Paying a South African employee who leaves
What a South African employer does in Achekam when someone leaves, from the final pay and leave balance to loan recovery, the UI-19 and the IRP5.
By Achekam · · 5 min read · For Running a business businesses in South Africa
When an employee resigns, retires or is let go, the last payslip is the one most likely to go wrong. It often includes amounts nobody has processed before (a leave pay-out, a pro-rata bonus, the balance of a staff loan), it is prepared in a hurry, and it is followed by paperwork that the former employee needs in order to claim from the UIF.
This article walks a South African employer through the exit in Achekam's payroll, in the order the work usually happens. It does not replace advice on what the employee is owed under their contract and the Basic Conditions of Employment Act; it covers how to get those amounts paid and documented correctly.
Final pay as variable inputs on the regular run
Achekam has no separate final-settlement pay run. The final pay goes into the regular run for the period, as variable inputs on that employee: the same place you enter overtime, commission, allowances, reimbursements and unpaid leave each month.
In practice, for the leaver you would enter:
- salary up to the last working day;
- any notice pay agreed or required;
- the value of accrued annual leave being paid out;
- any pro-rata bonus or commission owed;
- reimbursements still due.
Some exit payments need more than an input. Achekam's payroll calculator does not handle lump sums without a SARS tax directive, backdated pay or retrenchment packages: it returns warnings instead of figures. If the exit includes a severance package or another lump sum that SARS taxes by directive, apply for the directive first, then record and apply it on the run, as explained in applying a SARS tax directive in payroll.
As with every run, the person who prepares it cannot approve it, and nobody can approve a run that pays themselves. Variable inputs are frozen on approval, so get them right before the second person signs off.
Checking the leave ledger before the last run
Payroll keeps annual, sick, family responsibility and unpaid leave as a ledger, with leave accruing monthly. Before the final run, open the leaver's ledger and check three things:
- Accrued annual leave. Is the balance right up to the last working day, and have all leave days taken been approved and recorded? A forgotten week of leave taken last month changes the pay-out.
- Unpaid leave. Unpaid leave does not cut pay automatically in Achekam: payroll is warned and decides. Make sure any unpaid days in the final month are entered as a variable input.
- Pending requests. Decline or approve any leave requests still waiting, so the ledger reflects what actually happened.
Agree the final leave figure with the employee in writing before the run is approved. Disputes about leave pay are far easier to settle before the money moves.
Recovering an outstanding loan or advance
Salary advances and staff loans are recorded in Achekam and recovered from each pay run until repaid. When an employee leaves with a balance outstanding, the regular instalment will not clear it.
Decide how the balance will be settled before the final run: a larger deduction from final pay, a separate repayment arrangement, or a write-off. Check the loan agreement and take advice before deducting more than the agreed instalment, because deductions from pay generally need the employee's written agreement. Whatever you decide, record it, so the loan does not keep appearing on a payroll the employee is no longer on.
The UI-19 for the employee who leaves
When someone leaves, the employer declares the termination to the Unemployment Insurance Fund on the UI-19. The former employee needs it in order to claim benefits, so lateness here hurts them directly.
Achekam prepares the UI-19 for an employee who leaves from your payroll data, alongside the monthly UIF declaration and the COIDA Return of Earnings. It does not submit anything: a person files it and records the reference they were given. Note that the Department of Employment and Labour's E03 electronic file is not produced.
The Department of Employment and Labour publishes the gazetted UI-19 form that employers use to declare employee and remuneration details, including terminations, to the UIF by the 7th of each month. The wider UIF and COIDA routine is covered in UIF, the UI-19 and COIDA returns.
The leaver's IRP5
The leaver's tax certificate cannot wait for filing season. SARS says that under paragraph 13(2)(b) of the Fourth Schedule to the Income Tax Act, an employer must deliver the certificate within 14 days after employment ends, whether the person resigned, retired or died, and even if the EMP501 reconciliation has not gone in yet.
In Achekam, year-end IRP5 and IT3(a) certificates are prepared from issued payslips and download as PDFs. An IRP5 is issued where tax was deducted and an IT3(a) where it was not. Because these are the year-end certificates, decide now how the leaver's certificate will reach them inside those 14 days, and ask your payroll practitioner if you are unsure how to do it.
A certificate cannot be issued while the employee's ID number or tax number is missing. Check both on the leaver's record now, while you can still reach them; tracking down a former employee's tax number in the middle of filing season is much harder. How the year-end certificates and the EMP501 fit together is explained in IRP5, IT3(a) and the EMP501.
Paying the final amount and recording it
Each approved run has a payment schedule you can download as CSV. Marking the schedule paid only records that payment was made: Achekam moves no money. Pay the leaver through your bank as usual, then mark the run paid.
If the employee has asked for final pay to go to a new bank account, the change must be verified by a second person before it is paid. A last-minute bank change on a final payslip is a classic fraud pattern, so treat that check as essential, not as a formality.
An exit checklist
- Final pay inputs entered on the regular run
- Directive applied for and recorded, if a lump sum is involved
- Leave ledger checked and agreed with the employee
- Loan or advance balance settled or recorded
- Run approved by a second person
- Payment made and run marked paid
- UI-19 filed and its reference recorded
- ID and tax number confirmed for the year-end certificate
Work through the list the day the resignation letter arrives, not the day before the last payslip.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
