Eight clauses SARS will inspect in your employment contracts... Are yours up to date?
- 28 Critical clauses you must include in your new hire's employment contract
- Eight clauses SARS will inspect in your employment contracts...
- Safeguard your rights as an employer
When SARS carries out a payroll audit it'll compare your letter of appointment to your payroll and company policies. And if your employment letters are different to the way pay is structured, you'll have SARS' full attention!
Often, your main reason for issuing a new letter of appointment will be because of annual changes to SARS legislation, or a change of position within your company. If you look at your employee files you may find letters that reflect allowances no longer acceptable to SARS, or are described in a way which isn't acceptable anymore.
It's very important that the benefits the employee receives are reflected on the payslip and in the employee's contract of employment.
Make sure you have the following eight clauses in your letters of appointment or employment contracts...
28 Critical clauses you must include in your new hire's employment contract
You employment contract's a vital document! And you must ensure you develop it along the legal requirements. There are 16 clauses you have to include. And we've included the 12 others that will protect you as an employer. Cover all your bases when it comes to a new employee's contract.
Discover these in Recruitment: The Complete Guide
Eight clauses SARS will inspect in your employment contracts…
When SARS conducts an audit of a company's payroll it'll inspect the following clauses in a letter of employment:
Is it necessary for the employee to have a car allowance and what expenses are covered in the allowance?
Is the car allowance excessive given the employee's actual business mileage and the value of the vehicle?
Does the employee receive any double benefits (e.g. car allowance and use of a company vehicle, or a car allowance and reimbursement of fuel and maintenance)?
If the employee has use of a company-owned vehicle, is this described in the letter of appointment, and is the employee being taxed (a particular problem when tools of trade vehicles are taken on holiday)?
Safeguard your rights as an employer
You must give your employees the terms and conditions of their employment in writing. This document can take the form of a letter of appointment, or you can create a more formal contract of employment. Thee form doesn't matter it's the content that's important. Getting your employee to sign the document avoids disputes about whether or not it was given and what it contains. You must do this when the employee starts employment, and you must retain the document for at least three years after termination of the employment relationship (Section 29 of the BCEA).
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How are fringe benefits, such as medical aid and retirement funding, described in the contract of employment, treated on the payslip and described in the rules of the funds?
Does the contract of employment specify that the employee is entitled to:
- Subsistence allowances;
- Cell phone allowance;
- Home office allowances; and
- Depreciation on computer equipment?
Are the words 'salary sacrifice' used to describe benefits paid for by the employer before tax, while actually referring to an employee expense because they are deducted off the employee's cost to company salary, e.g. retirement funding?
Are gifts or incentives of a non-cash nature and interest free loans correctly taxed? You must regularly review employee documentation to ensure the current conditions of employment are accurately recorded in the employee's file. Consult with an expert to ensure the letter you want to issue complies with all relevant legislation.
So make sure all your employee contracts and benefits are 100% correct and specified in your letters of employment. Refer to chapter L04 Letters and contracts in the Practical Guide to Human Resources
for more information on your employee's letters and contracts. Still not a subscriber?
Until next time,
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