the Department of Employment and Labour, SDL where your payroll exceeds the threshold, and COIDA with the Compensation Fund — then walks through the monthly run: new starters and terminations, taxable fringe benefits, the Employment Tax Incentive, the EMP201 by the 7th, and the UI-19 declaration.

There is a section on what the Basic Conditions of Employment Act requires on a payslip, an explanation of how the twice-yearly EMP501 reconciliation ties your declarations, your payments and your employees' IRP5 certificates together, the annual COIDA return of earnings and the letter of good standing that depends on it, and how long each payroll record must be kept.

What each section covers

Registering as an employer

Before the first payslip is issued, the registrations must exist. Doing this late creates backdated liabilities and penalties that are entirely avoidable.

The monthly payroll run

Capture new starters with their tax numbers and banking details · Process terminations, including leave paid out and final pay · Capture changes: increases, commission, overtime, bonuses, unpaid leave

What must be on a payslip

The BCEA requires a written statement with each payment. A bank transfer alone is not compliance.

The twice-yearly reconciliation

The EMP501 reconciles three things that must agree: what you declared on your EMP201s, what you actually paid to SARS, and the IRP5 and IT3(a) certificates issued to employees. Where they disagree, SARS assumes the certificates are right and the payments are short.

Annual COIDA return of earnings

Declares actual earnings for the past year and estimated earnings for the coming year. · An assessment follows, which must be paid to stay in good standing. · A letter of good standing is required for many contracts and tenders — and cannot be issued if the return is outstanding.

Records to keep, and for how long

Payroll records, EMP201s, EMP501s and certificates: keep for at least five years from submission. · Employment contracts and personnel files: keep for the duration of employment and at least three years after it ends. · Attendance and overtime records: keep for at least three years.