[South Africa] Govan Mbeki Municipality seeks approval for R4.3m payroll error write-off

In South Africa, Govan Mbeki Municipality is seeking approval to write off more than R4.3m in overtime overpayments after an incorrectly configured formula in its Payday payroll system led to employees receiving the wrong rate for Sunday work, Ridge Times reports.

The report was tabled during an August 26 council meeting. It stated that the municipality had identified cumulative overpayments of R4.3m relating to Sunday overtime processed during the 2024/25 financial year.

The Auditor-General of South Africa (AGSA) reportedly identified the issue during its audit of the municipality’s 2024/25 annual financial statements.

According to the report, the Payday system had been incorrectly configured when it was initially implemented and failed to distinguish between employees who ordinarily work on Sundays and those who do not. 

This distinction is required under Section 16 of the Basic Conditions of Employment Act.

Ordinarily, employees who work on a Sunday are entitled to double their normal wage for each hour worked. Those who usually work on Sundays must be paid one-and-a-half times their normal wage.

The formula error meant that certain Sunday overtime payments were automatically calculated at the wrong rate.

The overpayments reportedly impacted around 3,058 overtime payment transactions across the municipality. However, the exact number of individual employees affected will be confirmed through a detailed payroll reconciliation.

The municipality confirmed that there was no evidence of employees submitting fraudulent overtime claims or manipulating the payroll system.

The report stated that the affected employees had performed approved overtime duties and received payments calculated automatically by the payroll system.

The municipality subsequently corrected the incorrect Sunday overtime formula in November 2025, in consultation with the Payday service provider, and received written confirmation from the service provider that the correct payroll parameters had been configured.

In addition, the municipality has revised its system-change delegation framework, requiring that payroll configuration changes be approved by the relevant head of department before implementation. The revised formula was tested against the requirements of the Basic Conditions of Employment Act.

Additional measures include monthly reviews of overtime calculations, exception reports to identify unusual overtime rates, hours and payments, and a requirement that future payroll parameter changes be documented, independently reviewed, tested and formally approved.

The council is being asked to approve the R4.3m write-off for accounting purposes in the municipality’s Annual Financial Statements for the year ended June 30. But the proposed write-off will not end the matter.

The accounting officer has also reportedly been asked to investigate how the incorrect system configuration occurred, and who was responsible for submitting, configuring, testing, approving and monitoring the payroll parameters.

The investigation is also tasked to determine whether any recovery can be made from the Payday service provider or another responsible party. Where warranted, corrective measures, recovery steps and consequence management must be implemented.

The report was released at a time when municipalities are facing increasing scrutiny over financial controls, irregular expenditure and accountability for losses.

The Council’s decision on the proposed write-off will reportedly determine how the R4.3m is treated in the municipality’s 2025/26 financial statements. The investigation will establish how the payroll error went undetected for an extended period.

Source: Ridge Times

In South Africa, Govan Mbeki Municipality is seeking approval to write off more than R4.3m in overtime overpayments after an incorrectly configured formula in its Payday payroll system led to employees receiving the wrong rate for Sunday work, Ridge Times reports.

The report was tabled during an August 26 council meeting. It stated that the municipality had identified cumulative overpayments of R4.3m relating to Sunday overtime processed during the 2024/25 financial year.

The Auditor-General of South Africa (AGSA) reportedly identified the issue during its audit of the municipality’s 2024/25 annual financial statements.

According to the report, the Payday system had been incorrectly configured when it was initially implemented and failed to distinguish between employees who ordinarily work on Sundays and those who do not. 

This distinction is required under Section 16 of the Basic Conditions of Employment Act.

Ordinarily, employees who work on a Sunday are entitled to double their normal wage for each hour worked. Those who usually work on Sundays must be paid one-and-a-half times their normal wage.

The formula error meant that certain Sunday overtime payments were automatically calculated at the wrong rate.

The overpayments reportedly impacted around 3,058 overtime payment transactions across the municipality. However, the exact number of individual employees affected will be confirmed through a detailed payroll reconciliation.

The municipality confirmed that there was no evidence of employees submitting fraudulent overtime claims or manipulating the payroll system.

The report stated that the affected employees had performed approved overtime duties and received payments calculated automatically by the payroll system.

The municipality subsequently corrected the incorrect Sunday overtime formula in November 2025, in consultation with the Payday service provider, and received written confirmation from the service provider that the correct payroll parameters had been configured.

In addition, the municipality has revised its system-change delegation framework, requiring that payroll configuration changes be approved by the relevant head of department before implementation. The revised formula was tested against the requirements of the Basic Conditions of Employment Act.

Additional measures include monthly reviews of overtime calculations, exception reports to identify unusual overtime rates, hours and payments, and a requirement that future payroll parameter changes be documented, independently reviewed, tested and formally approved.

The council is being asked to approve the R4.3m write-off for accounting purposes in the municipality’s Annual Financial Statements for the year ended June 30. But the proposed write-off will not end the matter.

The accounting officer has also reportedly been asked to investigate how the incorrect system configuration occurred, and who was responsible for submitting, configuring, testing, approving and monitoring the payroll parameters.

The investigation is also tasked to determine whether any recovery can be made from the Payday service provider or another responsible party. Where warranted, corrective measures, recovery steps and consequence management must be implemented.

The report was released at a time when municipalities are facing increasing scrutiny over financial controls, irregular expenditure and accountability for losses.

The Council’s decision on the proposed write-off will reportedly determine how the R4.3m is treated in the municipality’s 2025/26 financial statements. The investigation will establish how the payroll error went undetected for an extended period.

Source: Ridge Times