Arbitration Awards

Arbitration awards are the outcomes of disputes between an employee and an employer – usually after the employee’s service was terminated. In cases where this results in an arbitration award for compensation, in terms of which you, as the employer, has to pay the employee a sum of money, you can use the SimplePay system item to record this.

You should contact SARS to obtain a tax directive, which will provide details about how the arbitration award should be taxed.

Note

The use of the system item is strongly recommended as it will already include the correct tax treatment and meet SARS reporting requirements.

The steps to add an arbitration award are the following:

• Go to an employee’s profile, and click on Add next to Payslip Inputs.
• Click on Arbitration Award under Income.
• Enter the following, as found on the document obtained from SARS:
  • Directive Number
  • Directive Issue Date
  • Directive Income Amount, which will be reported under code 3608.
• Enter the Amount of Tax to Deduct (from Tax Directive) amount. This amount will be reported under code 4102.
• Click Save.

Directive Number

If you click Save without entering a directive number, you will get an error message. The system forces you to enter a directive number to prevent errors during bi-annual filing, when you might want to import your tax certificates into e@syFile.