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Covid-19 lockdown: How it will affect your employer's finances

With South African businesses facing an unprecedented crisis, many are worried about whether they will be able to afford to pay their employees when they close down operations for the 21-day national shutdown. Some employers are concerned about the morale of employees in these difficult times.
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South Africa's President Cyril Ramaphosa has announced some measures to provide financial relief for distressed employers during this difficult time. Although we are waiting for details on how all of this should be implemented, employers must take note of the following:

Employment Tax Incentive (ETI) reimbursements

Employers can claim the ETI on a monthly basis if they employ qualifying employees. If this is not claimed (and certain conditions are met), then SARS reimburses the employer after the six-month and 12-month reconciliation period is completed. SARS will speed up the payment of these reimbursements to monthly payments.

Innovation and creativity in the time of Covid-19: Alternative ways of thinking and doing

It's a strange reality, and while all concerns are valid, our best defence currently is to harness the value of innovation and creativity. That's the sentiment of Shaune Jordaan, CEO of Hoorah Digital, who believes we need to embrace these tumultuous times as an opportunity to create, to innovate and reinvent ourselves...

By Shaune Jordaan 26 Mar 2020

Delayed PAYE payments

If you are a tax compliant employer, with a turnover of less than R50m, SARS will allow you to postpone the payment of up to 20% of your PAYE (Pay-As-You-Earn) bill over the next four months. It needs to be clarified how this will be implemented and whether the first allowable postponement will apply to PAYE due on or before 7 April (based on salaries for March), or whether it would only be applicable to PAYE due on 7 May (based on salaries for April).

Temporary employer/employee relief scheme (TERS)

The Department of Employment and Labour has approved a temporary employer/employee relief scheme (TERS). This enables employers to pay employees with funds made available by the UIF as a TERS allowance. Certain conditions must be met for the UIF to pay the amount to the employer. The maximum TERS allowance payable for each employee, is R17,242 per month.

#LockdownSA: Precautions for fleet drivers

While office workers can work remotely in order to protect themselves and others from the coronavirus during the 21-day national lockdown, this is not always possible for fleet drivers...

26 Mar 2020

Tax subsidies

There will be a tax subsidy of up to R500 per month for the next four months for employees in the private sector who earn less than R6,500. This will be implemented under the Employment Tax Incentive (ETI) scheme. It is yet to be clarified how this will be applied and whether the employer or the employee, or both would benefit from the tax subsidy.

UIF and SDL contributions

Government is exploring the possibility of reducing UIF and Skills Development Levy (SDL) contributions. This will only be applicable for a short period of time. Currently, both an employee and an employer contribute 1% of remuneration (which is subject to UIF) towards UIF, and an employer contributes 1% of remuneration (which is subject to SDL) towards SDL.

Don't lose your home to the lockdown

Many home-owners are worried about not being able to pay their bond instalments over the next few months as they face the prospect of reduced earnings...

By Gerhard Kotzé 26 Mar 2020

Even though employers are experiencing stressful and difficult times, it shouldn’t stop them from running a compliant payroll. The deadline for the employer annual reconciliation (EMP501) remains the end of May.

Employers must not use the PAYE withheld from employees as a cash-flow tool, as this is prohibited by law. They should withhold and pay SARS the correct amount of PAYE and use the other measures available to navigate these times.

About Yolandi Esterhuizen

Yolandi Esterhuizen oversees the interpretation and implementation of tax, labour and protection of personal information legislation into Sage's HR and payroll as well as accounting products across Africa and the Middle East. She brings to her role expert knowledge and consulting experience in tax and labour law, including PAYE, Employment Tax Incentive, Employment Equity, Skills Development and Labour Relations.
    Penelope Khuzwayo
    I appreciate the article. My concern is of businesses that are cutting salaries by 60% for employees can a company do that - only pay you 40% of your salary through no fault off your own as a result of the Lockdown
    Posted on 26 Mar 2020 21:32

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