Employer of Record in South Africa

Hiring in South Africa for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in South Africa in the following three ways:

• Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in South Africa.
• Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with South Africa’s labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Businesses can only operate smoothly in South Africa if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in South Africa below, to avoid any compliance issues.

Employment Contract Requirements

When employing an individual in South Africa, the Basic Conditions of Employment Act (No. 75 of 1997 – the BCEA) compels an employer to give an employee a host of prescribed employment details in writing when they start work. The employer should also provide a contract of employment that is signed by both parties detailing:

• The companys disciplinary codes
• The date of commencement of employment
• The employees ordinary working days and work hours
• The employees wage rate and method of calculating wages

Onboarding Process

We can help you get a new employee started in South Africa quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in South Africa

In South African employment, employees are permitted to work a maximum of 9 hours or day/ 45  hours per week or a maximum of 8 hours per day if the employee works more than 5 days per week.

Additionally, an employee is entitled to a 60 minute meal interval after 5 hours of continuous work. Typical weekday working hours are 9 am to 5:30 pm, promoting a structured balance between productivity and employee well-being.

Overtime in South Africa

In South African employment, employees are not permitted to work more than 10 hours of overtime per week. Overtime is paid at 1.5 times employee's normal wage or an employee may agree to receive paid time off.

Employment contracts usually specify overtime rates and calculations for transparency, promoting fair and mutually beneficial working relationships in line with South African employment norms.

Probation Period in South Africa

Probationary periods in South Africa, are optional, but are often used to help mitigate risk in hiring. Employees can be subject to a probationary period that enables the employer to assess employees skills. General practice is 3-months.

Fiscal Year in South Africa

1 March - 28/29 February is the 12-month accounting period that businesses in South Africa use for financial and tax reporting purposes.

Payroll Cycle in South Africa

The payroll cycle in South Africa is usually monthly, with employees being paid by the 25th of the month.

Minimum Wage in South Africa

The minimum wage for employees in South Africa is typically 27.48 ZAR per hour, amounting to ~4,397 ZAR per month for a typical 40 hour work week.

Bonus Payments in South Africa

13th-month salary payments in South Africa are not legally required but are customary, and are typically paid in December of each year.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 2% on top of the employee salary in South Africa.

Employee Payroll Tax Contributions

In South Africa , the typical estimation for employee payroll contributions cost is around 1%.

Individual Income Tax Contributions

Income tax in South Africa is 'Pay As You Earn'. The individual income tax ranges from 18% to 45%. Income tax is calculated according to progressive rates.

Pension in South Africa

No mandatory pension contributions in South Africa.

Mandatory Leave Entitlement in South Africa

The annual leave entitlement in South Africa is 15 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In South Africa

South Africa has 12 mandatory national public holidays in a year.

Paid Time Off in South Africa

South African employees who work 5 days a week are entitled to a minimum of 15 days of annual leave. This is accrued in the following way:

• Annual leave is accrued over a leave cycle, which is a period of 12 months commencing from the first day of employment or the end of the previous leave cycle.
• The accrual rate for annual leave is typically 1.25 days per month for a five-day week worker (1 day for every 17 days worked) and 1.5 days per month for a six-day week worker.

Maternity Leave In South Africa

Eligible employees can take up to 16 weeks of maternity leave. Leave can begin at any time from 4 weeks before the expected date of birth or on a doctor recommended date. Maternity leave is unpaid, unless stipulated otherwise in the employment agreement.

Paternity Leave In South Africa

Eligible employees can take up to 10 days of parental leave.

Sick Leave In South Africa

Sick leave in South Africa is paid depending on the following:

• South African employees who work 5 days a week are entitled to 10 days of sick leave.
• Employees who work 6 days a week are entitled to 12 days of sick leave.
• During the first 6 months of employment, an employee is entitled to one day paid sick leave for every 26 days worked.

Parental Leave In South Africa

South Africa has recently introduced a shared parental leave policy. In October 2024, the Johannesburg High Court ruled that both parents are entitled to share four months of parental leave. This landmark decision allows fathers to share the previously exclusive four-month maternity leave with their partners.

Termination Process in South Africa

In South Africa, any terminations of employment must be for a fair reason and in accordance with a fair process. An employee may be terminated fairly for one of the following reasons:

• Misconduct
• Poor work performance
• Ill health
• Operational requirements

Notice Period in South Africa

In South Africa, unless a longer notice period is stipulated in the Employment agreement, the legislative minimum notice period is:

• 1 week for employees with less than 6 months service
• 2 weeks for employees with 6 to 12 months service.
• 4 weeks for employees with 12 or months service

Severance in South Africa

Severance pay is only mandatory when terminating an employee for operational requirements. Minimum severance pay is equal to 1 weeks pay for every completed year of service.