Remuneration 101. We should make time to explain the terminology to our employees. Never take it for granted that they know what HR know.
Matshidiso Machetje
NPO Founder of Mohauwathuto Innovative Centre | Pioneering Disability Education | and Corporate Training. Committed to inclusivity, breaking barriers, and empowering change.
Basic Salary: Your "Basic Salary" is the amount you earn before any additional benefits such as medical aid, pension, and allowances are added to your salary. Your basic salary is the section of your salary that is fixed every month and would not include any bonuses or 13th cheque.
Cost to Company: This is a term used to calculate the total cost to the Company to employ you, in other words all the costs associated with your employment contract. This could include company contributions to Medical, Pension/Provident, UIF, SDL, group insurance etc.
Net Salary: This seems to be the one that people have the least problems with, as everybody is very much aware of the money that is paid into their bank at the end of the day. Your net salary is just that, it’s the amount you take home after all your deductions.
Tax: If you are a salary earner you are well aware that a certain amount of money is deducted every month for PAYE (Pay As You Earn). PAYE is levied on your basic salary and your fringe benefits. Your employer is obligated to deduct it from your gross salary and, in turn, pay it over to SARS.
UIF: This is another deduction that is standard across the board for all employees. All employers have to contribute 2% of their remuneration (1% from you and 1% from your employer) – each month. The Unemployment Insurance Fund (UIF) provides an income to workers who have become unemployed through retrenchments and dismissals and to those on maternity leave.
Medical Aid: This will depend entirely on the company whether they contribute to your medical aid or whether it is actually part of your package. These days medical aid contributions aren’t legislated but normally contributions are deducted before you get taxed. Keep this in mind, as it would make a huge difference if you are changing jobs and now find your new company doesn’t contribute to your medical aid and you have to end up paying that for yourself.