A pay component is one building block of an employee's pay: a named item that adds to or subtracts from what they are paid, and that carries its own rules for how it is taxed and reported.
What it means
Every component falls into one of four classes: earnings (salary, allowances, overtime, bonuses), deductions (PAYE, UIF, voluntary amounts), contributions (to retirement and medical funds) and fringe benefits (the taxable value of things like a company car). The class and the specific component determine how it is treated for PAYE, UIF and SDL, and which IRP5 source code it maps to.
Where it fits in
Payroll assembles each employee's pay from components every period. The earnings build gross remuneration, the deductions and statutory charges reduce it to net pay, and the contributions and benefits affect the tax calculation. The split into components is what structures both the payslip and the IRP5.
Key rules
- One named line of pay, in one of four classes.
- Classes: earnings, deductions, contributions, fringe benefits.
- Each component has its own PAYE, UIF and SDL treatment and source code.
- Components combine each period to build gross remuneration and net pay.
