How Far in Advance Should I Plan for Payroll across Africa?
Mention normal payroll runs, different pay frequencies, tax seasons etc
Payroll appears deceptively simple from the outside: monthly pay with some set deductions and contributions that go out at regular intervals. But payroll is far from being as predictable as most people believe: even when pay goes out monthly or at set intervals, there are many surprises awaiting payroll teams along the way. Some of them can be planned for, while others must be dealt with on the spot. Even in such cases, preparation can save the day.
Here are some of the interruptions likely to occur, and how they determine how far in advance you should plan for payroll across Africa.
1. Different pay frequencies
While monthly payroll is the most common pay frequency, it is not the only one. Different industries, types of work, and countries may require people to be paid more or less often. In the agricultural industry for example, it is more common to pay workers every fortnight or even every week. In highly competitive industries like telecommunications, call centres may wish to pay their workers more often to attract and retain talent through payroll.
Naturally, organisations cannot simply decide one day that they will have fortnightly payroll runs and implement it the next. The right calculations have to be made, splitting the previously monthly salary into a bi-weekly one, while considering taxation, employee benefits and employee deductions.
There is also a cash flow consideration to account for.
Does your organisation have enough cash mid-month to pay employees correctly? More frequent pay cycles increase the need for planning around bank and religious holidays, (whether they are formally recognised or not), so that employees’ pay goes out on time, and is not held back because of administrative closures.
Typically, a payroll partner should be able to provide a payroll calendar that covers the entire year, with pay days clearly outlined.
2. Tax season (Corporate and personal)
Different African countries have different tax deadlines. For payroll, this matters. Tax season, whether corporate or personal, implies whole other sets of calculations, payroll data and administrative procedures. Meanwhile, employees still need to be paid while payroll providers handle the extra tax requirements.
Payroll providers often need to produce documents about the company’s total payroll expenditures, which includes pay, but also additional employee benefits, bonuses, and other allowances given out.
For personal tax season, payroll providers must calculate total emoluments for employees as well as any PAYE tax that is meant to be deductible.
This set of requirements adds up, and once again, this should be planned for at least a year in advance since dates for tax season are well-known. Compiling and sorting the right data throughout the year will help streamline tax season when it arrives.
3. Bonuses and other additional pay/benefits
Pay is not always the same from month to month. It can fluctuate, especially in industries that are commission-based or which require workers to work overtime hours. If employees have to go on business trips, for example, they may need to be paid a per diem. If an employee goes on maternity or paternity leave, they would need to be paid accordingly.
Some of these additional expenses can be accounted for in advance. For instance, organisations may learn, in time, what their peak seasons are and will know to plan and budget for them ahead of time.
Other instances such as an employee going on maternity or paternity leave are less predictable. Nonetheless, preparation is still required so that in such an event, the payroll team at least has a standard of procedure (SOP) in place, making the transition smoother at all levels.
4. Legislative changes
This is perhaps the most unpredictable aspect.
Laws can change without much warning across Africa. Even when employment and payroll experts carefully monitor these markets, legislative changes can come at the drop of a hat, requiring immediate action. In some cases, the changes don’t just apply from a specific date: they are also retroactively applicable. Meaning that payroll providers may need to adjust pay and make up for the difference in future payroll runs in order to comply with the law.
This kind of change is difficult to plan for. Having boots on the ground can help you be aware of certain legal changes before they are actually applied, but naturally, this is not a foolproof solution. Being ready for legislative changes, and having a team that can handle uncertainty and think on their feet are the main form of preparation for this kind of interruption.
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About the Author
Eddie van Zyl is an Africa payroll specialist at Africa HR Solutions with more than 15 years of experience in Sage 300 Payroll and HR across the continent. He writes on payroll operations and payroll trends in Africa.
Frequently Asked Questions
How Far in Advance Should I Plan for Payroll across Africa?
Payroll events fall into 2 groups.
Predictable ones, such as pay dates, tax deadlines, and seasonal peaks, should be planned at least a year ahead.
Unpredictable ones, such as legislative changes or an employee going on parental leave, cannot be scheduled, but they still call for preparation through standard operating procedures and a team that can respond quickly.
Can we change from monthly to fortnightly or weekly payroll?
Yes, but not overnight.
The monthly salary has to be recalculated into smaller payments, taking taxation, employee benefits, and deductions into account. You also need to confirm that your organisation has enough cash mid-month to pay employees correctly.
Why do bank and religious holidays matter for payroll planning?
Administrative closures, whether formally recognised or not, can hold back payments.
he more frequent your pay cycles, the more likely a pay date is to be affected. A payroll calendar covering the full year, with pay days clearly outlined, helps ensure employees are paid on time.
How does tax season affect payroll?
Tax deadlines differ across African countries, and both corporate and personal tax seasons add extra calculations, data, and administration. Payroll providers may need to report total payroll expenditure, including benefits, bonuses, and allowances, and to calculate employees' total emoluments and PAYE.
Because these dates are well known, planning a year ahead and compiling data throughout the year makes tax season far smoother.
What happens when payroll or employment laws change without warning?
Changes can take effect quickly and, in some cases, retroactively. This means payroll may need to be adjusted, with any shortfall made up in future runs. Local expertise helps you hear about changes before they apply, but the best preparation is a team that can handle uncertainty and act quickly.
