A Pain in the Payroll:

Navigating the Complexities of Switching Platforms in the New Employment Equity Era

Switching payroll platforms quickly reveals unexpected hurdles: complex data migration, compliance requirements, and employee questions.
 

One of the most significant challenges — and costs — in switching payroll systems is the migration of biographic and financial data. Payroll data is sensitive, intricately calculated, and subject to strict audit and compliance requirements. Ensuring its accurate transfer without compromising integrity or breaching regulations is no small feat

Traditionally, South African companies have timed payroll system changes to coincide with the start of the new tax year in March- in other words, to “go live” in March. This approach minimises implementation costs by avoiding the need to migrate historical financial data.

The recent changes to Employment Equity (EE) legislation have scuppered this strategy. The new EE reporting period starts 1 September, and this period is compulsory for all designated employers with 50 or more employees.

The consequence is that a March “go-live” must include all financial data for the period from September to February to enable the payroll platform to automatically populate the prescribed EE submission forms.

The table below outlines the number of months of financial data required for different “go-live” dates. While March remains the optimal time to switch, it now requires 6 months of data migration rather than none.

The decision when to implement the new payroll system is now more complicated – one must consider the amount of data to be taken on, the current platform’s licence expiry, and operational considerations.

Axiomatic has recognised this difficulty (and the increased cost of implementing a payroll) and can offer clients various options:
  1. Capped data migration cost
    For all future implementations, Axiomatic will only charge for 6 months of take on data irrespective of the “go-live” date.
  2. Hybrid implementation costs
    To contain costs, Axiomatic can also offer hybrid solutions which include, inter alia:
  • No historic EE data migration. The Client will, however, have to use both the legacy and new systems to collate EE reports.
  • Limited financial data migration. Axiomatic will do a YTD take on it, and then the mid-year EMP501 submissions will be done via the legacy system or the new platform, and the year-end submission will be completed by the new platform.
  • Full data migration managed by Axiomatic, but the cost will be limited to a maximum of 6 months.
As can be appreciated from the above, the decision to change payroll platforms and providers has now become more complex. However, short-term problems can be solved, thereby ensuring that you run on a world-class payroll platform capable of addressing all your needs and requirements.

The Constitutional Court deemed this approach legally incorrect and impractical for several reasons:

If you are considering switching payroll platforms, we offer a free consultation to help you choose the optimal timing based on your unique needs, EE legislation, and licence renewal date.
For a free consultation, Contact Us.

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