When the employer pays PAYE it failed to deduct
Who carries the cost when a South African employer deducts too little PAYE or UIF, the offences involved, and the records SARS expects you to keep.
By Achekam · · 5 min read · For Running a business businesses in South Africa
An employee's salary changes, a bonus goes through on the wrong setting, or last year's tax table is still loaded in March. Nobody notices for months. When the mistake surfaces, the natural assumption is that the employee owes the missing tax, since it was their income.
SARS does not see it that way. In South Africa the person responsible for deducting employees' tax is the employer, and the shortfall lands on the employer. This article explains that liability, the offences that sit beside it, the register you must keep, and the controls Achekam puts in front of a pay run so that the wrong figures are harder to approve.
The shortfall is the employer's
SARS's employer guide says an employer who fails to deduct the full amount of employees' tax or UIF is personally liable for the shortfall. The same guide says employees' tax, UIF contributions and SDL must be paid to SARS within seven days after the end of the month in which they were deducted or became due.
Put those together and the position is plain. If PAYE of a certain amount should have been withheld and a smaller amount was, SARS can look to the employer for the difference. Whether the employer can later recover it from the employee is a separate question, and one to take up with an adviser rather than assume. The safe course is to get the deduction right the first time.
The guide sets all of this out in one place. SARS's Guide for Employers in respect of Employees' Tax (2027) covers the employer's duties to deduct, pay over and keep records, and it is the document to keep beside the payroll at the start of each tax year.
How under-deduction usually happens
None of these is exotic. Each one is a setting or a record, not a calculation error:
- The wrong year's tables. A new tax year begins each March, and a payroll still using the previous year's brackets and rebates deducts the wrong amount for everyone.
- An employee's details are wrong. A date of birth that is missing or mistyped changes which rebates apply.
- Irregular payments. Bonuses, commissions and back pay processed outside the normal run, or with the wrong treatment, are a common source of shortfalls.
- UIF left off. A new employee captured without UIF, or a contributor flagged as exempt by mistake.
When a mistake becomes an offence
SARS says it is a criminal offence for an employer wilfully or negligently to fail to submit EMP201 or EMP501 returns, to deduct or pay over PAYE within the prescribed period, or to deliver IRP5 and IT3(a) certificates to employees within the prescribed deadlines.
For UIF specifically, SARS's page on the Unemployment Insurance Fund says failing to deduct, withhold or pay UIF contributions to SARS, or failing to keep records, is an offence under Chapter 17 of the Tax Administration Act, punishable by a fine or imprisonment.
The words "wilfully or negligently" separate an honest error that is corrected from a pattern nobody bothered to fix. An employer that finds a shortfall, quantifies it and puts it right with its accountant's help is in a very different position from one that carries on with tables it knows are wrong.
The register SARS expects
SARS's employer guide says an employer must keep a register of each employee's remuneration, employees' tax deducted, UIF contributions and income tax reference number, for five years from the date the return is submitted.
That register is your defence when a shortfall is alleged. It shows what each person was paid, what was taken off, and which tax number it was reported against. Without it, you cannot show which months were right, and the argument becomes much harder.
Keep with it the payslips, the monthly declarations, and any working that explains an unusual month. A note written at the time ("bonus paid in the March run; treatment confirmed with the accountant") is worth far more than a reconstruction made during an enquiry.
Why Achekam will not run payroll on an unconfirmed table
In Achekam, South African PAYE, UIF and SDL come from a tax table stored as data, and a pay run is refused until a named person confirms that year's table. Achekam ships its payroll tax tables pre-loaded but unconfirmed, and no payroll run uses a table until a named person at the business confirms its own copy. Confirming creates that copy; the shared table stays unconfirmed for everyone else.
This is deliberately inconvenient. The most common cause of a payroll-wide shortfall is a table nobody checked, and the refusal forces somebody to look before the first run of the year. The shipped South African table is for 2025/26, so for the 2026/27 year the person confirming must check every bracket, rebate and threshold against SARS's published figures first. How to go about that check is set out in confirming the 2026-27 tax table.
A second person on every run
A pay run in Achekam is approved by someone other than the person who prepared it, nobody can approve a run that pays themselves, and an approved run is never recalculated. In practice this means a business needs at least two people in payroll roles to run payroll.
The approver is the check on the deductions. Before approving, they can compare each employee's PAYE and UIF with the previous month and ask about anything that moved without a reason: a pay rise, a bonus, a change of tax status. Because an approved run is not recalculated, a correction after approval is made deliberately in a later run, not by quietly changing history.
Once the run is approved, the amounts still have to reach SARS on time. The deadlines and penalties for that step are covered in EMP201 deadlines and late-payment penalties.
If you suspect a shortfall now
Work out which employees and months are affected, and how the error arose, before anything else. Fix the setting so the next run is right. Then sit down with your accountant to quantify the difference and agree how to correct it with SARS, keeping every working paper in the payroll register's file.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
