Pay slip Employers contributions in S. Africa IRP5 report

In South Africa an employer should pay Unemployment Insurance Fund of 2%.
1 % is deducted from the employees salary, and
1% is a payable by the employer

I have set up the pay slip deduction and contribution items under settings.
I have an employee who earns 100 000
So the expected UIF contribution is as follows:
a. Employee contribution = 1000
b. Employer contribution = 1000
TOTAL = 2000

I have captured all these(Salary, UIF contributions)

When i draw the IRP5 report of this employee, the report shows the following:
Gross income = 100 000
Employee and Employer UIF contribution = 0.00 (the amount for this should be 2000

I tried to open the report to check why it is ZERO / 0.00
I found out that the system post or record the employee’s contribution as a +/positive amount,
and there after post the employer’s contribution as a -/negative amount.

May this computation error be corrected because the IRP5 is note correctly showing the contributions.

I have checked the income statement and balance sheet and found out that, expenses are correctly recorded as 2000 and the liabilities are recorded correctly as 2000.

So this show that the error is in the computation of the contributions on the IRP5 report.

This is a localisation feature, I think - hopefully someone on the localisation team can help

I think it’s just the report which has the error, as the UIF control account has the correct balance. I didn’t realise that this report had been added to Manager. It’s almost a pity I set up my companies before the localised report appeared. I must see if there’s a way to get it to work.

@pau and @Joe91

I have managed to sort out the problem and the IRP5 is correctly showing the total UIF contributions, and the expense and liability are showing the correct amount.

This is how i have solved it, even though i am not sure that is how the software was set up.

  1. I have put employee’s contribution as a deduction items.

  2. Added the employer’s contribution as pay slip earning items and also as a deduction item (initially i had set it up as a contribution item) so that the employee’s net pay is not overstated or understated.

That is correct. Something that is paid from funds otherwise owed to the employee is a deduction. In many jurisdictions, this results in lowering income tax payable by the employee, because the employee has effectively paid a mandatory amount rather than receiving money that can be spent.

This is not correct. The employer’s contribution should be set up as a contribution item. It is paid from the employer’s funds, not from anything the employee ever earned. But the accounting treats the contribution as both earnings and deduction. So it accomplishes the same thing you have done.

The fact that your report was incorrect is not the result of incorrect accounting, but of an apparent error in the localization report. You should not try to fix it by changing the accounting.

I am putting this topic into the bugs category so the report can be fixed.

@Panashe_Mlambo check this topic out.

You can make this work with existing businesses. You need to go to your Payslip Items under Settings tab and set correct Reporting Category for each payslip item. (also your country needs to be set to South Africa under business details).

Then this report will work retrospectively.

@Panashe_Mlambo has created and is maintaining this report so if there is an issue, he can improve it.

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I do agree with you on the accounting treatment. I was just desperate and thinking that there was something wrong i was doing on my side.

I will check the report, it should be adding the employee contribution and the employer contribution.

I have set the employer contributions as contribution Items.

Report Transformations
I am busy with some changes to the report but since there is someone who is using the report I might as well get some input from this forum.

A payslip contribution item is a positive amount while a Payslip deduction item is negative amount so when adding these 2 amounts the total will be 0

I have tried to use x Reverse Signs but the result is the same

Work around

I see why you have done so, effectively you have increased employee earnings by the same amount as the employer contribution and deducted the same amount which will increase your UIF contribution.

You will need to do the same thing for SDL to get it working.

Problem to be fixed - ability to add x Reverse Signs at Payslip Items settings page
@lubos - The challenge I am having is on adding the Contribution item and Deduction Item on the same line since they have different signs (one being positive and another being negative).

@Panashe_Mlambo OK, this is something for me to resolve.