A deduction is any amount taken off an employee's earnings before they are paid. Deductions split into statutory ones the law requires and voluntary ones the employee agrees to.
What it means
Statutory deductions - PAYE and the employee's UIF - are compulsory and paid over to SARS or the UIF. Voluntary deductions, like a retirement fund contribution, a savings amount or a loan repayment, need the employee's consent. An employer may not deduct for things like damages or shortages without meeting strict legal conditions.
Where it fits in
Deductions are subtracted from gross remuneration in the pay run to arrive at net pay, and each appears as a line on the payslip. Statutory deductions flow into the EMP201 and the year-end IRP5; third-party deductions are paid across to the relevant fund or institution.
Key rules
- Split into statutory (PAYE, UIF) and voluntary (with employee consent) deductions.
- Subtracted from gross remuneration to reach net pay.
- The BCEA limits what an employer may deduct and requires consent for most voluntary deductions.
- Statutory deductions are reported to SARS; others are paid to the relevant third party.
