The legislative landscape of payroll management is constantly evolving as new trends come into play, and businesses need to be prepared to stay ahead of the game. While it can sometimes feel frustrating to have to keep up with the latest developments, taking a proactive approach will ensure that your payroll department is able to maximise efficiency and accuracy.
Many business owners, management teams, and payroll and HR professionals are worried about the upcoming legislative landscape in South Africa in 2023 because of possible unexpected surprises and obstacles.
2022 was another challenging year, presenting many new surprises, multiple interest rate hikes, and more activity than ever in the legislative arena as a rather revenue-hungry SARS looked for ways to close budget gaps.
In addition to the looming Budget Speech, here is what we predict will take shape in 2023.
Payroll teams eagerly anticipate the Finance Minister’s Budget Speech every February to learn about forthcoming PAYE adjustments for the upcoming fiscal year. Usually, these modifications simply require minor adjustments to payroll formulas. Beyond 2023, however, we should prepare for further profound changes as the government and SARS begin to advance long-delayed items on their agendas, one of which is national health insurance.
According to SARS’ ambitious Vision 2024, a more real-time system will replace personal tax filing season. Vision 2024 plans to pre-populate an “assessment” for the individual through a SARS app with third-party data from third-party returns, which will display near real-time tax liabilities.
Based on this information, employers may be required to withhold employees’ tax (PAYE). Employers will be required to change withholding tax as necessary, for instance, if an employee makes contributions to a personal retirement annuity policy or receives income from interest on a bank account. Although it’s unclear how soon this vision will materialise, payroll managers ought to be considering it already.
A Flexible Workforce
The workplace has undergone a significant transformation. With many people working remotely all or part of the time, hybrid work is here to stay. Many businesses are hiring remote workers from around the country and even worldwide. Additionally, many businesses are embracing more flexible work arrangements, such as hiring contractors and freelancers more frequently and providing more accommodating schedules for those looking for part-time work.
Even more, change is predicted by trends like the four-day workweek. Payroll and HR professionals will need to adjust their processes to accommodate a wider range of working models and everything associated with this trend.
The Salary Increase Expectation
In 2023, South African businesses anticipate increasing salaries by an average of 6.1% in an effort to recruit and retain workers in the face of high inflation and a competitive labour market.
According to a recent survey, which analysed 423 answers from across the nation, this year’s 6.1% increase is marginally higher than the 5.9% average pay budget increase for 2022.
The Implementation of Artificial Intelligence (AI) and Robotic Process Automation (RPA)
Payroll AI and RPA are still in their infancy, but some intriguing cases are already beginning to emerge. We can imagine AI being used in data validation and anomaly detection, assisting businesses in improving accuracy and quickly spotting potential fraud or mistakes.
RPA, on the other hand, could assist in streamlining manual procedures like collecting data from scanned documents. The “intelligent time” capture software is an illustration of this; it analyzes your calendar and past timesheets to pre-populate timesheet inputs.
Interest Rate Changes
The South African Reserve Bank (SARB) governor, Lesetja Kganyago, has already announced a 25 basis point increase in the repo rate on Thursday, 26 January 2023. This has taken the rate at which it lends to commercial banks to 7.25%.
The South African Reserve Bank (SARB) has already increased the repo rate by 25 basis points to 7.25%, and the prime lending rate has increased from 10.50% to 10.75%. This resulted from two Monetary Policy Committee members voting for a 50-point hike, while two others preferred a 25-point increase.
As a result, the SARS official rate of interest, as defined in Section 1(1) of the Income Tax Act 58 of 1962 (the Act), changes.
Economists are projecting that the recent interest rate hike may not be the last for 2023, but we’re all hoping that the lower increase in January is a sign that the Reserve Bank could be at the end of its hiking spell.
The Inclination Towards Cloud-Based Payroll
Moving out of conventional on-premise installations and towards a cloud-based payroll system is going to be an emerging trend. Cloud-based solutions provide an effective response to this problem and a way to manage distributed and hybrid workforces. The flexibility and scalability of cloud capabilities improve staff support.
Modern security procedures guarantee data protection and shield it from illegal access and breaches. Payroll management powered by the cloud enables secure, quick, and compliant payroll transactions between several states.
As the world of work changes, so too does payroll. Understanding these payroll trends can help you stay ahead of the curve and ensure that your organization is keeping up with best practices. Payroll will continue to evolve in response to changing needs and regulations, so it’s important to stay informed about the latest developments.