Update your employment contracts in January or prepare to face fines from the DoL and SARS

Simangele Mzizi, Fsp Business, 14 Jan. 2015

Tags: employment contracts, contracts of employment, updating employment contracts, how to update employment contracts

Now that you’re back at work, certain HR things are at the top of your to do-list. Getting your list right will ensure everything runs smoothly.

One of the things you must include on your list is updating your employees’ employment contracts. Sadly, many employers forget to do this. And because it’s a legal requirement, they face hefty fines from the Department of Labour (DoL) and SARS.

Don’t fall into the same trap.

Read on to find out how to update your contracts of employment so you can comply.

SARS and the DoL could fine you if your employment contracts aren’t up-to-date

When a new employee starts work, you know you must give him an employment contract. But, as time goes by, many employers don’t update the contract.
This is against the law and could expose you to fines from the DoL and SARS.
You see, every time your employee’s conditions of employment or even his title changes, you need to reflect this by updating the contract.
So how do you go about updating your contracts of employment?
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Look at the following clauses to update your employees’ contracts

1. SARS’ requirements
It’s not only the DoL you must worry about when it comes to employment contracts. SARS requires you to stick to certain requirements too. So make sure your contracts are in line with what SARS wants.
Experts behind the Practical Guide to Human Resources Management say when SARS carries out a payroll audit, it compares employment contracts to your payroll and your policies.
“If your contracts are at odds with the way you structure your employees’ pay, you’ll have SARS’ full attention. You and your employee could be liable for a fine and interest on the incorrect tax,” warn the experts.
2. Employee benefits
Benefits change often. So ask yourself if there were any changes in the past year when it comes to:
  • Your medical aid provider;
  • Provident fund contributions or provider;
  • Hours of work (for example, did you move from fixed hours to flexi-hours or now have employees who work the night shift?);
  • Company cars (for example, did you go from giving employees company cars to giving them allowances?); and
  • Remuneration structures (commission, incentives or increases)?
If you made any of these changes, record them in your contracts.
3. Changes in position
If some of your employees got promotions, you must record this in a new contract of employment.
Remember that the new employment contract must include a full job description of the position and the standards you expect from your employee.
4. Salary increases
You must reflect each salary increase in writing. Also make it clear how you structure remuneration.
5. Changes in employment law
Laws change all the time. Last year alone, amendments to the Employment Equity Act and the Broad-Based Black Economic Empowerment Amendment Act came into effect. And there was even an adjustment in wages for domestic workers.
That’s why you need to look at these changes and record them in your employment contracts if they affect your employees.
Here’s the bottom line: Giving your employees employment contracts when they start working for you isn’t your only legal duty. You also have a duty to update these regularly. Make sure you do this, this January to avoid the wrath of the DoL and SARS.
PS: These are only some of the things you need to look at to update your employees’ contracts. To find out the rest and get more information on drafting legally compliant contracts, check out the Practical Guide to Human Resources Management.

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