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Thread: TCE/Bonus Salary

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    TCE/Bonus Salary

    Hi, I am new on here and have a question RE TCE.

    My company decided in February 2008 that they were all going to change our salary packages to TCE and therefore the HR Manager came down to the Cape to go through all our new packages. Nothing really had changed as per previous salary. We were advised on Monday that due to the TCE only starting in March that our bonuses that were paid out on Monday have been done pro rata and therefore would only be 10 months and not 12 as people were expecting. Does anyone know whether a company can do this? I started paying bonus tax from January 2008 which they have given back on our December salaries but prior to this everyone who had choosen to have thier full bonus in December obviously were expecting this!!!
    Do you think the company is putting up smoke screens, at the end of the day they would have saved lots of money by not paying out those two months !!

    Thanks

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    Site Caretaker Dave A's Avatar
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    How are bonuses dealt with in terms of your employment contract?
    What is TCE an acronym for?
    The trouble with opportunity is it normally comes dressed up as work.

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    Total cost to employer (TCE). Effectively what they've done is that instead of paying you a lumpsum in December as 13th cheque, they've split the 13th cheque into 12 instalments, i.e. added a bit on to your normal salary every month, so no huge exit cashflow for employer at end of December. Also the fact that they've refunded you the tax for Jan & Feb 2008 in December 2008 is correct from an accounting entry point of view. Unfortunately one seldom remembers that you should keep aside the little extra in the paypacket each month to substitute your lumpsum December bonus. Rising living costs has made this practically impossible for that matter.

    Most companies have switched to this system (cost to company/no added value/cost to employer) so that prospective employees are also under no misconception as to any additional offerings of the employer.

    Keep in mind that a 13th cheque is NOT a condition of employment/right/entitlement and non-payment by an employer does NOT constitute unfair labour practice, even if the company has paid a bonus for the last 10 years. It's just good practice to at least warn your employees at least 6 months in advance not to expect a bonus at year end due to adverse eonomic conditions.

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    No they actually have not added onto my normal salary as I did not opt for that option, I wanted my full bonus at the end of the year and when the TCE was drawn up on an excel spreadsheet in Feb it was stipulated that way on the sheet and said I wanted my full bonus in December and we had to sign the new TCE deal as such. Like you say nothing was explained in Feb to say we will only be paid pro rata in December for the bonus until our bonus was paid on Monday and everyone was two months short . What are the tax implications for this at all as they would have had done my IRP5 as though I was getting a bonus?

    We amalgamated with another company during the year and we took on thier processes and the employees who work for the other company who were on TCE already got thier full bonues. This is what they advise in a mail:-

    - "for those staff who requested a bonus to be be paid to them in December, deductions from the salaries were only activated from March. Prior to March 2008 bonus were at the discretion of the company and were paid accordingly." -

    I was still getting bonus tax taken off in Jan, Feb and March and yes in Dec07 I did get a full bonus !! What they are saying is that they only decided in March they would pay a bonus when they did the TCE on our company. It does not make sense !!!

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    Site Caretaker Dave A's Avatar
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    Over-recovery of PAYE during the year to compensate for the effect of the bonus shouldn't affect your overall tax liability for a particular tax year. There would have been an IRP5 issued at the end of Feb 2008, probably another when the amalgamation took place and of course there will be another at the end of Feb 2009. As long as the IRP5s correctly reflect your income and tax paid via PAYE, it all works out in the end.
    Quote Originally Posted by Cape365 View Post
    - "for those staff who requested a bonus to be be paid to them in December, deductions from the salaries were only activated from March. Prior to March 2008 bonus were at the discretion of the company and were paid accordingly." -
    That kinda answers where I was heading - the bonus for Jan and Feb was discretionary. And perhaps in this instance, effectively nil.

    Maybe the solution is to bluntly ask - what was the discretionary bonus for Jan and Feb and when was it paid?
    The trouble with opportunity is it normally comes dressed up as work.

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    Thanks Dave,

    What they were saying is that any bonuses paid prior to March 2008 were at the dicretion of the company and paid accordingly ...... meaning that in December 2007 we all got our full bonuses as we choose at the beggining of 2007 and prior to that in 2005 and 2006 to have our bonuses paid at the end of December or into your salary on a monthly basis. This is the first year and blamed on the TCE package that they have not paid it fully !!!

    What they say is that Jan and Feb thier was no Bonus but as soon as they do TCE thier is a bonus even though my salary had bonus tax coming off in Jan and Feb 2008, which they kindly gave me back now

    Anyway it looks like I have to take this up with the MD of the company even though it will probably get me nowhere!!!

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    Site Caretaker Dave A's Avatar
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    I think your only hook is that you have been predjudiced by comparison to the people who were on TCE for the full year. It constiitutes unfair preferential treatment.

    If I was your boss, I'd counter that there were bound to be pay anomalies with a merger/amalgamation but they were addressed promptly and everyone can expect even treatment going forward

    Life isn't always fair.
    The trouble with opportunity is it normally comes dressed up as work.

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