Why does the National Treasury want to clamp down on payroll deductions? Essentially, the offering of payroll deduction services provides preferential treatment to certain beneficiaries, as their payments are processed before the remaining funds are transferred to the employee’s banking account.
Only thereafter are other creditors or service providers allowed to collect on the remaining available funds. Arlene Leggat, the president of the South Africa Payroll Association (Sapa), says there are cases where a person is required by a court of law to pay their debts but has no liquidity after all their payroll deductions.
“Employee deductions have created a nation of employed people who are living in poverty. In the absence of an appropriate regulatory framework for discretionary or voluntary payroll deductions, employees remain vulnerable and susceptible to potential exploitation by unscrupulous employers and service providers,” says Leggat.
In a recently published joint proposal by Sarb, there are three payroll deduction regulatory options: