A director of a company is a person appointed to direct and manage its affairs. For payroll, a director who also works in the business is treated as an employee, but their remuneration can be uneven, which complicates PAYE.
What it means
Executive directors often draw variable amounts during the year, with the final remuneration only settled later. This makes the standard monthly PAYE calculation awkward, so a directive can set the withholding basis. The director nature-of-person code (and the equivalent for a member of a close corporation) marks this status.
Where it fits in
The director classification sits in the nature-of-person setup and links to the director tax directive, which fixes how PAYE is withheld. It is distinct from a non-executive director, who is not employed in management and has different PAYE, UIF and SDL treatment.
Key rules
- An officer who manages the company, treated as an employee when working in it.
- Remuneration is often irregular, complicating monthly PAYE.
- A directive can set the PAYE basis for a director.
- A member of a close corporation is treated equivalently.
