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Remuneration in employment contracts: Consider these points before putting pen to paper

by , 21 September 2015
Employment contracts are the foundation for any business relationship between you and your employees.
So it's very important for you to pay careful attention what you include in it.
Remuneration is an area that requires even more attention.
Before creating clauses that deal with remuneration, it's always wise to take a step back and consider the following points:

Which package?

There are two options you can choose from when deciding on a package to provide your employee with.

They are:

·         A total-cost-to-company package; and
·         A Salary-plus-benefits package

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Total-cost-to-company package

When looking at this package, you must consider the following:

·         You must specify what exactly the package includes. This will be medical aid, pension etc.
·         How will the salary be paid? Will it be monthly?
·         What will happen if one of the variables change? For example, what will happen if medical aid premiums go up?
·         If and when the employee can change the structure of the package and to what extent.

Salary-plus-benefits package

If you're thinking about this package, then you'll need to determine if there are any non-salary items that you'll treat as remuneration.

Examples include:

·         Payments in kind for accommodation and food. A payment in kind is any item or right that you provide an employee with for his services;
·         Car allowances;
·         Standby allowances; and so on.

Remember that regardless of which package you choose, you should confirm with your employee that you may make any deductions where required by law. This includes UIF, PAYE or specific agreements.

So, there are some practical points to keep in mind before drafting anything with regard to remuneration in your employment contracts.

To learn more, click the source below…

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