With the end of the year in sight companies face the administrative burden of making the complex calculations related to determining the correct leave pay due to employees.
The Basic Conditions of Employment Act (BCEA) sets out the legal structure of all employment contracts and the rights of employees to ensure they are fairly treated in terms of annual leave and severance or notice pay.
To assist companies process leave applications, payroll and HR software specialist Sage Pastel Payroll & HR has developed a Self Service online leave planning tool that enables employees to apply online for leave and for payroll administrators or human resource managers to approve the application via the internet.
Once the person managing the payroll and HR system approves the employee’s leave application, all leave details and changes are reflected on the desktop payroll solution, eliminating manual recapturing. “It promotes efficiency, is convenient for both employers and employees and provides an online audit trail that eliminates the need for costly, space and time-consuming paper files,” says Philip Meyer, technology director at Sage Pastel Payroll & HR.
“Employees can apply for leave from anywhere and payroll administrators or small business owners can approve it from anywhere. A mobile application also allows employees to apply for leave using an Android smart phone,” says Sumay Dippenaar, marketing manager at Sage Pastel Payroll & HR.
Many of the calculations for leave pay are quite complex and arriving at the correct allocations manually or on spreadsheets is time consuming and prone to error.
The BCEA aims to achieve a situation where leave pay is fully representative of individual employees’ actual earnings. The calculations have to take into account variable income types and must be based on the average earnings of each employee over the 13 weeks preceding the date upon which leave becomes effective.
“There are many elements that affect the calculations such as overtime, commissions, allowances and other payments,” adds Meyer. “The bottom line is that they lead to fluctuating income so each employee’s income has to be calculated individually. It can be a nightmare to execute this manually or on spreadsheets.”
Automated payroll and HR software retains detail of all of the variable income paid to each employee so that the calculation for the average income over the 13 weeks preceding the leave is not only accurate but is immediately available.
“Circumstances may lead to some employees benefiting from higher variable earnings during the three months prior to the leave date. For example accounting staff may take leave when company financial year-end audits are completed, thereby benefiting from the overtime payments they may have received during the preceding 13 weeks,” says Meyer.
Similarly, people employed in the construction industry which usually shuts down in mid-December, are also likely to have worked overtime to ensure contracts are completed before shut-down and therefore their leave pay calculations will be affected.
“In consultation with management, payroll administrators can establish parameters that the software will automatically follow so that calculations of average earnings are always consistent with the requirements of the BCEA and fair to all concerned.”
Users of automated payroll and HR software also benefit from the fact that the software developers monitor amendments to the BCEA and provide updated versions whenever new legal requirements are promulgated.
“The automated payroll and HR software therefore always operates in full compliance with the Act, ensuring also that the BCEA leave payments are not subject to basic finger trouble, interpretation or even fraud,” adds Meyer.
In addition, automated payroll and HR software solutions offer functionality that enables the user to give the entire company an increase, based on either a set value or a specific percentage as well as process a production bonus or commission using only one screen. This not only saves time, it allows global changes to be made to any transaction within the payroll system for all, or a selection of employees.
View a short video on leave and bonus: http://www.youtube.com/watch?v=oGQ-mIHBHGk