Earning a salary is not as simple as being paid the agreed amount offered by your employer at the end of the month. The reality many young people are quickly made aware of, is that there are a number of deductions made against their income.

But do they understand it?

According to the Basic Conditions of Employment Act (75 of 1997), funds may only be deducted from your salary if an agreement to do so has been signed and if your employer is legally allowed to do so.

Herman Lombard, founder and executive director at financial services provider African Unity, advises that you should regularly check your payslips to ensure that no unauthorised deductions are made.

“The usual compulsory deductions include tax and Unemployment Insurance Fund (UIF) contributions,” he explains.

“Pensions and medical aid contributions may also be included, as per your agreement with your company,” he says.

“Other deductions, which would be considered voluntary could include loans from your employer, donations towards a particular cause or even membership fees to the union you may belong to.”

Another deduction to be aware of is a garnishee, more formally known as an emoluments attachment order (EAO).

This is usually issued through the courts by a creditor to the employer, demanding that the employer deduct money from an employee’s salary or wage to pay debt.

In July 2017, the Courts of Law Amendment Act (7 of 2017) was signed into effect, so there is now a limit to the total amount that can be deducted from your salary, which is no more than 25% from your salary or wage.

What is the difference between a salary and a wage?

Your wage is based on the number of hours worked, at an hourly rate. It is likely that you would be paid on a weekly basis. If you earn a monthly salary, your gross salary is the amount of money you earn before deductions and any bonuses and benefits which may be added. Your net salary is the amount you receive after tax.


Payments from your earnings which your employer is responsible for deducting, by law, are UIF (unemployment insurance fund) and PAYE (pay as you earn). If you lose your job, go on maternity leave or become ill, you will be able to draw from the UIF which will offer short-term financial relief. Should you die, it will also provide some financial relief to your dependents. Both you and your employer contribute to this fund.

It is important to check tax and unemployment insurance deductions. You should also ensure that these deductions have been paid over to SARS and the Department of Labour, respectively, by looking at the IRP5 certificate issued at the end of a tax year.

Remember, you will be held liable along with your employer, if your taxes are not paid. You don’t want to risk not being able to claim UIF at a time when you need it most.

If your employer contributes towards a medical aid, a pension fund, income protection and a retirement annuity (RA), and these costs are deducted from your earnings, it will be taken into account when your PAYE amount is calculated. Funds paid toward a retirement annuity are deducted from your taxable income. As benefit, no tax is paid on RA investment returns.

Submitting tax returns

SARS states that the income amount above which individuals must pay tax for the period of 1 March 2018 – 28 February 2019 stands at R78 150 for income earners younger than 65 years of age.

Taxpayers do not need to submit an income tax return if their total employment income for the year before tax is not more than R500 000, they receive an income from just one employer for the full tax year, have no other form of income or other tax-related deductions to claim for.

In addition to understanding their payslips, Lombard urges young people to start planning and saving from the time they start working.

“It should be one of your top priorities at the beginning of your career. You should commit to save 20% of your salary each month that can go into a savings account or towards an investment.

He also advises being wise when it comes to choosing a bank and savings account.

“Part of planning involves doing your homework and finding out which bank has the lowest bank charges and best interest rate on savings,” he adds.

“Believe it or not, you will feel the difference in your pocket if paying high rates every month. This is money that could be saved or invested, so work smart,” he concludes.

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