Republic of Namibia Ministry of Finance GUIDELINE DOCUMENT FOR PAYROLL DEDUCTION CODE Table of Contents 1. DEFINITIONS... 2 2. OBJECTIVES OF THESE GUIDELINES... 3 3. OBLIGATORY REQUIREMENTS... 3 4. DEDUCTIONS ALLOWED FOR STAFF MEMBERS... 5 5. FURTHER REQUIREMENTS TO BE MET BY APPLICANTS... 6 6. GRANTING OF DEDUCTION CODES... 7 7. VALIDITY OF DEDUCTION CODES... 7 8. GUIDANCE TO DEDUCTION CODES... 7 9. BREACH OF THESE GUIDELINES... 9 10. TRANSITIONAL ARRANGEMENTS AND EFFECTIVE DATE... 9 09 March 2015 Page 1 of 9
1. DEFINITIONS In these Guidelines, unless the context indicates otherwise, a word or expression to which a meaning has been assigned in the Act, has the same meaning, and Accounting officer means a person designated as accounting officer by or under section 8 of the Act; The Act means the State Finance Act, 1991 (Act No. 31 of 1991); Debt means an amount of money owed and payable by a staff member to a deduction code holder; Deduction code means a code issued by the Permanent Secretary to entities that complies with the set conditions and requirements and is approved to participate as a deduction code holder; Deduction code holder means an entity to whom a deduction code has been issued and is notified in writing to the PDMS operator; Discretionary deduction means a personal loan repayment deduction or premium repayment deduction on the PDMS against a staff member s salary, other than a collective agreement deduction, a state deduction or a statutory deduction; PDMS means the Payroll Deduction Management Service provided by the PDMS Operator; PDMS Operator means the entity that make deductions in terms of this Guidance Note from staff members monthly salary payments in favour of Deduction Code Holders using a Payroll Deduction Management Service approved by the Ministry of Finance; Permanent Secretary means the Permanent Secretary of the Ministry of Finance; Staff member means a person as defined in the Public Service Act, 1995, (Act No. 13 of 1995); state deduction means a direct deduction against a staff member s salary for the payments, such as rent in respect of accommodation supplied by the employer and contributions to employee benefit funds, by a staff member; and Statutory deduction means a direct deduction against a staff member s salary, which is required or permitted in terms of a court order, or any law, or arbitration award. Page 2 of 9
2. OBJECTIVES OF THESE GUIDELINES The objectives of these guidelines are to: 2.1. set the terms and conditions applicable to participants to the payroll deduction system; 2.2. set limits to payroll deductions; 2.3. determine procedures for application 3. OBLIGATORY REQUIREMENTS 3.1. An entity qualifies to be considered to participate in the payroll deduction system if- 3.1.1. such entity is a financial institution licensed by Bank of Namibia and NAMFISA and is in is in good standing with (a) (b) (c) (d) the Receiver of Revenue; and the Social Security Commission; and the Bank of Namibia or NAMFISA; and the Financial Intelligence Centre; and 3.1.2. In addition to the good standing requirements referred to in subparagraph 3.1.1. such entity- (a) is not have been placed under curatorship, liquidation, judicial management, or given notice surrender its license; and (b) has 51 percent Namibian ownership of which 30 percent equity is owned by previously disadvantaged Namibian natural persons; and (c) is in possession of a valid Affirmative Action Certificate, issued in terms of section 41 of the Affirmative Action (Employment) Act, 1998 (Act No. 29 of 1998) or an exemption issued under section 42 of that Act, or proof from the Employment Equity Page 3 of 9
Commissioner that the bidder or supplier is not a relevant employer as defined in that Act; and (d) submits a copy of the Applicants auditors letter, not older than 12 months, indicating that the applicant is a going concern without a qualification by its auditors; and (e) submits particulars of the financial product or service, including all terms and conditions, fee structure of the product offered to staff members; and (f) undertakes that staff members will at all times be properly informed about the financial product or service, including all terms and conditions, fee structure of the product and that the staff member will be able to take a responsible decision before having entered into a contract; and (g) undertakes not to artificially split debt repayment obligations;and (h) must not transfer, cede, and allow any other entity including its holding company to participate directly or indirectly to use the Deduction Code granted by the Permanent Secretary. 3.1.3 such entity falls under the category of Statutory bodies such as Local Authorities, Regional Councils, a State-owned enterprise as referred to in the State-owned Enterprises Governance Act, 2006 (Act No. of 2006) and such other bodies that is owned or controlled by the Government, when engaged in any repayments for purposes of execution of their objects. 3.2 Provided that the condition under paragraph 3.1.2.(b) shall apply to new applicants for a Deduction Code. Subject to other terms and conditions, the current Deduction Code Holders may be considered if they make a further undertaking that they will be compliant within a period approved. Page 4 of 9
3.3 Provided further that holding companies of Applicant entity and all subsidiaries of such holding companies comply with the requirement set in this paragraph. 4. DEDUCTIONS ALLOWED FOR STAFF MEMBERS 4.1. Only the following discretionary deductions are allowed under the Payroll Deduction Code for Government staff members: 4.1.1. Loan repayments of a housing loan by a licensed banking institution that meets the requirements set out in these guidelines: Provided that the maximum annual finance charge rate shall not exceed the ruling Namibian prime rate; 4.1.2. Repayment of personal loan to licensed financial institutions that meets the requirements set out in these guidelines: Provided that the total cost of granting a loan must not exceed prime rate plus 2 percent per annum; 4.2. Short- and long-term insurance company shall qualify to be considered under the Payroll Deduction Code for Government staff members on condition that they comply with the paragraph 3 and 5 in these Guidelines. 4.3. A staff members minimum take-home pay, after all deductions, shall not be less than N$ 1 200 per month. Provided that the Permanent Secretary may review the said amount. Page 5 of 9
5. FURTHER REQUIREMENTS TO BE MET BY APPLICANTS Applicants must - (a) submit a duly completed application form (see attached) and proof of payment of the prescribed application fee; (b) allow that the Permanent Secretary: Ministry of Finance may obtain clarity on information about the applicant as and when required; and (c) undertake to submit to conditions set in the agreement between the Ministry of Finance and PDMS operator. 5.1. Application fee payable 5.1.1. Each applicant registered as a (a) money lender or micro-lender that meets the requirements set out in these guidelines must, when submitting its application form, pay a nonrefundable application fee in cash of N$1,000 (one thousand Namibia Dollars); (b) Short- and long-term insurance company, insurance broker and agent and other financial or non-financial service provider that meets the requirements set out in these guidelines must, when submitting its application form, pay a non-refundable application fee in cash of N$1,500 (one thousand five hundred Namibia Dollars); at any Office of the Receiver of Revenue in Namibia, where a receipt will be issued to the applicant. The receipt must accompany the application form. 5.1.2. Statutory bodies that apply for a Deduction Code are exempted from payment of an application fee. Page 6 of 9
6. GRANTING OF DEDUCTION CODES 6.1. Based on the information supplied by the applicant as set out in paragraph 3.1 above, the Permanent Secretary may consider the applications; 6.2. Should applicant meet all the requirements and submit all the information as set out in paragraph 3 and 5 above, the Permanent Secretary may subject to further special conditions, issue the applicant with a Deduction Code. 6.3. A Deduction Code is granted to a service provider for a specific financial product and service and not to a service provider for multiple financial products and services. This means that an applicant must apply for a Deduction Code for each product and service separately. 7. VALIDITY OF DEDUCTION CODES The Deduction Code shall be valid for a period of 36 months from the date that the Deduction Code was issued, and the holder may apply for renewal thereafter, upon submission of the information set out in paragraph 3 above at least two calendar months before the expiry of the Deduction Code. 8. GUIDANCE TO DEDUCTION CODES 8.1. Obligations of Deduction Code Holders 8.1.1. Each Deduction Code holder shall: (a) At all times fully comply with the terms and conditions of these Guidelines and the provisions contained in the Agreement between the Ministry of Finance and the of the relating to the PDMS Operator. Page 7 of 9
(b) Apply every 36 months for renewal of the Deduction Code upon submission to the Ministry of Finance annually the information set out in paragraph 3 and 5 above at least two calendar months before the expiry of the Deduction Code; (c) Ensure that only valid deductions are deducted from staff members salaries in each respective deduction month; (d) Communicate to the PDMS Operator well in advance of a monthly payroll run any agreed changes, such as increases, decreases or cancellations, in the deductions and ensure that the same is also communicated to the staff members. 8.2. Priority of Payroll Deductions Before any discretionary deduction may be processed, the following deductions take precedence (in order of priority): (a) State deduction; (b) Statutory deduction. (c) Collective agreement deduction Only after deductions other than discretionary deductions have been processed, a discretionary deduction may be considered, provided that the payroll deduction limit is not exceeded. 8.3. Payroll Deduction Limits and Order of Payment - 8.3.1. The processing of Deduction Code contained in the Agreement between the Ministry of Finance and the PDMS Operator applies by incorporation by virtue of the undertaking made by the applicant in its application; Page 8 of 9
8.3.2. A staff member s minimum take-home pay, after all deductions, shall not be less that N$1,200 per month; 8.3.3. The deductions will be processed in an order of priority, referred to in paragraph 8(2) above; 8.3.4. The onus of ensuring that the Payroll Deduction Limits are not exceeded rests with a staff member and the PDMS Operator. 9. BREACH OF THESE GUIDELINES Any non compliance with this Guidelines or terms of conditions constitutes a breach of conditions and the Permanent Secretary may withdraw or suspend the use the Code. 10. TRANSITIONAL ARRANGEMENTS AND EFFECTIVE DATE 10.1. A Deduction Code that was granted before the date of commencement of this Guideline continues for a period of six (6) months to be administered in terms of and governed by the conditions set in such approval, as if this Guideline has never been issued. Three (3) months before the end of the six (6) months period current Deduction Code holders must submit their application in line with this Guideline; 10.2. The Ministry of Finance will upload the Application on its website and the PDMS Operator s website. 10.3. Successful and unsuccessful applicants will be notified of the decision of the Permanent Secretary. Arrangements will be made by the Permanent Secretary for incidental matters. END Page 9 of 9