Payroll often comes across as a necessary evil, a hurdle that organizations, much like your own, must overcome as they strive to grow. Undoubtedly complex, disconcertingly detailed and stressful due to time constraints and the consequences of failure, payroll management truly is not for the faint-hearted. To dispel your fears and help you see clearer through the payroll process, today we will answer 10 of the most asked global payroll questions.
With processes as complex as payroll, the answer to this question is nothing as straightforward as “No” or “Yes”, rather “It depends” would be the more accurate answer.
To begin, payroll taxes include taxes that employees and employers pay on salaries, wages, bonuses and tips. These taxes are levied on the federal, state and local levels, which means that different types of taxes apply. In some countries, payroll taxes are flat – which means that the tax is the same for everyone, regardless of income earned. In other countries, payroll taxes are progressive, which means that the tax rates change if certain conditions are met. In the island-nation of Mauritius, for example, employees earning less than 650,000 Mauritian Rupees per year are subject to a 10% income tax rate. On the other hand, employees whose earnings exceed this amount face a 15% tax rate.
In Kenya, one must consider the average and marginal tax rates. The latter is set at 31.4%, while the average tax rate is 15.8%. Any immediate new income is typically subject to this rate of marginal taxation.
No, not necessarily.
At first glance, it may seem to be the logical course of events, but in actuality, inflation and salary increases are motivated by different forces. Inflation is driven by the rise of product prices, such as groceries, gas and fuel. On the other hand, changes in salaries and wages are driven by spikes in supply and demand for labor as well as demographic trends. So while salaries and wages may rise slightly along with inflation, it is not likely that salaries will rise enough to fully counter the effects of inflation. Unless, that is, there are changes in supply and demand.
The reason why payroll management is so important has to do with the stakes at play.
On one hand, there is the employee experience. According to The Workforce Institute studies from 2017, 49% of American workers would begin a new job search if they had just two pay issues – a concerning number that does not bode well for employee retention. On the other hand, there are the consequences of poor payroll management: fines, legal troubles and a damaged employer reputation, all of which any company would be anxious to avoid. Proper payroll management is also important because of the sheer amount of data and variables involved in payroll calculations. One mistake or one oversight could cost a company dearly, whether that be in financial terms or by way of crumbling employee trust.
Not always. As mentioned previously, this depends on the country you find yourself in. But in a lot of countries, income taxes are progressive, which means that there is a certain threshold beyond which employees do pay more tax than others who do not earn as much.
This, of course, depends on the country your organization is in. But generally speaking, employers tend to contribute to their employees’ social security, health and pension funds or schemes. To get a better idea of the employer contributions in the African country you are interested in, feel free to get in touch with our team.
One thing to note about payroll mistakes is that they are costly. Should one or more of your employees encounter errors in their payslips, as an employer, you have a duty to correct them as soon as possible. To do that, you will first need to identify the origin of the mistake, whether that is an incorrect overtime calculation or an omitted bonus. Failure to correct the mistake expeditiously will result in disgruntled employees who will not trust in your organization. Worse still, these employees may choose to contact the authorities if the situation is not promptly seen to.
Yes, although it is a process rife with formalities.
“Payroll reversal”, as it is known, is the process of requesting a bank to cancel a deposit transaction into an employee’s bank account and retrieve the money that was first transferred. You may need to proceed with payroll reversal for different reasons such as a mistake in the amount that was transferred. If an employee is cooperative, this process may go smoothly. On the other hand, should an employee oppose the decision, the process may prove trickier and more time-consuming.
Such mistakes usually occur when companies use a manual payroll system, which is in and of itself error-prone. Companies that outsource their payroll management will usually not face such issues as these types of mistakes will not happen nearly as often.
A payslip is the document issued by an employer and in which employees are informed of their earnings and deductions for a particular pay period. Payroll, on the other hand, is the process of paying employees of a business, which includes keeping track of hours worked, figuring out salaries, and sending checks or direct deposits to employees’ bank accounts.
The term may sound intimidating, but a parallel payroll is a rather simple process. It simply entails running your previous payroll application side by side with your current application and comparing the outcomes. It is a way of verifying that the new application works properly.
Shadow payroll, often known as “expat payroll,” is a payroll system that is primarily employed when personnel are transferred on overseas assignments. Employers can report details about foreign-sourced compensation through expat payroll. For instance, if your business is situated in the USA and you have an employee in Kenya, establishing a shadow payroll there will ensure that you are in conformity with the regional income tax regulations. This implies that you can pay the employee using payroll services situated in the USA while fulfilling your tax and social duties in Kenya.
It goes without saying that a reliable, efficient payroll partner is an absolute necessity to businesses that wish to thrive during their expansion to African countries like Kenya, Nigeria and South Africa. As a major service provider trusted by over 300 companies, Africa HR Solutions provides your organization with top-of-the-line payroll services as well as the peace of mind that your payroll management is in good hands.
To learn more about what Africa HR Solutions can offer your company, get in touch with us.
Grant Geraghty is the longest-serving member of the Africa HR team. This resident subject matter expert and client champion is responsible for gaining a deep understanding of our clients’ unique HR needs in Africa and providing tailored solutions that align with their business objectives. Grant collaborates closely with our clients to ensure that their requirements are properly implemented, providing ongoing support and guidance throughout the process.
Grant brings a wealth of experience to his role, having served as Africa HR’s longest-serving employee. He holds a Bachelor of Commerce degree, with a major in Economics and Business Finance, from the University of Natal in South Africa. Additionally, he has completed a certification program in Payroll and Tax Administration from the University of Cape Town, further enhancing his expertise in HR operations and compliance.
His commitment to delivering exceptional service and his extensive knowledge of HR in Africa make him an invaluable member of the Africa HR team.
Kevina Takoordyal has a BA Hons Business Management from the University of Glamorgan, UK, with MBA in leadership and Innovation, MBA General, PMP Certified, and Agile Scrum Master. She currently works as the Head of Operations at Africa HR Solutions Ltd with more than 20 years of proven leadership capabilities in Operations, Business Development, People Management, Process Optimization, and Project Management in the Financial Services, BPO, Banking Industry, and Heath Care Industry. In Senior leadership roles with an international footprint across Europe working and extensive Pan- African experience from a compliance, finance, and operations angle, Kevina comes across with a panoply of cross-functional skills. Kevina also serves on a few Boards, Non-Independent Executive at MioD and for NGOs on a voluntary basis, a coach and mentor to aspiring female leaders across Africa and Mauritius.
Kevina is a firm believer in Servant Leadership with a strong focus and commitment to uplifting others, with the ability to deliver through a highly engaged – diverse team, and works towards consistently synergistic value creation. While being a focused and adaptive thinker and Kevina is actively participating in panel discussions on Innovation, CX, Digital transformation.
Kevina serves as Project Assessor for the National Youth upskilling program. She has been recognized as Global Talent in a few companies, Ceridian, and International SOS Ltd whereby she has been awarded a few scholarships and had the opportunity to be mentored by Senior Vice President in the US. Award Winner in various fields and at a national level and recognized including Super Achiever Leader Award in Africa in 2016, Awarded Africa Women Leader 2018.
Viloshna is an experienced finance professional with 18 years of expertise in strategic financial planning, financial analysis, cash flow management, systems and controls implementation, financial reporting, and continuous process improvements. She currently serves as Head of Finance & Business Support, where she has successfully automated and leveraged the financial reporting system capabilities to ensure efficient company operations.
Viloshna’s background includes senior roles in a multinational pharmaceutical company and a large listed Mauritian conglomerate. Her meticulous attention to detail and strategic thinking have streamlined financial processes, making her a valuable addition to any finance team. Viloshna is a qualified finance professional with an FCCA qualification and an MBA, bringing valuable expertise to any organization.
In her current role, Viloshna leads the company’s Treasury and Payments function, including the fulfillment of the company’s cross-border payments into Africa. With her strong educational background and extensive experience, Viloshna consistently demonstrates her ability to optimize financial operations, minimize risks, and improve profitability. Her expertise in financial reporting and process improvements make her a valuable asset to any organization.
A qualified lawyer who joined Africa HR Solutions in July 2020, Mark Du Preez has experience working in private practice for a reputable law firm in South Africa. He also played commercially focused roles at a leading private bank, wealth management company, and outsourcing firm in South Africa and Mauritius.
Mark has played a pivotal role in Africa HR Solution’s risk mitigation strategy, which positively impacted P&L performance over the years.
He currently leads the Partnerships function of the company including relationships and oversight with in-country partners (ICPs) across Africa.
Alex has more than 15 years of experience in the global, strategic development of both enterprise and consumer brands in categories including technology, transport, enterprise software, entertainment, and travel.
With experience in roles on both agency and corporate side, he has worked across international brands and has led the development and execution of multi-discipline campaigns across EMEA, NORAM and Asia Pacific.
His focus is on driving meaningful business impact through brand differentiation and building high-functioning, digitally oriented, and analytically driven capabilities. He is motivated by working with, and developing dynamic people, teams, and organizations.
He leads, manages, develops and mentors the Key Account Management department, including line management responsibility for the team of Key Account Managers and Key Account Administrator who represent the Company as the primary communication link between all relevant stakeholders, including clients, third party in-country partners and internal functions.
Originally from Mauritius, he holds bachelor’s degrees in International Business, Finance and Management from the University of Nevada, Reno.