Success In the Payroll Management Business. Vincent Gabriel
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for the performance of services.
Responsibilities of the employee and the designation of duties.
Contracts of Services Characteristics
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Checklist of Items
Terms that should be included in the Employment Contract that affects the payroll. To avoid miscommunication between the employer and the employee the following should ne included:
1) Date of commencement of employment
2) Probationary period and the terms during and after probation
3) Salary of the employee
4) Annual increment
5) Any bonus
6) Other forms of allowances
7) Hours of work
8) Method of working
9) Any overtime pay
10) Other types of incentive payment e.g. attendance bonus
Implications of an Employment Contract
With the employment contract the employer has the following rights and obligations:
• The employee must give notice if he wishes to stop working.
Example 1
Mohan has been working in a restaurant for 6 months. He has accepted a higher paying job elsewhere. Mohan has to give his employer a notice period of one month as stated in his employment contract. He submits his letter on the 8th of May and his last day is 7th June. Payroll Guide: Salary is paid up to the last day of service, 7th June.
Example 1
Salary to be paid up to and inclusive of the last day of work
• The employee must carry out the duties that are assigned to him.
Example 2
John Pereira is employed as a driver of the company vehicles which includes saloon cars and station wagons. The company contracts off its delivery service to a third party. The company wants to keep John Pereira because his work performances has been satisfactory. Can the company assign John to drive the most senior manager’s Mercedes?
Patrol Guide: John’s salary continues at the same rate whether he drives saloon cars or whether he drives just one Mercedes limousine.
Example 2
Salary continues if employee carries out the duties assigned to him
• The employee must be diligent and honest.
Example 3
Tommy Tan is an excellent technician of Mercedes cars and his employer, a motor service agency has assigned him the task of scheduling the cars of valuable clients for service. Tommy accepts ‘under the table’ money and changes the schedules so that Mercedes cars of favoured clients are given priority.
Tommy Tan has no legal right to these payments, even if clients give them to him without him asking for them.
Example 3
Extra payments are not the legal right of an employee
Contract of Service
Differences between a Contract OF Service and a Contract FOR Service.
A Contract of Service is an agreement of EMPLOYMENT.
A Contract For Service is an agreement made between 2 parties.
One party may be an organisation and the other party, an individual who undertakes to perform a job, example paint the external walls of a building. The individual is not an employee as defined by the Employment Act.
An excellent example is YOU. You take on the outsourced job of payroll management. You are not an employee. You employ yourself.
If a dispute arises and the organisation fails to pay the individual, then the parties may refer their dispute to the SMALL CLAIMS COURT.
Example 4
The HR department wishing to provide refreshment to its employees during the morning coffee and the afternoon tea breaks contracts with Madam Lim Ah Soh. She is given a contract for service.
Example 4
Contractors for services are not employees and are not entitled to benefits given to employees
Madam Lim Ah Soh works very hard and provides drinks and food of a high quality. She puts in a full day of work from 9.30am when she comes in to make the coffee till 3.00pm when after serving the last cup of tea, she cleans the pantry thoroughly. As a result of her hard work, she is now asking for salary increase. She has been paid a flat fee of $2200 to prepare food and drinks for 52 employees. Can she claim an increase in salary?
ANSWER: No. From the start she was given a contract for service so she is NOT AN employee but a contractor for services.
Summary of Tutorial
A contract of employment is expected and should include
1) Date of commencement
2) Termination notice
The term salary is defined as ‘all remuneration paid to an employee for the work done in a contract of service’. (Employment Act)
Definition of Salary
The Employment Act has specified that the term ‘salary’ does not include the following:
• The price of accommodation including the use of electricity and water
• Medical expenses paid
• Provident fund contribution
• Travelling allowances
• Allowances of defray expenses while on duty
• Gratuity payable on discharge or retirement
• Retrenchment benefits
• Reimbursed expenses for payments made by the employee, e.g. to buy a ball of string to tie a pile of sticks.
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