how does this affect existing contracts of...

NEWSLETTER AUGUST 2014

SERVICES WE OFFER:

· Auditing

· Tax planning

· Due diligence

· Special investigations

· Accounting

· Registration of trusts and companies

· Management and financial advisory services

· Planning and installation of information systems

1

Earnings threshold increased 1 July 2014

A new earnings threshold was recently announced by the

Minister of Labour, Mildred Oliphant. Government Gazette

Notice no. 37795 states that all employees earning in

excess of R205 433.30 per annum will be excluded from

sections 9, 10, 11, 12, 14, 15, 16, 17(2) and 18(3) of the

Basic Conditions of Employment Act (BCEA) with effect

from 1 July 2014. The previous threshold was R193 805 per

annum.

For the purposes of the notice, ‘earnings’ means the

regular annual remuneration before deductions, i.e.

income tax, pension, medical and similar payments, but

excluding similar payments (contributions) made by the employer in respect of the

employee: Provided that subsistence and transport allowances received, achievement

awards and payment for overtime worked shall not be regarded as remuneration for

the purpose of the notice.

The effect of the increase is that employees who were previously not covered by the

BCEA in terms of its ‘Regulation of working time’ sections, will now be covered. In other

words, employees earning above R193 805 but below R205 433 as from 1 July 2014, will

have to be compensated for overtime, work on public holidays and Sundays (and all

the sections in the BCEA relating to working time, as listed above).

Apart from those who earn above the new threshold, some of these benefits also do

not apply to certain classes of employee, such as senior managerial employees,

employees engaged as sales staff who travel to the premises of customers and who

regulate their own hours of work, and employees who work less than 24 hours a month

for an employer (refer to section 6(1) and (2) of the BCEA for a comprehensive list of

those classes of employees not covered).

2

How does this affect existing contracts of employment?

Any existing remuneration packages and employment contracts may need to be

reviewed in light of the increase, so as to ensure that both are aligned with the rights

afforded to employees in the BCEA. If an employer wishes to amend existing terms and

conditions, it cannot do so unilaterally. The employer and employee will need to

negotiate any changes.

Employment Equity Amendment Act, 2013

The Employment Equity Amendment Act, 2013, which was

signed into law by President Jacob Zuma in January this

year, will come into operation on 1 August 2014. The

legislation aims to eliminate discrimination in the

workplace and promote affirmative action.

Chapter II of the principal Act relates to the prohibition of

unfair discrimination, and applies to all employers. Section

6 provides that no person may unfairly discriminate,

directly or indirectly, against an employee, in any

employment policy or practice, on one or more grounds,

including race gender, sex, pregnancy, marital status, family responsibility, ethnic or

social origin, colour, sexual orientation, age, disability, religion, HIV status,

conscience, belief, political opinion, culture, language and birth. The Amendment

Act extends the ambit of “unfair discrimination” and has added,” or on any other

arbitrary ground” to this list. In addition, Section 6(4) has been added, which

introduces the concept of equal pay for work of equal value.

Chapter III of the principal Act relates to affirmative action, and applies to

“designated employers”. Such employers are required to implement affirmative

action measures for people from designated groups, in order to achieve

employment equity. They are required to submit Employment Equity Plans and

Reports to the Department of Labour annually, and to show progress they have

made against their EE Plans.

Schedule 4 of the Act has been amended, resulting in the annual turnover

thresholds that an employer must exceed in order to be classified as a “designated

employer”, being significantly increased. As from 1 August 2014, for example, the

total annual turnover threshold for the agriculture sector is increased from R2 million

to R6 million, and for the construction sector from R5 million to R15 million (refer to

Schedule 4 of the Amendment Act for a full list of sectors and increased total annual

turnover figures). Therefore many employers who fell within the ambit of “designated

employer” previously, based on annual turnover threshold, may no longer fall within

that definition.

However, employers that employ 50 or more employees (irrespective of turnover) will

fall within the definition of designated employer [see section 1, (as amended) for the

definition of designated employer].

All employers and “designated employers” are required to have knowledge of, and

comply with the Act, as amended, so as to ensure compliance. The Amendment

Act introduces new measures for enforcement, and fines and penalties have been

increased and linked to turnover for non-compliance.

This article serves to highlight just a few of the many amendments that will be

effective from 1 August 2014. There are many more, but due to the limitations in

length of this article, are not able to be included herein.

3

Cloud Accounting – Is It For You?

There still seems to be a lot of mixed feelings about

the merits of cloud based software in general, and

cloud accounting is no exception.

Are cloud accounting applications right for you

and your clients? In this article, we’ll define cloud

accounting and look at the risks and benefits.

What is cloud accounting?

Cloud accounting applications provide much of the same functionality as desktop

accounting software with one major difference

on remote servers and are accessed via a web browser.

What are the benefits?

There are numerous benefits to cloud accounting and progressive business owners

are enjoying them. Here are a few of the benefits:

• Access, speed and versatility

are out of the office, travelling etc, via

need is an internet connection.

• There is no lump sum upfront capital investme

a monthly set subscription fee which

functionality you require.

• Can generally end

terms).

• Software upgrades happen automatically, so

don’t have to run the risk of losing any data when upgrading to the latest

version.

• The interaction with your accountant becomes easier with them having

access to up-to-date information

• Most cloud accounting packages offer

leads to a reduction in time spent processing

• Your data backup

don’t run the risk of losing data if your computer should crash

What are the risks?

The world of cloud accounting is not without risk. These solutions are new and require

that you perform the necessary due diligence to determine if the solution is right for

your business. Here are a few of the risks:

• You don’t have internet access

from anywhere and anytime assuming that you have a connection to the

Internet. If you find yourself without internet access, you will not have access

to your accounting data.

• Security breach – Cloud accounting soft

Internet. There is a risk that someone could gain access to your data.

Is It For You?

There still seems to be a lot of mixed feelings about

the merits of cloud based software in general, and

cloud accounting is no exception.

accounting applications right for you

and your clients? In this article, we’ll define cloud

accounting and look at the risks and benefits.

What is cloud accounting?


g software with one major difference - cloud accounting app

on remote servers and are accessed via a web browser.


e a few of the benefits:

ccess, speed and versatility - Data can be accessed remotely

out of the office, travelling etc, via a laptop or mobile phone.

need is an internet connection.

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a monthly set subscription fee which can be structured according to

functionality you require.

Can generally end your subscription at short notice (subject to contractual

s happen automatically, so a reduction in IT costs and


The interaction with your accountant becomes easier with them having

date information.

accounting packages offer automatic bank feed uploads

leads to a reduction in time spent processing.

ata backup happens automatically and being stored off site, you

don’t run the risk of losing data if your computer should crash



your business. Here are a few of the risks:

You don’t have internet access – Cloud accounting vendors are accessible



to your accounting data.

Cloud accounting software and your data both live on the



loud accounting applications run


Data can be accessed remotely, so when you

mobile phone. All you

, as there is generally

according to the

(subject to contractual

a reduction in IT costs and you


The interaction with your accountant becomes easier with them having

automatic bank feed uploads which

stored off site, you

don’t run the risk of losing data if your computer should crash.



Cloud accounting vendors are accessible



ware and your data both live on the


4

Four reasons why you should take leave this year

Could you use a holiday?

Of course you could, and most of us know time away

gives any leader a better perspective. But research

shows that less than half of small business owners are

likely to take a whole week off at a time.

Perhaps this is a better question: Could your business

use a break from you?

Of course it could. Your absence will reveal

organisational weaknesses that need attention, as well

as strengths you may have overlooked.

Regardless of your motivations, here are four ideas to consider to help you take

more time off.

1. Define success. Success can be defined in two ways: (1) a favourable

outcome; (2) gaining wealth. Embracing both definitions as having equal

value will help you recognise that living long enough to enjoy the fruits of the

second definition - with your loved ones - must be part of your success

definition.

2. Hire quality. Taking time off requires being able to leave your business with a

team that is trustworthy. If you’re not comfortable with the idea of leaving

your baby in the care of others, your instincts are probably good, but your

hiring practices may not be. Part of your interview process should determine

whether a prospect is the quality of individual you would trust with your

company in your absence. By the way, this is one of the best times in history

to acquire high-quality talent. It’s a hirer’s market.

3. Delegate. If you’ve already assembled that trustworthy team, their usefulness

is limited by your ability to delegate. Delegating isn’t easy for entrepreneurs;

you’ve done all of the jobs, and you know how you want them done. But

there’s an old saying that successful delegators embrace, “Don’t let the

perfect be the enemy of the good.” If you cringe at the thought of how

things won’t be perfect in your absence - get over it.

4. Leverage technology. No one has to be completely unplugged anymore.

There’s plenty of affordable technology that can serve as your security

blanket by helping you “run shop” without actually being there. And if you

practice, no one will notice that you checked email on your smart phone

while rolling over to tan the other side.

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