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Thread: Employing Somebody - What to know?

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    Gold Member Mark Atkinson's Avatar
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    Employing Somebody - What to know?

    So the time has come for Red Giant to make its first hire. This is both an exciting and daunting time as the business starts to find its feet and expands.

    I would basically like to know from those who already employ full time employees - what do I need to know?

    Here are the facts:

    1. The employee in question is working with us while he learns our trade and, as such, won't be earning that much.
    2. He will be below the tax threshold - so I believe I don't need to pay PAYE on his behalf.
    3. I want to employ him with as little admin involved as possible.
    4. We will employ him on a 1 month renewable contract. Don't want to overcommit.

    So, some questions:

    1. Is there a standard employment contract that I should use? If not, are there any particular clauses that should be included that have helped you!
    2. Is there any way I can avoid having to pay UIF on the employee's behalf?
    3. Do I need to register the employee somewhere? (e.g. UIF) - if so, where and how?
    4. What documentation should I keep on record for the employee?
    5. Anything else I missed out? (Other compulsory deductions/contributions etc.)

    Apologies, I am a complete newbie when it comes to employment. I think I know the answers to most of my questions but some confirmation would be great.

    Thanks in advance.
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    Diamond Member Justloadit's Avatar
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    Hi Mark,

    My book keeper does all the necessary paper work on my behalf, so can not help you there.

    One thing though, and I stand to be corrected here, you can only renew a contract with out a break for no more than 2 times, in which case the person automatically becomes a full time employee. So be extra careful when drawing up renewable contracts.
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    Mark Atkinson (23-Apr-12)

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    Gold Member Mark Atkinson's Avatar
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    Thanks Justloadit. I'm sure somebody else will help on the bookkeeping side of things.

    That's a very interesting point regarding renewable contracts. Can anybody confirm or elaborate on that?
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    Diamond Member wynn's Avatar
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    Keep him as a contractor, he just submits an invoice at the end of every month and you pay him.
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    Gold Member Mark Atkinson's Avatar
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    Quote Originally Posted by wynn View Post
    Keep him as a contractor, he just submits an invoice at the end of every month and you pay him.
    I'm pretty sure that this will result in him being deemed to be a permanent employee - from a tax perspective at the very least. What are the implications of that?
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    Diamond Member Blurock's Avatar
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    These are only my personal views and needs to be confirmed by our HR fundis.

    If you intend employing the person with a renewable contract, one month will be too short as you can only renew twice. Six months may be better. If he does not perform in terms of the contract you can cancel the contract, which should also contain a service level agreement. (if you pay a contractor a fixed amount monthly, he is deemed an employee in terms of income tax and you will have to deduct PAYE)

    However, if you intend training him for a period, you can put him on probation for 3 months before agreeing to a full time employment only once he has completed his training a t a certain standard.

    Can the HR professionals help us out on this one?
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    Platinum Member Mike C's Avatar
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    As I understand it, the definition of an Independent contractor is that he/she does not spend more than 50% at the Employer's premises, does not use the Employers tools and works without supervision (meaning leave, setting targets etc).

    If they do not fit the definition then they become employees and you will have to pay all the legal requirements.

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    wynn (24-Apr-12)

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    Site Caretaker Dave A's Avatar
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    Here's an idea I've toyed with at times -

    Is it possible this "employment" could be construed as providing workplace experience? (at least initially).
    Has the prospect done (or in the process of doing) a related training course?
    The trouble with opportunity is it normally comes dressed up as work.

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    Gold Member Mark Atkinson's Avatar
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    It could be construed as such, but he there is no real "training course" for what we do. It's basically a whole bunch of reading and online tutorials. If that counts, then yes, he is in the process of doing a related training course.

    The best way to learn in our line of work is to actually work and learn from others around you.
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    Gold Member Singhms's Avatar
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    With regards to UIF as far as I understand from my accountant that handles my fast food store, all staff contract or permanent have to be registered for UIF. You as the business cc\pty will have to register for PAYE\UIF\SDL (even if you not paying PAYE & SDL it all goes on 1 form) and basically make a UIF submission every month (1% you pay, 1% employee pays deducted by you from employee salary).

    The reason why most accountants do the UIF submissions is basically because it falls under SARS as far as I understand! (My accountant does not handle my employee contracts only the UIF\PAYE\SDL submissions)

    Hope this helps with the UIF question!
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  13. Thanks given for this post:

    Mark Atkinson (26-Apr-12)

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