By Maureen Phiri, Managing Director at Oxyon People Solutions
Year-end payroll can be a challenging period for South African businesses, particularly those with shift-based workforces or employees covered by bargaining council agreements. In addition to normal salaries, employers must also account for leave pay, bonuses, overtime, and other benefits, typically within tighter deadlines due to the December holidays.
When leave balances, timesheets and other payroll records have not been properly checked during the year, mistakes can result in underpayments, disputes and delayed salaries. To avoid these problems, employers need to start preparing well before December, giving themselves enough time to reconcile records, check calculations and resolve any outstanding issues.
Last-minute challenges
In many businesses, payroll only receives attention when salaries need to be paid, statutory submissions are due or an employee raises a query. Employee records and leave balances are not always reviewed regularly, which means that incorrect information, outstanding adjustments, and missing documentation can go unnoticed until the year-end payroll is being prepared.
This is even more challenging when the entire payroll function is managed by one person, which is often the case in smaller businesses. If that person is unavailable or leaves the business, there may be nobody else who understands how the payroll is managed. Finance teams are also often busy with audits and reporting requirements towards the end of the year, which leaves very little time to identify and correct payroll errors before the December processing deadline.
Adding to the complexity
These challenges are exacerbated in businesses with shift-based or unionised workforces, where payroll calculations are not always straightforward. Employees may be subject to different bargaining council agreements, with leave pay, bonuses, and other entitlements determined by their employment category, length of service and the conditions that apply to their role.
One of the most common mistakes businesses make is applying the minimum requirements of the Basic Conditions of Employment Act (BCEA) without checking whether the relevant bargaining council agreement provides for different benefits or calculation methods. Employers may also use incorrect leave pay or bonus formulas, or rely on leave balances and overtime records that have not been properly confirmed.
When these errors are only identified during the year-end payroll process, correcting them can involve reviewing several months of records and recalculating employee entitlements. This adds to the workload at a time when payroll teams are already stretched and working against tight deadlines.
Preparing for the December payroll
To avoid these problems, employers should start by making sure their payroll records are accurate and that employees are being paid correctly. This means checking wage schedules, leave balances, bonus arrangements, and statutory deductions, as well as ensuring that overtime and public holiday payments have been accurately recorded. For businesses with shift-based workforces, timesheets also need to be checked with operational managers or clients before payroll calculations are finalised.
It is also important to have clear deadlines in place for the December payroll. Employers need to know when timesheets and employee changes must be submitted, who is responsible for checking and approving the calculations, and how any late changes will be handled. There should also be someone who can step in if the person normally responsible for payroll is unavailable, so that payments are not delayed.
In addition, businesses need to make sure they have enough money available to cover the additional year-end payments. Planning cash flow across November, December, and January can help prevent a situation where leave payments or bonuses put pressure on the funds needed for salaries and other expenses.
Managing payroll requirements
For businesses with complex payroll requirements, particularly those with limited internal resources, an experienced Temporary Employment Service (TES) provider can help manage the additional year-end workload. This includes checking employee records, reconciling payroll information, ensuring that the correct bargaining council provisions are applied, and managing statutory submissions. Having experienced support available can also help businesses identify and resolve discrepancies before they affect employee payments.
Ultimately, avoiding year-end payroll problems comes down to preparing early and making sure the necessary checks are completed before December. Employers need to ensure that employee entitlements are calculated correctly, records are up to date, and payments are made on time.
