With the compliments of Our range of services AUDITING ACCOUNTING FINANCIAL / PROJECT ANALYSIS COMPUTER SERVICES SECRETARIAL SERVICES COMPANIES & CLOSE CORPORATIONS TAX RETURNS & ADVICE June 2008 8th Floor 135 Musgrave Road DURBAN 4001 PO Box 50309 MUSGRAVE 4062 ESTATE PLANNING INVESTMENTS - LOCAL & OFFSHORE LIFE ASSURANCE BUSINESS ASSURANCE PERSONAL ASSET MANAGEMENT PENSION & PROVIDENT FUNDS HEALTH CARE / MEDICAL AIDS PORTFOLIO MANAGEMENT TEL: (031) 202-7601 FAX: (031) 202-7663 E-MAIL: email@example.com WEB: www.aitkenlambert.com DESERTION IN THE WORKPLACE what to do? What can you do when your employee does not come to work, does not contact you to advise as to reasons for her/his absence, and there is evidence to suggest that it is his/her intention never to return to work (e.g (s)he has told a fellow employee that (s)he is not coming back or has cleared out his/her locker or personal possessions)? The scenario described above is known as desertion, and as an employer, it is vital for you to understand the implications thereof, so that you can effectively manage the situation, without falling foul of the Basic Conditions of Employment Act (BCEA) or the Labour Relations Act (LRA), and unhappily find yourself in the halls of the CCMA - facing a hearing. HOW LONG? There is no specific period stated in terms of the law after which time one can assume that the employee has deserted, however in practice, and according to the CCMA information brochure on the topic, it is generally accepted that the period should not be less than five days. IN THIS ISSUE Desertion in the workplace what to do? Foreign Exchange control regulations Securities Transfer Tax (STT) 2008 Filing Season DESERTION VS ABSENTEEISM VS AWOL There is a distinction between desertion, absenteeism or going "AWOL" for a short period of time. Basically, going AWOL (absent without leave) is going missing without permission for a short period - with clear evidence that the intention is to return (e.g the employee's possessions are still at work).This should be treated as misconduct which should give rise to a disciplinary hearing. Usually this does not as a first offence give rise to dismissal - however repetitions of going AWOL and failure to inform the employer can and should lead to a dismissal. Absenteeism is where an employee is regularly absent e.g regular illness. DEFINITION OF 'DESERTION' "when an employee has left the place of work, does not appear to have any intention of returning, has no authorisation or permission for his/her absence, and has not contacted the employer in any way to provide an explanation for his/her absence" The employer's obligations when the desertion scenario applies Try and contact the employee via telephone, sms, telegram, registered mail, or even try to contact him/her via his or her family. Note: the employer has an OBLIGATION to try and contact the employee in these circumstances. (Employers records of employees should always be up to date for these reasons - contact telephone numbers and addresses); Your correspondence with the employee should state the following: to warn him/her of the possible consequences of his/her actions, to enquire as to whether there is a valid reason for his/her absence and why (s)he has not contacted you (e.g (s)he was in an accident and is unconscious in hospital), and to satisfy the you, the employer that (s)he has not intention of returning to work. The notice should also require the employee to report for duty by a specified date, and that failure to report could result in his/her dismissal; Where the employee fails to report within specified period: Where the employee fails to report, the employer can hold a disciplinary enquiry and in his/her absence, formally dismiss him/her. One of the prime requirements for such a dismissal is that the employer must be reasonably certain or have evidence to support the conclusion that the employee has no intention of returning to work; NOTE: it is the employer's act of accepting the employee's desertion that amounts to a dismissal by the employer. In certain circumstances, the CCMA could find that this dismissal is unfair. In a case a few years ago the CCMA held that a dismissal was unfair where an employee was held in custody by the police for 6 weeks.When released he returned to work to find that he had been dismissed. He was not afforded the opportunity by his (ex) employer to explain the reasons for his desertion. The CCMA held that the employer should have given him the opportunity to state his case, and that if he had been given this opportunity he could have offered a reasonable explanation.The CCMA held that the dismissal was substantively unfair (without good reason), and the employee was thus unfairly dismissed. He was reinstated retrospectively to the date on which he first reported for work after his release. Note: this does not mean that you have to keep a job open for an employee who has been convicted of a crime and sent to prison for a lengthly period of time. The supervening impossibility of performing his side of the employment contract is entirely the employee's fault and you should be able to dismiss the employee on the basis that he is physically unable to carry out his duties for an unreasonably long time. Where the employer has dismissed the employee and (s)he returns to work thereafter, (s)he should be given an opportunity to explain his/her absence or be allowed to present mitigating factors to avoid confirmation of that dismissal; Where the employee reports to work within specified period: Where the employee reports to work or makes contact within the specified period stated in the notice, the employer is entitled to enquire as to the reasons why the employee was absent from work and why (s)he did not notify the employer earlier. Based on the explanation given, the employer can decide whether to take further action (disciplinary steps) or not; Where the employee reports to work after the specified period in the notice: Where the employee reports to work after the specified period, the employer is still obliged to give the employee a hearing and an opportunity to explain him/herself. Depending on the explanation provided and the proof supplied to back up the employee's explanation (e.g (s)he was unconscious in hospital) the employer could either re-employ the employee or confirm his or her dismissal. In all cases, the employee is entitled to be given an opportunity to present his/her side of the matter and explain the reasons for his "desertion". Some practical tips for the Employer: Follow established procedure - make an effort to contact the employee or his/her family; Should this fail, place the employee on unpaid leave; Employ temporary staff to fill the position of the deserter (and state in your contract with your temp that the contract will cease after a maximum period of 6 months or when the deserter returns, whichever is the sooner); If the deserter reappears, hold a disciplinary hearing, allowing him/her to state his reasons for his/her absence and lack of communication and why (s)he should not be dismissed; Document each step, so that once a final outcome has been achieved, evidence is available to confirm that procedural fairness has been adhered to; Include desertion in your disciplinary code or employee's individual employment contract -e.g include a clause which provides for an employee's absence without authorisation for a certain period of days (usually between 3-5 working days) the employee will be treated as having deserted and repudiated his/her employment contract; When is it not desertion? NB: it is not desertion if the employer knows where the employee is and why he can't come back to work. Payment of monies to employee who deserts ? According to the CCMA, where the employee admits desertion, he/she is still entitled to be paid for any period worked (before the desertion), and to be paid for any leave that has accumulated. The employer is not liable to pay notice pay. It is possible that monies owed to the employee as per above may be set off by his/her failure to give the employer notice of termination of the employment contract (in terms of the BCEA or his/her employment contract), or any loan amounts due to be repaid to the employer. FOREIGN EXCHANGE CONTROL REGULATIONS This year's budget brought about some significant changes in exchange control regulations - effectively relaxing them and shifting the focus towards greater surveillance and prudential regulation. The name "Exchange Control Department" has been replaced with "The Financial Surveillance Department of the Reserve Bank". Investing overseas will now be far easier for South African businesses, as the current application process of exchange control approval before undertaking foreign direct investment will be removed for company transactions totalling less than R50 million per year. [These transactions must still however be reported, to ensure proper surveillance and supervision by the Reserve Bank]. In Manuel's 2008 Budget speech, he stated that exchange controls on institutional investors will be removed and replaced with a system of prudential regulation, involving quarterly reporting and monitoring of foreign exposures by the Reserve Bank For individuals who are South African residents, and 18 years of age or older, a single discretionary allowance of R500 000 per individual per calendar year, has been introduced. Should the person be 17 years or younger, the allowance is reduced to R160 000 per individual per calendar year. (for these purposes, an adult is defined as 18 years or older and a child as 17 years or younger). This new single discretionary allowance may be used for any combination of the following: Annual travel allowance; Annual gift allowance; Annual maintenance transfer; Donations to missionaries Note: This discretionary allowance is in ADDITION to the existing R2 million individual foreign capital allowance. The following requirements are still applicable: Single discretionary allowance requirements 1. foreign exchange can only be purchased within the 60-day period prior to departure from South Africa; 2. allowances are applicable per calendar year and may not be carried forward to the following year; 3. South African residents are required to return their unused foreign currency within 30 days of return; 4. If a trip is cancelled the foreign currency must be exchanged with an authorised dealer within 30 days of the cancellation; 5. Passport, air tickets or e-tickets, ID number, and proof of residence for individuals for FICA purposes, are still required when foreign exchange is purchased; 6. Existing FICA requirements for corporate travel are still applicable The shift in focus from exchange controls to prudential regulation / reporting, placing more emphasis on the role of the local banks (who will now be required to authorise such transactions) - will impact on the current functions of the Financial Surveillance Department of the Reserve Bank, resulting in greater responsibilities, monitoring and supervision. SECURITIES TRANSFER TAX (STT) The Securities Transfer Tax Act is effective from 1 July 2008 and applies to the transfer of listed and unlisted securities on or after 1 July 2008. This tax has been introduced to replace stamp duties and UST on securities with a single tax in respect of any transfer of listed and unlisted securities, and ensures that the rules governing both listed and unlisted securities are consistent. Securities Transfer Tax or STT is a tax levied on every transfer of a security at the tax rate of 0.25% to be applied to the taxable amount (for both listed and unlisted securities). A security in essence means any: Share in a company; Member's interest in a Close Corporation (CC); or Any right or entitlement to receive any distribution from a company or CC; To whom does it apply ie which securities are taxable: Only securities issued by the following are taxable(a) Companies incorporated, established or formed INSIDE the RSA and; (b) Companies incorporated, established or formed outside the RSA which are listed on a SA exchange The following tables provide some pertinent information relating to STT for listed securities (table 1) and for unlisted securities (table 2): TABLE 1 Taxable amount on which STT is payable Listed Securities Transfer effected by a participant: Purchase through agency of or from a member: or any other manner: the amt the consideration for which of the consideration for the the security is purchased. security declared by the person who acquired it or the market value determined acc to a specific rule if the consideration declared is less than the market value the member Who is liable? the participant When payable? on the 14th day of the month following the month during which transfers occurred TABLE 2 Taxable amount on which STT is payable Unlisted Securities The amount or market value of the consideration for the transfer of the security. If no consideration or its less than the market value, then the market value. If the security is cancelled or redeemed, the market value of that security immediately before the cancellation or redemption. the company which issued the unlisted security is liable the company may recover the tax payable from persons to whom securities transferred within 2 months from the end of the month in which transferred Note: Payment for both listed and unlisted STT must be made by using the SARS e-STT system (electronic payment). Revenue stamps or an impressed stamp may not be used. The Act also sets out certain exemptions, and provisions relating to interest and penalties for late payments. For what period must records be kept? Any company which issued unlisted securities and any member, participant or person to whom a listed security is transferred must keep for a period of five (5) years, records of every transfer to enable them to observe the requirements of the Act, and to enable SARS to be satisfied that those requirements have been observed. Who is liable? When payable? 2008 FILING SEASON Finance Minister Trevor Manuel officially launched SARS's 2008 Tax season on the 15th May 2008, at which time the following important dates were released; Employer submission dates 1 July 2008 29 August 2008 1 September 2008 21 November 2008 23 January 2009 Trusts 19 December 2008 20 February 2009 Exempt institutions Companies Deadline for manual submission Deadline for electronic submission 12 months after financial year end 12 months after financial year end New PAYE reconciliation process goes live (release of new software & new EMP501 manual & electronic forms) Deadline for PAYE reconciliations Filing season opens for individuals, trusts & exempt institutions Deadline for manual submission of individual income tax returns Deadline for electronic submission of individual income tax returns (eFiling) Taxpayer filing dates (individuals) Some of the major changes that Manuel confirmed for 2008 are the reform of the entire PAYE system - the focus being on the legal obligation of employers who administer payroll taxes - PAYE, SITE, UIF and SDL. These changes will effect the way in which employers submit their annual PAYE declarations to SARS, and the way companies issue IRP5 certificates to employees.The changes will ensure that tax return filing is made easier for individuals and to provide companies with free, convenient software for automated payroll reconcilations as well as technical assistance. Some points to note for individuals: SARS will not issue or mail any returns for taxpayers this year; Individuals must REQUEST a return from SARS and can do so from 1 September 2008; Employees cannot receive or submit their tax returns to SARS until employers complete their PAYE declarations to SARS; Certain individuals with income below R120 000 per year who have a single employer and source of income, and who meet certain criteria WILL NOT have to complete and submit a tax return to SARS SARS will provide individual tax returns in multiple official languages IMPORTANT NOTE The information contained in this newsletter is of a general nature, and may in certain circumstances be subject to misinterpretation. Consequently, we recommend that our advice be sought when acting upon the information contained herein. While every care has been taken in the compilation of this newsletter, no responsibility of any nature whatsoever shall be accepted for any inaccuracies, errors or omissions.
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