Salary Structure

Payslips: Valuing the total earnings

Loss of earnings and support claims are based on total earnings. Therefore, it is critical to provide the actuary with the claimant’s total earnings, as indicated above. Only providing the basic salary, gross earnings, total package or net salary results in the claim being undervalued.

Take note that the claimant may receive their basic salary but may lose out on allowances, bonuses, fringe benefits or variable income after the accident.

Allowances are usually consistent but may vary. Confirm the allowances with the employer.

Medical aid, and retirement benefits vary and there is no standard industry amount. Do not assume the actuary will know what the amount is.

Identify the employer contribution to medical aid, not the claimant’s contribution.

Specify both the employee and employer retirement funding contributions, as they are not always the same.

The basic salary is usually consistent but may vary. It may be lower in certain months due to shorter hours worked. Sick leave is usually a portion of the standard basic salary. In these cases, the basic salary and sick leave should be added together to estimate the standard basic salary. Confirm the average basic salary with the employer.

If the guaranteed bonus was not received in the month of the payslip date, it will not be indicated on the payslip. Fringe benefits are often excluded from payslips. Confirm all the bonuses and fringe benefits with the employer.

If possible, a single month’s earnings should not be used to estimate variable earnings. The best approach is to use a 12-month average (where the claimant worked in the same position).

Subsistence payments, reimbursements and loan type items may appear on the payslip but do not represent earnings.

What are Year-to-Date items / Statistical data on payslips?

Some payslips include a section that indicates earnings accrued in the current tax year. These are usually accumulated between March and the payslip date. It can be useful to calculate the average variable earnings, or identify benefits not mentioned in the current month’s earnings.

There is no standard format (e.g. taxable earnings could be basic or gross earnings), and not all earnings necessarily appear under the Year-to-Date section. These YTD figures should be used with caution.

Importantly, include complete, clear copies of all payslips and tax certificates used in your report.

Tax certificates: Valuing the total earnings

Tax certificates can be used to value total earnings for relevant tax years. Tax certificates are issued for individual jobs.

The income received section indicates all the earnings and adds up to gross earnings.

Common tax codes:

3601 - Income

3605 - Annual payment

3606 - Commission

3607 - Overtime

3615 - Directors remuneration

3701 - Travel allowance

3709 - Uniform allowance (non-taxable)

3712 - Telephone allowance

3713 - Other allowances

3714 - Other allowances (non-taxable)

3804 - Meals etc.

3805 - Accommodation

3806 - Services

3695 - Gross taxable annual payment

3696 - Gross non-taxable income

3697 - Gross retirement funding income

3698 - Gross non-retirement funding income

3699 - Gross remuneration

3801 - General fringe benefits

3810 - Medical aid contributions

4005 - Medical scheme fees (contributions)

4474 - Employer's Medical scheme fees (contributions)

3817/3825/3828 - Benefit: Employers Pension/Provident/Retirement Annuity Fund contributions

4001/4003 /4006- EE pension/provident/retirement annuity fund contributions

4472/4473 - ER pension/provident fund contributions

4475 - Employer’s retirement annuity fund contributions paid for the benefit of employee

Find the tax codes here