Final pay for an employee who leaves
How a South African payroll bureau processes a leaver's final pay: leave due, loans owed, the UI-19, and lump sums that need a SARS directive.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa
A resignation usually reaches the bureau as a two-line e-mail from the client: a name, a last working day and a request to do the final pay. Behind those two lines sit half a dozen questions the e-mail does not answer. How much leave is still due? Is anything outstanding on the advance the employee took in the winter? Is there a notice period being paid out or worked? Is anything being paid as a package, and if so, has anyone asked SARS for a directive?
Final pay is the one payslip an employee is sure to scrutinise, often with a labour adviser or a union official beside them, and the one the employer cannot easily fix afterwards because the person has gone. This article sets out how a South African bureau should handle it in Achekam.
Final pay goes through the regular run
There is no separate final-settlement pay run in Achekam. Final pay goes in as variable inputs on the employer's regular run, alongside everyone else's pay for the period.
That shapes the timing. The leaver's final pay is calculated, reviewed and approved with the rest of the run, so the bureau needs the client's leaving instruction before the run's input cut-off. A resignation that arrives after the cut-off either waits for the next run or needs an agreed exception with the client.
Ask the client for a leaving instruction that answers, in writing:
- The last working day, and the reason for leaving.
- Whether notice is being worked or paid out.
- Any amounts still due: overtime, commission, outstanding claims.
- Any amounts the employee owes the employer, under a signed agreement.
- Whether any severance, ex gratia or other lump sum is being paid.
- The employee's personal e-mail address for the final payslip.
Leave pay due
Achekam keeps leave as a ledger of accruals and days taken, using the Basic Conditions of Employment Act minimums as a floor that the employer may raise. The ledger gives the leaver's balance at the last working day, built from each accrual and each day taken, not from a figure someone remembers.
Before converting the balance into pay:
- Make sure all leave taken has been captured. A leave day taken in the final weeks but never recorded inflates the payout.
- Check the employer's policy and the contract against the BCEA for what must be paid out on termination, and confirm the treatment with the client.
- Have the client confirm the balance in writing. It is the figure most often disputed later.
The leave pay then goes onto the regular run as a variable input. How the ledger itself is kept is covered in keeping leave balances for clients' staff.
Loans and advances still owed
Salary advances and staff loans are recorded and recovered from each pay run until repaid, and advances and loans are recovered from later runs. When an employee leaves, there are no later runs after the final one, so any balance is either recovered from final pay or remains a debt owed outside payroll.
Do not recover the whole balance from final pay on assumption. Check the signed loan or advance agreement for what it says happens on termination, confirm with the client what it wants to do, and record the instruction with the final pay working. If the final pay is not enough to clear the balance, the client must decide how to pursue the remainder.
The UI-19 for the leaver
Achekam prepares the monthly UIF declaration, UI-19 forms and the COIDA Return of Earnings from payroll, and a person files each one and records it. For a leaver, the UI-19 is the document the former employee will need if they claim unemployment benefits, so a late or wrong one causes real hardship.
The Department of Employment and Labour's own electronic file format, the E03 file, is not produced. A person at the bureau or the client submits the information through the Department's channels and records the reference in Achekam.
The Department publishes the gazetted UI-19 employer's declaration form, which employers use to declare employee and remuneration details to the UIF, including new appointments and terminations. Compare Achekam's UI-19 against it the first time you file one for a client, and check the termination reason in particular. The broader routine for these returns is in UIF declarations, UI-19s and the COIDA return.
Retrenchment packages and directives
This is where final pay most often goes wrong, and where Achekam deliberately stops short. On South African payroll, each run works out gross pay, PAYE, UIF and SDL per employee, but the calculator does not handle lump sums without a directive, backdated pay or retrenchment packages, and returns warnings instead of figures.
SARS tax directives (IRP3) can be recorded and applied to a run, as a lump sum taxed at the directive's amount or at a fixed percentage. So the working order for any severance or similar lump sum is:
- The client decides the package, with its labour adviser where needed.
- The directive application is made to SARS, and the bureau waits for the directive.
- The directive is recorded in Achekam and applied to the final run.
- The preparer reads every warning on the run; the approver checks the lump sum against the directive.
Never put a lump sum through without the directive simply because payday is close. The limits of the calculator, and why it returns warnings rather than guesses, are covered in what the payroll calculator will not work out.
After the final run
Achekam produces each payslip as a PDF and e-mails it one person per message, with a record of every send. A client's employees have no login, so the final payslip reaches the leaver by e-mail only. Send it to the personal address collected in the leaving instruction, not a work address that closes on the last day.
At year end, Achekam prepares IRP5 and IT3(a) certificates from approved runs, and a certificate is numbered and frozen only when SARS's required details are present. Check now that the leaver's ID and income tax numbers are on record: it is much easier to ask while the person is still in the building.
Year end is not the leaver's deadline, though. According to SARS, paragraph 13(2)(b) of the Fourth Schedule requires the employer to hand over the employee's tax certificate within 14 days after employment ceases, on resignation, retirement or death alike, even before the EMP501 reconciliation is submitted. Settle with the client who delivers that certificate, and by when, as part of the final-pay instruction.
Turn the six questions in the leaving instruction into a form, send it to every payroll client, and refuse to process a final pay until it comes back complete.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
