Setting up the employee classification is the first step in adding an employee. You can also return to the classification screen at any point by going to the employee’s profile and clicking on Edit Info > Classification.
Selecting any of the options on this page will have an impact on one or more aspect of the employee’s payroll calculations. Each option is discussed in greater detail below:
Director / Member of CC
Indicating that the employee is a director / member of the CC, will allow you to enter an amount of deemed remuneration for them, if applicable. Additionally, all of the employee’s income will be reported under the correct code (3615) on their tax certificates. Please see the following article for a detailed explanation of this concept:
If you did not mark an employee as being a director or member of the CC, you will be able to select the employee’s working hours – either “Full time” (by default) or “Less than 22 hours per week”.
If you select the latter option, three further questions / drop-down menus will appear with regards to the employee’s particular circumstances.
An employee working less than 22 hours a week has two potential effects on their payroll calculations.
If you select “No” as the answer to Do you have a written declaration that the employee will not work for another employer while employed by you?, their employment qualifies as non-standard and they will be taxed at a flat rate of 25%. More information on this concept is available in the following article:
However, if you select “Yes” as the answer to Does the employee work at least 5 hours a day and receive less than R287 per day?, PAYE will be calculated based on the normal tax tables.
If you select “Yes” as the answer to Does the employee work less than 24 hours a month?, they will not accrue leave or be automatically paid for public holidays that they don’t work. They will also be UIF exempt (discussed further on).
This refers to contractors whose remuneration is subject to PAYE as a result of meeting certain requirements. As with directors, these employees’ income will be reported under the correct code (3616) on their tax certificates. Please see the following article for a detailed discussion of independent contractors in the context of payroll:
They will be subject to PAYE and SDL, if applicable but will not be liable for UIF. They also do not accumulate leave.
You should tick the box next to UIF Exempt only if the employee meets one of the requirements for exemption. You can select one of the following exemption reasons:
- “Works less than 24 hours per month”: Employees are are employed by the employer for less than 24 hours a month are exempt from paying UIF.
- “Learner in terms of the SDL Act”: This refers to learners employed and remunerated under a contract of employment as contemplated in Section 18(2) of the Skills Development Act. Prior to 1 March 2018, these employees were UIF and SDL exempt. Since 1 March, these employees are no longer UIF exempt, but are still SDL exempt.
- “Foreigner, leaving SA at the end of service”: Prior to 1 March 2018, foreigners who were temporarily working in South Africa and who would be leaving the Republic at the end of their contract of service, apprenticeship or learnership were exempt from UIF. These employees are no longer exempt and UIF will be calculated for them if you choose this option after 1 March 2018.
- “Earns commission only”: Commission is specifically excluded from Remuneration for UIF. SimplePay excludes commission from all UIF calculations, regardless of whether or not you select this exemption reason. However, if an employee only earns commission for their entire duration of employment, this needs to be reported on the UIF Declaration so that there is a clear reason for them not contributing to the UIF.
- “Income from pension, superannuation or retiring allowance only”: Similar to commission earners, individuals who only earn an income from a pension, superannuation or retiring allowance need to be reported as such on the UIF Declaration.
- “Public Servant”: The President, any Member of Parliament or individuals in any sphere of government are exempt from paying UIF.
The exemption reason selected will result in one of the following non-contribution reason codes being added to the UIF Declaration:
For more information on UIF Declarations, go to the following help article:
If you are adding an employee and are happy that their classification is correct, the next step is to capture their Basic Info.