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Code 3601 — ex gratia gross remuneration.
| Programme period | 1 August 2026 – 31 October 2026 (3 months, extendable at the employer's written election under PP&MA Schedule 1). |
| Payment tiers | Band A: R600/month (NMW–R14,180.80/mth) · Band B: R575/month (R14,180.80–R22,466.74/mth) · Band C: R550/month (R22,466.74–R30,752.69/mth). Salary Band placement only — per CDII Disbursement Notice, employer has no discretion. |
| SARS Income Code | Code 3601 — Ex Gratia Gross Remuneration. Codes 3702 and 3703 are not applicable — this is not reimbursive business travel under s8(1) of the Income Tax Act 58 of 1962, and eligibility does not depend on commute distance or mode of travel. |
| PAYE | APPLIES. Withheld at employee's applicable marginal rate. Nil PAYE for employees earning below R99,000 per annum (paragraph 11(3) of the Fourth Schedule). |
| UIF | DOES NOT APPLY. The Social Ex Gratia Payment is not "remuneration in respect of services rendered" under the Unemployment Insurance Contributions Act 4 of 2002. |
| SDL | DOES NOT APPLY. Ex gratia welfare payments fall outside the Fourth Schedule remuneration definition for SDL base purposes under the Skills Development Levies Act 9 of 1999. |
| COIDA | DOES NOT APPLY. The Minister's Notice (April 2025) expressly excludes ex gratia payments — "voluntary payments to employees without legal obligation" — from the Return of Earnings calculation. |
| Benefit funds | DOES NOT APPLY. Social Ex Gratia Payment does not constitute pensionable pay or trigger any benefit fund contribution. Payroll systems must be configured to exclude Code 3601 from all benefit fund calculation bases. |
| IRP5 | Code 3601 must appear on each Beneficiary's IRP5 at year-end. |
| EMP201 | Code 3601 amounts appear in monthly EMP201 (PAYE only — no UIF or SDL amounts). |
Primary tax treatment — s11(a) Staff Welfare Expenditure
The participating employer's contributions to CDII are deductible as staff welfare expenditure under section 11(a) of the Income Tax Act 58 of 1962. The deduction applies to the full contribution (gross payments plus administration fee) and is available immediately, unconditionally, and without a separate SARS election.
Alternative election — s18A Donation
Employers may alternatively elect to treat contributions as a donation to CDII under section 18A of the Income Tax Act. If the s18A election is made, CDII issues a Section 18A Certificate monthly. The deduction is subject to the 10% of taxable income limitation under s18A(1). The s11(a) and s18A routes are mutually exclusive — the employer must elect one. Employers are advised to confirm their preferred treatment with an independent tax adviser.
Non-contractual. Non-recurring. Extendable at discretion.
The Social Ex Gratia Payment is non-contractual, non-recurring, and ex gratia. It does not form part of remuneration under section 213 of the Labour Relations Act 66 of 1995 or section 35 of the Basic Conditions of Employment Act 75 of 1997.
The programme runs for a fixed initial term (1 August – 31 October 2026) and does not renew automatically — any extension requires a fresh, documented decision by the employer under PP&MA clause 4.4. Because continuation is never implied and must be actively re-elected each time, this addresses the risk of the payment being treated as a benefit giving rise to a legitimate expectation of continuation under section 186(2)(a) of the LRA — the unfair labour practice provision covering the provision of benefits (see Apollo Tyres South Africa (Pty) Ltd v CCMA, confirming that discretionary advantages under a policy or practice can constitute "benefits" for this purpose). All participants acknowledge the non-contractual character in the Employee Acceptance Form (CRP/EAF/2026/001 v6.5) before their first payment.
Four architectural elements that make this programme defensible.
Two triggers only. No others.
End of the 3-month programme period. Extension beyond 31 October is possible at the employer's written election under PP&MA Schedule 1 — a fresh, documented decision is required for each extension; continuation is never automatic or implied.
The programme terminates on written notice from CDII, acting as Programme Administrator, following its determination — based on evidence presented to it — of a material macroeconomic development or a material company-specific event substantiating that circumstances have materially changed. There is no other trigger.
Registered Responsible Party. Minimum data. Documented purpose.
CDII is a registered Responsible Party under the Protection of Personal Information Act 4 of 2013 (Information Regulator Registration No. 2025-008244). Employer participant lists submitted to CDII use employee reference numbers only — no names, identity numbers, or banking details. All personal information is processed solely for programme administration purposes.
Questions from your legal team, auditors, or B-BBEE VA?
Contact Adv. Don Leffler directly for the full compliance documentation pack — including the Programme Participation & Master Agreement (PP&MA v1.0), Board Resolution Template, and B-BBEE SED verification structure.
Contact Programme Director →