Payroll guide
Bargaining council payroll: the requirement most software ignores
If your industry has a council, its contributions and reporting formats are not optional. Very few payroll products handle them natively.
If your industry falls under a bargaining council, its contributions and reporting are not optional and they are not something most payroll software handles. This is the requirement that quietly rules products out.
What a bargaining council is
Bargaining councils are established under the Labour Relations Act for a particular industry and area. They negotiate collective agreements covering wages, conditions and benefit funds, and the Minister can extend those agreements to employers who were never party to the negotiation.
That last point catches people. You do not have to have joined anything. If your business falls within the registered scope of a council and an agreement has been extended, it applies to you.
What it means for payroll
Typically there are contributions to a provident or pension fund, a sick pay or benefit fund, a council levy, and often a holiday or leave enhancement pay arrangement. Some are employee deductions, some are employer contributions, and many are calculated on a base that is not simply gross pay.
There will also be prescribed minimum wages by job grade, and those are enforced. A payroll that pays below the applicable rate is not just a commercial problem, it is a compliance one.
The reporting is the hard part
Councils require returns in their own formats and on their own schedules, entirely separate from anything SARS wants. Some accept a spreadsheet, others require a specific file layout, and the layout is not always well documented.
This is where general payroll software falls down. It will calculate a custom deduction happily enough. It will not produce the council's return, which means somebody rebuilds it by hand every month.
How to ask the question properly
Do not ask a vendor whether they support bargaining councils. Almost everyone says yes, meaning they support custom deductions. Ask whether they support your council by name, and ask them to show you the return it produces.
The established South African payroll providers are considerably better at this than international products, for the obvious reason that no international vendor is going to build a return for a South African industry council.
If your software cannot do it
You have three options. Use a payroll product that handles your council natively. Use a bureau that specialises in your industry. Or accept a manual monthly process and make sure one named person owns it.
The third option is the most common and the most fragile, because it usually depends on one person and an undocumented spreadsheet. If that is where you land, at least write down how it works.
Backdated increases are the expensive surprise
Council wage increases are often agreed after the effective date, which means an increase announced in September may apply from July. You then owe arrears for every affected employee, and the council will expect them.
Ask a payroll provider how it handles a backdated increase across multiple employees and multiple months. Recalculating that by hand is where errors enter, and the council checks the arithmetic.
Common questions
01Which industries have bargaining councils in South Africa?
Many, including motor, metal and engineering, building and construction, road freight, hairdressing, contract cleaning and others. Scope is defined by industry and area, so check the registered scope rather than assuming.
02Do I have to comply if I never joined a bargaining council?
Often yes. Collective agreements can be extended by the Minister to non parties within the council's registered scope, which makes them binding on employers who took no part in the negotiation.
03Does payroll software handle bargaining council contributions?
Most will calculate custom deductions. Far fewer produce the council's own return in the required format. Ask about your specific council by name and ask to see the output before you buy.
Editorial note
This guide is general buying guidance and not accounting, legal or tax advice. Amounts and deadlines set by SARS change, so confirm the current figures for your own business before you rely on them.