WHAT ARE OUR OBLIGATIONS TO EMPLOYEES?

WHAT ARE OUR OBLIGATIONS TO EMPLOYEES?

The failure to deduct or to pay over employees’ tax is a criminal offence (along with various other acts or omissions regarding employees’ tax obligations’. Offenders will be liable on conviction to a fine or imprisonment of up to one year. 

Every employer has many statutory obligations and risks in respect of its employees. These range across areas such as employees’ tax, individual labour law requirements, collective agreements and employment equity arrangements. Each area is governed by its own legislation with its own, often severe, penalty provisions. Compliance in all these inter-related areas is becoming both more complicated and more important to employers. 

Employees’ tax 

There’s personal liability by employers, representative employers, shareholders and directors, for outstanding employees’ tax. 

SARS is serious regarding employees’ tax compliance. Employees’ tax has been a focus area for SARS and payroll audits have become a common occurrence. 

The deduction of employees’ tax and its payment to SARS is the responsibility of the employers. They can be held liable for employees’ tax that is either not deducted or is deducted but not paid over to SARS. Undeducted employees’ tax can then be recovered from the relevant employees, but any penalties and interest cannot. 

Representative employers, which include public officers of corporate employers, have a duty to correctly deduct and pay over employees’ tax. Failure to deduct will not, however, give rise to personal liability for representative employers. If representative employers deduct but do not pay over employees’ tax, then a certain extent of personal liability may arise. 

Perhaps more worrying is the position of shareholders and directors of corporate taxpayers. If they either control or are regularly involved in the management of the company’s financial affairs, then they will be personally liable for the company’s employees’ tax obligations. 

In addition to the above provisions, the failure to deduct or to pay over employees’ tax is a criminal offence (along with various other acts or omissions regarding employees’ tax obligations). Offenders will be liable on conviction to a fine or imprisonment of up to one year. 

Basic Conditions of Employment Act 

This Act prescribes the minimum benefits and employee should be accorded for rendering service to his employer. A written contract of employment is required. This provides the employee with the details of who his employer is and the type of work he has been contracted to do, his place of work, details of his pay and when it will be paid. Records of employment must be kept as well as details regarding remuneration. 

Labour inspectors have the power to enter employers’ premises and his home if the Labour Court has sanctioned such an inspection. Any person questioned by an inspector is required to provide truthful answers. The employer bears the onus of proof that he has not infringed a provision of the Act. Fines and prison terms are fixed for offences committed in terms of the Act. 

Overall Compliance 

It is important for all employers to ensure that they are complying with all of their statutory obligations in respect of their employees. This is not only in order to avoid the various penalties that can be invoked, but also for good corporate governance and to facilitate employer/employee relations. 

Reference: 

Tim Desmond & Dave Vinnicombe – Garlicke & Bousfield Inc