How to win friends and influence people: Chapter 1

Another day in the life. I have only changed one word (somewhere in the last paragraph:).

Memo: To all Staff,

The recent transfer of our payroll to a new service provider has highlighted and made us aware of an error in the way that our previous system was calculating the tax payable by employees. This error has only affected staff who were on the company medical aid scheme.

The effect of this is that since March 2006 staff who are on medical aid, while they have been receiving the correct salary, have had less than the required PAYE amount deducted from their salaries every month and have therefore have been receiving an inflated cash amount every month. This will be evident if staff compare their February 2006 payslip to their March 2006 payslip. The gist of the system error is that the fringe benefit in respect of the company contribution to Medical Aid was not being recognised as taxable income as it should be. The unfortunate result is that staff with higher medical aid costs are most affected.

The payments now reflected now indicate the amounts that should be the net cash component. The result is that affected staff have had a cash benefit over the last 12 months which has now been corrected going forward.

No adjustment has been made in respect of the prior 12 month underdeductions and it is likely that the taxman will detect the underdeduction and the individual tax payer will have to pay the shortfall in the assessed tax for the 2006/7 year of assesment. Should this situation arise the company will assist employees if they receive a tax assessment and they have to pay the taxman the under deducted PAYE, in the form of a loan to the employees to be recovered over an agreed period of time.

On a more positive note - the March 2007 tax amounts have been calculated using the prior year tax tables. When the current year tax tables are applied this will result in a reduction of the tax payable amount which will be adjusted in your next payslip. The exact adjustment will depend on which particular tax bracket you fall into.

I must emphasise that the company has received no benefit as a result of this fuckup and that I am aware that this turn of events may place a unexpected burden on those so affected. I have personally reviewed and recalculated each payslip and while this has confirmed that the majority of payslips are correct a number of errors have been noted which have been forwarded for immediate rectification. If any staff member would like to discuss this with me I encourage you to call me directly at head office or on my cell.

Sincerely,...