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Video: Understand the total package

Nov 16, 2018

If you are starting a new job or considering a change, you need to understand the implications of your new package.

Most employment contracts are done on a “cost to company” basis which includes things like medical aid, retirement funds, housing and travel allowance.

Depending on the types of benefits and how they are taxed, the same “cost to company” offer from two different employers may result in a different take-home pay.

You may leave an existing employer for a bigger “package” only to find out that your take-home pay remains the same.

However you also need to review the benefits. For example: one job offers a take-home pay of R30 000 whilst another only R27 000. In the first scenario, the company has no retirement or medical aid benefits whilst the second company contributes towards a retirement fund and life cover. If you had to provide for retirement and life cover from your R30 000 take-home pay you may find that the lower take-home pay scenario is actually more beneficial.

So how do you compare payslips?

  • Ask for a mock payslip to give you an indication of what you will be getting in your pocket. This will also help you understand the tax implications of any fringe benefits.
  • Try quantify the benefits offered by the new employer. These could include preferential mortgage rates, discounts on products, lower insurance premiums, buying at cost price, or low or no banking fees.
  • If offered a 13th cheque, this may come out of your cost-to-company package which means that your annual salary is actually divided into 13 paycheques.
  • Once you start with a new company, make sure that you check your first payslip. Is everything on there as it should be? If you do not understand an item on you payslip ask the HR department to explain.

Make your package work for you.


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Maya Fisher-French author of Money Questions Answered

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