An employee is a person who works for an employer in return for remuneration, under the employer's control as to how, when and where the work is done. That control test is what separates an employee from an independent contractor.
What it means
Each employee is the level at which payroll is calculated: their gross remuneration, PAYE, UIF and net pay are worked out individually each pay period. How an employee is classified for tax, captured as their nature of person, determines which tax treatment and SARS source codes apply.
Where it fits in
Every payslip, IRP5 and UIF declaration is per employee. The employer holds each employee's tax number, banking details and pay structure, runs the calculation for the pay period, and reports the result both to the employee on a payslip and to SARS in aggregate on the EMP201.
Key rules
- Distinguished from an independent contractor by the degree of the employer's control over the work.
- Taxed through PAYE deducted by the employer, not by paying SARS directly.
- Classified by a nature of person code that sets the applicable tax treatment.
- Entitled to a payslip each pay period and an IRP5 after each tax year.
