Hiring your first employee as a Financial Planner or Fiduciary Financial Advisor is a significant milestone for your firm.
However, it comes with various compliance obligations that you need to understand and fulfill to avoid legal pitfalls.
This guide will walk you through the key compliance requirements to ensure a smooth and lawful hiring process.
Understand Employment Laws
Labour Laws
Familiarize yourself with South African labour laws.
These regulations cover minimum wage, overtime pay, worker classification, anti-discrimination policies, and more.
The Basic Conditions of Employment Act (BCEA) and the Employment Equity Act (EEA) are essential starting points.
Financial Sector-Specific Regulations
Understand industry-specific regulations that apply to financial planners, including the Financial Advisory and Intermediary Services (FAIS) Act.
Ensure your firm adheres to compliance standards set by the Financial Sector Conduct Authority (FSCA).
Worker Classification
Correctly classify your worker as either an employee or an independent contractor.
Misclassification can lead to penalties and back taxes.
The South African Revenue Service (SARS) provides guidelines to help determine the appropriate classification.
Obtain an Employer Reference Number (EMP201)
Register for an EMP201
Before hiring an employee, you need to obtain an Employer Reference Number (EMP201) from SARS.
This unique number is used for tax reporting purposes.
You can apply for an EMP201 online through the SARS eFiling system.
Set Up Payroll System
Payroll Taxes
Set up a payroll system to manage employee wages, taxes, and deductions.
You are responsible for withholding Pay-As-You-Earn (PAYE) tax, Unemployment Insurance Fund (UIF) contributions, and Skills Development Levy (SDL) from your employee's paycheck.
Payroll Schedule
Establish a payroll schedule that complies with South African regulations.
Ensure timely and accurate payment of wages to your employee.
Professional Payroll Services
Consider using professional payroll services tailored for financial firms to ensure accuracy and compliance.
Employee Forms and Documentation
Employee Declaration (IRP5)
Have your employee complete a declaration to determine the amount of PAYE tax to withhold from their paycheck.
Employee Contract
Complete an employment contract outlining the terms and conditions of employment.
Include clauses specific to the financial planning industry, such as confidentiality agreements and compliance with FAIS.
Keep this contract on file for each employee and be prepared for potential audits.
Register for Unemployment Insurance Fund (UIF)
UIF Registration
Register for the Unemployment Insurance Fund (UIF) with the Department of Labour.
You will need to pay unemployment insurance contributions based on your employee's wages.
Specific Requirements
Check for any specific requirements regarding unemployment insurance and ensure compliance with all applicable regulations.
Workers' Compensation Insurance
Obtain Coverage
Obtain workers' compensation insurance to cover medical expenses and lost wages if your employee gets injured on the job.
This insurance is mandatory in South Africa.
Compliance
Ensure your coverage meets national requirements and maintain proof of insurance to avoid penalties.
Post Required Notices
Labour Law Posters
Display required labour law posters in a visible location within your workplace.
These posters inform employees of their rights and protections under South African laws.
FAIS Compliance Notices
Post notices related to compliance with the Financial Advisory and Intermediary Services Act to keep employees informed of their obligations and rights.
Regular Updates
Keep these posters up-to-date with the latest regulations to remain compliant.
Develop Employee Handbook
Company Policies
Create an employee handbook outlining company policies, procedures, and expectations.
Include sections on workplace conduct, anti-discrimination, and harassment policies.
Compliance Policies
Incorporate compliance-related policies such as leave entitlements, health and safety guidelines, and reporting procedures for workplace issues.
Financial Planning-Specific Policies
Develop policies specific to the financial planning sector, such as ethics guidelines, continuing professional development (CPD) requirements, and client confidentiality rules.
Report New Hires
UIF Reporting
Report your new hire to the Unemployment Insurance Fund (UIF).
This information is used for social security and other legal purposes.
SARS Requirements
Ensure compliance with any additional SARS reporting requirements for new hires.
Provide Mandatory Benefits
Health Insurance
Depending on the size of your firm, you may be required to offer health insurance to your employees under South African health and welfare regulations.
Retirement Plans
Consider offering retirement plans, such as a provident fund, to attract and retain top talent.
Ensure that your plans comply with the Pension Funds Act (PFA).
Stay Updated on Compliance Changes
Continuous Education
Stay informed about changes in employment laws and compliance requirements.
Regularly review legal resources and consult with HR professionals or legal advisors.
Training
Provide ongoing training for yourself and your management team on compliance-related topics to ensure your firm remains up-to-date with current regulations.
Financial Planning-Specific Training
Ensure your staff receive training specific to financial planning, including updates on FAIS regulations, investment advice standards, and ethical practices.
Get Started Today
Ready to hire your first employee and ensure compliance with all regulations?
Contact us today to learn how we can help you navigate the complexities of hiring and compliance.
Whether you need assistance with payroll setup, employee documentation, or compliance training, we’re here to help you succeed.
See our membership pricing plan.
Let’s build a compliant and successful team that drives your firm’s growth!