Hiring Talent And Managing Payroll In South Africa

Hiring in South Africa? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in South Africa.

Employment Norms in South Africa

South Africa has a complex and evolving employment landscape, with a range of labor laws and regulations in place to protect workers' rights. From minimum wage requirements to working conditions, it's important to have a solid understanding of the norms and expectations of the South African workforce.

General Information:

The South African currency is the South African Rand (ZAR).
Pretoria is the administrative capital of South Africa, Cape Town is the legislative capital, and Bloemfontein is the judicial capital.
Eleven languages are recognized as official in South Africa, including English, Afrikaans, Xhosa, Southern Sotho, Zulu, Northern Sotho, Venda, Tswana, Tsonga, Ndebele, and Swati. Legal documents can be drafted in any of these languages to be considered legally valid.
As of 2021, the GDP of South Africa was reported to be approximately USD 419.02 billion.

Labor laws and regulations in South Africa protect workers' rights and cover issues such as minimum wage, working conditions, and employment contracts.

Table of Contents

Select Section

Agreements
Onboarding Process
Visa
Minimum Wage
Payroll Cycle
Annual Bonus
Health Benefits
Working Hours and Overtime
Leaves
Social Security
Taxes for Employers
Taxes for Employees
Probation
Termination
Severance Pay
Employees or Contractors
Final Words

Agreements Onboarding Process Visa Minimum Wage Payroll Cycle Annual Bonus Health Benefits Working Hours and Overtime Leaves Social Security Taxes for Employers Taxes for Employees Probation Termination Severance Pay Employees or Contractors Final Words

Agreements

In South Africa, agreements between employers and employees are subject to several legal requirements:

Employment agreements must be in writing and signed by both parties.
The language used in agreements can be any of the official languages of South Africa.
Agreements must comply with the provisions of the Basic Conditions of Employment Act (BCEA) and any other relevant labor legislation.
Collective bargaining agreements between employers and unions are legally binding and enforceable.
The terms and conditions of employment must be clearly outlined in the agreement, including hours of work, remuneration, and leave entitlements.
Agreements can be modified or terminated by mutual consent or under certain circumstances as provided for by the law.
In cases of dispute, the matter can be referred to the Commission for Conciliation, Mediation, and Arbitration (CCMA) or to the Labour Court.

Onboarding Process

The onboarding process typically involves the following steps:

Employee completes necessary paperwork, including tax forms and employment contracts.
Orientation and training are provided, including an introduction to company policies, procedures, and culture.
The employee is provided with necessary equipment and tools, such as a computer or uniform.
The employee is introduced to colleagues and management.

Mandatory documents for onboarding may include the employee's ID or passport, banking details, and proof of qualifications or work permits.

Visa

South Africa offers several types of visas for foreign workers:

Critical Skills Visa: For individuals with specialized skills and qualifications in critical fields such as engineering, science, and medicine.
General Work Visa: for individuals who have received a job offer from a South African employer and meet the necessary qualifications and experience requirements.
Intra-Company Transfer Visa: for employees of multinational companies who are being transferred to a branch or subsidiary in South Africa.
Business Visa: for entrepreneurs and investors looking to establish or invest in a business in South Africa.
Spousal or Life Partner Visa for the spouses or partners of South African citizens or permanent residents.

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Minimum Wage

As of March 2023, the national minimum wage in South Africa is ZAR 25.42 per hour.

Payroll Cycle

In South Africa, the standard payroll cycle is monthly.

Annual Bonus

Paying the 13th month's salary is customary. It should be paid to the employee every year in December.

Health Benefits

Health benefits offered to employees in South Africa are as follows:

Medical aid: employers may contribute to or provide access to a private medical aid scheme to cover medical expenses.
Group life insurance: employers may offer life insurance coverage for employees.
Disability insurance: employers may provide disability insurance to cover employees in the event of injury or illness.
Wellness programs: employers may offer wellness programs or initiatives to promote employee health.

Working Hours and Overtime

Work hours: Maximum of 45 working hours per week and 9 hours per day.
Break: A minimum of one 30-minute break for every five hours worked, which should be paid unless the employee is exempted from paid breaks.
Overtime: Employees who work more than 45 hours a week, receive 1.5 times their hourly wage or get the time off equivalent to their overtime.

Leaves

Sick Leave

Employees are entitled to up to 33 days of paid sick leave per 3-year cycle, with full payment by the employer.
No sick leave for employees who have worked for less than a day.
For the first 6 months, the employee gets 1 sick leave every 26 days.
after 6 months annually the employee receives,
- 5-day work week - 30 sick leaves
- 6-day work week - 36 sick leaves
- 20-24 working days a month - 33 sick leaves

Parental leaves

Maternity leave- Primary caregivers (typically the birth mother or adoptive parent) are entitled to up to 16 weeks of unpaid parental leave. These are to be taken 4 weeks before birth until 6 weeks after birth. Employees contributing to UIF get maternity benefit, which is 60% of their regular salary, based on their insurance plan and income.
Paternity leave- Secondary caregivers (typically the non-birth parent in same-sex couples) are entitled to up to 10 days of unpaid parental leave.
10 days of unpaid parental leaves are provided to the surrogates, adopting parents and fathers.

Annual leaves

Full-time employees in South Africa are entitled to 15 days of paid annual leave per year
This entitlement is based on a 5-day workweek

Other leaves

Study leave - Maximum of 10 days of paid leave for a year, if more are required those will be unpaid.
Work injury leave - If an employee takes more than 4 days of leave due to an injury at the workplace,
- For 3 months - 75% of regular pay
- After 3 months - the compensation fund pays 75% of regular pay.

Public Holidays (for the Calendar year 2024)

Some dates may vary based on official notifications and traditional calendars.

New Year's Day - 1st January
Human Rights Day - 21st March
Good Friday - 29th March
Family Day - 1st April
Freedom Day - 27th April
Workers' Day - 1st May
Youth Day - 16th June
National Women's Day - 9th August
Heritage Day - 24th September
Day of Reconciliation - 16th December
Christmas Day - 25th December
Day of Goodwill - 26th December

Public Holidays (for the Calendar year 2025)

Some dates may vary based on official notifications and traditional calendars.

New Year's Day - 1st January
Human Rights Day - 21st March
Good Friday - 18th April
Family Day - 21st April
Freedom Day - 27th April
Workers' Day - 1st May
Youth Day - 16th June
National Women's Day - 9th August
Heritage Day - 24th September
Day of Reconciliation - 16th December
Christmas Day - 25th December
Day of Goodwill - 26th December

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Taxes for Employers

Here is a brief overview of the most common taxes paid by employers in South Africa:

Skills Development Levy (SDL): Employers contribute 1% towards the Skills Development Levy
Unemployment taxes: Employers are required to pay unemployment taxes to cover the costs of providing unemployment benefits to workers who have lost their jobs. The contribution to UIF is 1%. This is annually capped at ZAR 212,544.

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Taxes for Employees

In South Africa, employees are responsible for paying various taxes on their income. The main taxes paid by employees include:

Income Tax: Employees are required to pay income tax on their earnings, which is deducted from their salaries through the PAYE system. The amount of income tax ranges from 18-45%. The exact tax slab is:
- Up to 226,000 ZAR - taxed at a rate of 18%.
- 226,001 ZAR and 353,101 ZAR - taxed at a rate of 26%.
- 353,101 ZAR and 448,700 ZAR - taxed at a rate of 31%.
- 448,701 ZAR and 641,400 ZAR - taxed at a rate of 36%.
- 641,401 ZAR and 817,600 ZAR - taxed at a rate of 39%.
- 817,601 ZAR and 1,731,600 ZAR - taxed at a rate of 41%.
- Above 1,731,601 ZAR - taxed at a rate of 45%.
Unemployment Insurance Fund (UIF): Employees contribute 1% towards the UIF.

Probation

In South Africa, probationary periods are usually 3 months.

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Termination

An employee in South Africa can be terminated under various conditions, including:

Misconduct or poor performance
Incapacity
Operational requirements
Mutual agreement

Severance Pay

Regarding severance pay, South African labor law stipulates that an employee is entitled to severance pay if their employment is terminated due to operational requirements or if they have been employed for more than 12 months. In general, employees are entitled to one week’s severance pay for every year employed.

Employees or Contractors

It is important for employers to correctly classify their workers as either employees or independent contractors, as misclassification can result in penalties and legal disputes in South Africa.

If an employer misclassifies an employee as an independent contractor, the employee may miss out on benefits and protections such as paid leave, UIF contributions, and protection against unfair dismissal. The employer may also be liable for back pay and penalties for non-compliance.
if an employer incorrectly classifies an independent contractor as an employee, they may be liable for additional costs such as PAYE, UIF, and workers' compensation.

Final Words

South Africa has a well-established employment sector with a range of opportunities across various industries. With a robust legal framework and a wealth of resources available, both employers and employees can navigate the employment landscape in South Africa with confidence and clarity.