Janine James

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Is the future of Robo-Bosses here?

A robot-driven future is closer than we think. According to Gartner’s “Top Predictions for IT Organisations and Users for 2016 and Beyond”, more than three million workers globally will have robo-boss supervision by 2018.

Initially performing monitoring and supervisory functions, these robo-bosses will eventually undertake logical staffing decisions. Also by 2018, there will be six billion “things” connected to the internet, seeking out other businesses and performing digital transactions, automating processes and providing a wealth of data to streamline, improve and enhance the way we do business. Of these six billion devices connecting to the Internet of Things (IoT) and generating data, two million of them will be health-and-fitness tracking devices that employees will be required to wear as a condition of employment.

While this not-so-distant picture of our future sounds intimidating and potentially scary for humans, it will have a positive impact from a business and personal perspective. While it will be hard for humans to adapt at first, the benefits will far outweigh the potential negatives.

Automation is imminent

It is our increasing acceptance of Artificial Intelligence (AI), both in the business and consumer sectors, that has coupled with the growing popularity of wearables to mould Gartner’s predictions for the IT realm, showing that AI is gaining a firm foothold in our lives.

Automation, analytics and the IoT have already begun to combine and usher in an age of total digitisation for business. Given that most organisations are customer-facing, whether corporate, retail or individual businesses, digitisation will have the effect of providing real-time information. This will be achieved through analytics, about what a user is doing on web and mobile channels, offering more information about the customer than what is already on record. Organisations will now be able to tell what the customer is thinking, obtain data about their experience, their behaviour and how they’re spending their money.

By adding automation to the mix, organisations can remove the need for manual human intervention in the consumer’s online activities. Through the creation of environments that are automatically aware of receiving these data points, it is possible for these smart systems to create next best action or next best offer. This could include providing customers with coupons and incentives to purchase, through the delivery of direct, targeted campaigns. In this way, businesses can benefit from being able to monetise data, increase revenue, boost loyalty, prolong retention and create a better customer experience.

For those industries that are not directly consumer-orientated, there will be massive benefits from automation, analytics and the IoT. One example is in industries like oil and gas, where upstream business processes occur that include an element of risk. Temperature and pressure sensors provide information about the environment and acidity of the oil which can be used to pre-empt breakages or failures. They can be used positively for just-in-time warehouse inventory and to alert management about the conditions of machinery, without the need for human intervention. Before a failure occurs, replacements can be ordered and implemented without breaking any component of the oil processing line. From that perspective, businesses can benefit from zero downtime, reduced costs and operations that are extremely efficient and reliable.

Our robo-future

In 2018 Gartner predicts that robo-bosses will have begun to infiltrate the workplace. At first, they will be doing simple things, like attendance checks and performance monitoring through certain sets of algorithms that observe activities and provide reports. Manual intervention will still be necessary as a human brain and touch cannot yet be replaced, but at the same time these robo-bosses will keep a close eye on activities and raise a red flag for behavior that is outside of the norm. When it comes to employee appraisals, the process will be similar. Based on activities, (such as sales-generation and lead-generation activities), all data can be sent through an algorithm to produce a performance index, which will deliver an accurate, if somewhat un-feeling, performance appraisal. In this way, robo-bosses will at first play a role of monitoring or supervision and the training process will be automated. Further on down the line? The possibilities are endless. We might see a robot replacing the CEO of a company.

It’s undeniable that this will impact on employee headcounts, and in some parts of the world this has already begun. In a Chinese factory, workers in a manufacturing plant have already been replaced by robots. While robot workers will increase efficiency for the business, there will be fewer jobs for humans. Even this has a positive aspect, given that the impact of robo-workers will be felt in industries that are hazardous and areas that are dangerous, such as minefields in war-torn countries that need to be cleared for human safety. Furthermore, it gives rise to upskilling, enabling employees to master a new skillset that results in self-development and improvement.

Wearing the future

Wearable technology is making an impact on our lives and these devices gather lots of data about the wearer. While it might seem invasive at first, these devices can be used for security purposes, much like access cards. They can also be used positively in hazardous environments like mining, to provide information about the location and health vitals of the wearer should an accident occur. The benefits to both employer and employee are so significant that Gartner predicts that wearing such a device will be a condition of employment for two million people by 2018.

The big question on everyone’s lips right now: what are the pros and cons of these data-driven, analytics-based technologies, from a human perspective?

The answer is simple. Right now, we’re surrounded by data. There are upsides to this. Data can be used to inform and automate our interactions with customers and transform our business processes. On the other hand, given the high volume of transactions taking place every minute, there is always the danger that these transactions can be hacked.   

Regardless of the pros and cons; generating data and leveraging it appropriately can provide information about a situation or environment, allowing it to be rectified. The pros far outweigh the cons, once we accept that harnessing the power of data is the future, in any industry.

Disclaimer: The views expressed in this post are mine and my employer does not subscribe to the substance or veracity of my views.

Rudraksh Bhawalkar is the Practice Manager, Analytics, Africa Region, Wipro Limited and Gavin Holme is the Wipro Limited’s Africa Country Manager.

Oh no! More employment regulation

Various entities, academics and commentators have stated that the employment arena is over regulated. Whether this is true is a debate for another day. Recently, in the case of AMCU and Others v Buffalo Coal Dundee (Pty) Ltd and Another (JA42/2015) [2016], the Labour Appeal Court held that where a mining rights holder is not the employer it too must consult with the trade union insofar as the contractor intends to terminate employees’ employment for operational requirements.

In the recent case of Mnyandu v Padayachi (AR162/2014) [2016], an employee (Padayachi) applied for a protection order in terms of the Protection from Harassment Act, No 17 of 2011 (Act) after receiving an email from a colleague (Mnyandu) which was circulated at their place of employment in which certain allegations were leveled against Padayachi and three colleagues. Padayachi alleged that his colleague had circulated an email which was ‘defamatory, slanderous, libellous, dishonest, deceitful and malicious’. He contended that by circulating the email, Mnyandu ‘impaired his dignity, defamed him, adversely affected his wellbeing and undermined his opportunity for promotion and financial benefit’ at his place of employment by fabricating unfounded claims against him.

Padayachi could have utilised the common law to institute a claim for defamation or requested the employer to take disciplinary action against Mnyandu for her conduct. Instead, Padayachi used the Act to found his claim. Padayachi contended that that this email constituted harassment.

The Magistrates Court determined whether the conduct, ie the email sent by Mnyandu constituted harassment.

In s1 of the Act “harassment” is defined as:

‘directly or indirectly engaging in conduct that the respondent knows or ought to know

(a)   causes harm or inspires the reasonable belief that harm may be caused to the complainant or a related person by unreasonably:

(ii)  engaging in verbal, electronic or any other communication aimed at the complainant or a related person, by any means, whether or not conversation ensues; or

(iii) sending, delivering or causing the delivery of letters, telegrams, packages, facsimiles, electronic mail or other objects to the complainant or a related person or leaving them where they will be found by, given to, or brought to the attention of, the complainant or a related person;

‘harm’ means any mental, psychological, physical or economic harm.’

The Magistrates Court found that the email sent by Mnyandu was sufficient to constitute harassment in the workplace. The Magistrates Court issued a final protection order against Mnyandu.

The Magistrates Court should have stated that the Act does not apply to the workplace and dismissed the claim. Rather, the Court stated that the Act applies in the workplace. As a result, employers and employees have to now contend with yet another piece of legislation applicable in the workplace.

Mnyandu appealed to the High Court. On appeal, the High Court overturned the decision of the Magistrates Court and ruled in favour of Mnyandu. Although, the High Court found that the Act was applicable at the workplace, it found that Mnyandu did not harass Padayachi.

The High Court confirmed that the Act can apply to the workplace and may be useful in the work environment. Accordingly, the Act and the issuing of a protection order in terms of the Act extends to the workplace.

Aadil Patel and Boipelo Diale, Employment practice and services, Cliffe Dekker Hofmeyr.

How to tax cellphones in the workplace

South African businesses depend on mobile phones, computers and telecom services to keep their businesses running smoothly. Depending on whether the devices are employer- or employee-owned – as well as who pays for airtime and Internet access – this reality brings with it a range of implications for payroll calculations as well as the employee’s take-home pay. 

In many cases, employers have adopted bring-your-own-device (BYOD) strategies to allow employees flexibility in choosing the devices and contracts that meet their personal and business needs. In this case, they might give employees a regular allowance for their costs or ask employees to claim their business expenses each month.

In other cases – though increasingly rare – employers take out the mobile or broadband contract in the business’s name and give employees access to a company-owned device. The payroll department needs to look carefully at each of these scenarios to ensure that the business complies with tax regulations with the least effort, cost and risk.

The basic principle is simple: the use of the employer’s mobile device, or the provision of a communication service such as the internet or a telephone service, is tax-free if used for business purposes, but the personal use is taxable. The difficult (and sometimes admin-intensive) part is separating personal from business usage so that personal use can be taxed as a fringe benefit.

Let’s look at how this works in practice.

Employer-owned devices

When the employer provides the employee with a device that is leased, rented or fully owned, personal use by the employee should be treated as a fringe benefit. The value of the fringe benefit is calculated as follows:

• If the mobile device is leased or hired by the employer, it is valued as the amount of the lease or rental payments.
• If the device is owned by the employer, 15% per annum of the lesser between the cost of the asset and the market value at the start of the period of use.
• If the employee is granted the sole right of the use of the device over its useful lifetime (or over a major portion thereof), the cost of the mobile device on the date on which the employee was first granted the right of use.

Employers may deduct any amount spent by the employee on the maintenance or repair of the asset as well as their work usage from the fringe benefit valuation. The good news is that if the employee uses the device mainly (more than 50%) for business purposes, there is no fringe benefit to declare.

Employer-provided communication services

When an employee has personal use of a communication service (home broadband, mobile internet, internet connectivity, voice lines etc.) provided by his or her employer, this should be treated as a fringe benefit. The initial value is the cost to the employer of providing the service.  

Again, the fringe benefit has no value if the service is used mainly (more than 50%) for business purposes. This also applies to personal use of a telecommunications service made available at work, for example personal calls made from the office using the employer’s fixed line service.

Employee-owned device and communication services

Employers generally compensate employees for business-related device expenditure by way of reimbursements (or advances) and allowances.

Reimbursement

– Reimbursements of business-related expenditure are not taxable if the expenses are incurred on the instruction of the employer, and the employee provides the employer with proof of the expense. In the case of mobile devices, the proof would be in the form of an itemised billing statement.
– The difficulty with the calculation of the reimbursement value of the business use of the mobile device is items such as free minutes and the fixed contract amount.

Here’s an example of a calculation that SARS will accept:

 Subscription: R600 per month (includes the mobile device and 500 free minutes per month)
 Total bill: R600
 February use: 150 minutes for business use, and 300 minutes for private use
 February business use value: R600 x 150 / (150 + 300) = R200

Thus, the employee may be reimbursed up to R200 tax free. If more than R200 is reimbursed, the excess amount above R200 is taxable and must be reported on the tax certificate against code 3713 (taxable allowance). A valid reimbursement for business-related mobile expenses is not remuneration and is therefore not used for the calculation of SDL or UIF.

Allowance

– If the employer is satisfied that the employee will incur business-related mobile expenses an allowance can be paid to compensate the employee for incurring the employer’s expense. The value of the allowance must be in line with the expected business use value. The allowance is remuneration and the full value is subject to PAYE, SDL and UIF.

– Furthermore, no deduction may be claimed against this allowance on assessment, even if the employee is paid mainly (more than 50%) by way of commission. If the employer reimburses the employee for business calls above the allowance value, then this portion of the compensation is treated as a reimbursement.

Closing words

Companies spend a lot of time considering the technical and accounting aspects of the ownership and payment models they follow for communication devices and services. However, the implications for the payroll should not be neglected if a company is looking at implementing a BYOD strategy or reverting to an employer-owned approach.  

As the global market leader of integrated accounting, payroll & HR and payment systems, we have become an indispensable business partner to the country’s Small & Medium Businesses. For us, this isn’t just about providing use the smartest technology to reinvent and simplify business accounting and payroll, but also helping clients to navigate the tax and legal environment. 

Rob Cooper is the tax expert and Director of Legislation at Sage HR & Payroll.

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