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Sunday, February 1, 2004
More red tape

The regulatory requirements that govern labour and employment issues in South Africa have been expanded considerably in the past few years. Employers must now consider and adhere to several additional regulations and requirements, apart from income tax matters and payment of other statutory levies.

These regulations could place additional financial and administrative burdens on a small business owner, which may prove to be very onerous and/or restrictive. A few of the regulations are dealt with below.
Every employer is required to comply with the Basic Conditions of Employment Act (BCEA) in which the basic conditions of an worker’s employment are outlined, as well as minimum wage regulations. This act applies to all employers except the defence force and a few other government agencies and to all employees, but excludes unpaid volunteers working for charitable organisations.
The conditions contained in the BCEA automatically form part of the contract of employment, and a few of the duties placed on employers in terms of this act, are:
• To provide an employee with written particulars of various aspects of the employment, e.g. hours of work, wage or rate and method of calculation, leave entitlement, period of notice, duties and payment;
• A statement of employees’ rights must be displayed at the workplace in the official languages used there;
• To keep records of employees’ names, remuneration, date of birth, etc; and,
• Provide detailed written information when the employee is paid regarding name, period, amount and deductions.

The BCEA also contains prescribed periods of annual and sick leave, maternity and family responsibility leave, as well as regulations regarding termination of employment.
Furthermore, workers are presumed to be employees of another person (the small business owner/entity) if certain conditions are met, and persons allegedly acting as independent contractors are also deemed to be employees of a person to whom services are rendered, in the following circumstances:
• When the worker is subject to supervision and control regarding the manner and hours of work performed;
• Where services are rendered only to one person;
• When the worker is provided with the necessary tools to perform the trade;
• When the worker performs services to the other person for at least 40 hours per month over the preceding three months, or
• When the worker is economically dependent on the other person.

These regulations could for the purpose of the BCEA, result in a worker being regarded as an employee of a small business, without the owner even realising this. Another recent amendment to the BCEA is that amounts to be included for the purpose of calculating leave and retrenchment pay is now regulated, and includes the following:
• Cash;
• Allowances for housing and travel; and,
• Employer’s contributions to benefit funds and funeral or death benefits.

It is therefore no longer advisable for an employer to agree an amount with the staff member in respect of payments for paid leave or retrenchment packages, which falls outside of the regulations of the BCEA.
In the light of the additional burden placed on all employers, it is advisable for a small business owner to seek professional advice on the above and other labour law issues. By Vinnie-Marie Roodt, Manager Tax And Legal Services at PricewaterhouseCoopers. For further information please call (021) 529 2147

Copyright © Insurance Times and Investments® Vol:17.1 1st February, 2004
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