Payroll errors, salary deductions

OWEN Kabanda.

SOMETIMES, as an employer, you find that when implementing new salaries for your employees, including new taxes and other statutory contributions, your payroll may just start giving errors.

The payroll errors are common especially in January when the systems are adjusted from one financial year to another to effect tax changes, salary increments, and other conditions of service.
While it is normal to have payroll errors, employees desire only one thing – being paid correctly what they have worked for.
As is known, section 2 of the Employment (Amendment) Act 2015 makes it clear that an employee is one who, in return for wages, enters into a contract of service, whether on full-time, part-time or temporary basis; or one who is engaged to do casual work.
As an employer, when you realise that there is a problem with salary payments, you need to quickly communicate with the employees, and this reduces anxiety and possible industrial unrest.
It is also important to understand that in Zambia, the way you treat over- payments, underpayments, and salary deductions requires that you are compliant with the labour laws.
Section 45 of the Employment Act, CAP 268 of the Laws of Zambia prohibits employers from making deductions on employees anyhow.
To this effect, bear the following in mind:
1. Payroll errors: When there are payroll errors, what you end up with is a situation where some employees receive more money while others may receive less than what is due and payable to them.
Once payroll errors are recognised, as a responsible employer, it is just a basic requirement that you communicate with the employees affected and start taking corrective measures.
For the employees you have underpaid, you recalculate and pay them the difference immediately or in the next payroll (if agreeable), as this is their money they worked for.
For the employees you overpay, know that the law allows you to deduct the amount paid in excess of what was due and payable to the employee.
To this effect, you can ask the employee to pay back immediately or make correct salary deductions in the subsequent months.
2. Statutory deductions: The aforementioned law also empowers you to deduct from an employee’s salary at source the pay as you earn (PAYE) tax, National Pension Scheme Authority (NAPSA) contributions, and personal levy payable to a local council as and when it falls due.
It is important that you are remitting to the relevant authorities the correct amounts you deduct from your employees.
3. Pension fund or any other fund or scheme: If you have a private pension scheme, you can also make deductions to employees to the scheme.
What is important for you to do is ensure that an employee agrees in writing to be part of the same and make contributions.
4. Damage to, or loss of, property in employee’s possession: You can deduct a reasonable amount for any damage done to, or loss of, any property lawfully in the possession or custody of your employee.
Remember, however, that such amounts and its deduction should be duly accepted in writing by the employee to avoid problems on your part.
Be further advised that, rather than using emotions and threatening workers, pass them through the internal disciplinary process so that you also give them an opportunity to be heard.
5. Shortage of money through negligence: You can deduct from an employee’s salary for any shortage of money arising through an employee’s negligence or dishonesty as long as such does not amount to a criminal offence.
Before you lose your temper and just go on deducting salaries, ensure that the due internal appropriate disciplinary process is followed.
Again, the requirement is that you should ensure that the employee consents to such a deduction in writing. You cannot just sit in your office and start deducting from an employee’s salary anyhow.
6. Repayment for a loan made by the employer: You can also deduct any amount agreed in repayment of a loan you gave your employee, at their request, for a purpose beneficial to them.
If the employee has not finished repaying you and they have separated with you, you have the right to deduct any outstanding amount from their terminal benefits.
7. Medical, education and other schemes: Sometimes in an organisation you may have a shared medical scheme, shared education scheme, and many other schemes that come as employee benefits.
Again, ensure that the employee has signed up to such schemes voluntarily in writing before you can start deducting their salaries.
Issues concerning overpayment or underpayment should be treated with the urgency they deserve and corrected accordingly.
If the employee is not performing or behaving as required, use appropriate disciplinary processes rather than deducting salaries as a punishment.
Remember that section 49 (1) of the Employment Act CAP 268 of the Laws of Zambia stipulates that employers shall not limit or attempt to limit the right of an employee to dispose of his wages in any manner which he deems fit.
Ensure that when employees work, they are paid timely and correctly to ensure a happy workforce that contributes positively to the achievement of set production or service delivery targets.
The author is a human resources and business advisor.

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