Global Payroll and Benefits — 7 min
Does your company need to hire an employee in South Africa? Is one of your current employees moving to South Africa? To employ a worker while maintaining compliance with South Africa’s labor laws — and to ensure your employees in the country receive the best experience and the right benefits — start here.
Remote helps companies hire all top talent over the world. In South Africa, employment laws, payroll requirements, taxes, and common benefits differ from norms in other parts of the world on a few key points. This guide on hiring employees in South Africa provides all the basic information you need to make your first hires.
South African business culture tends to be friendly and warm, but not fast-paced, especially on initial meetings. Companies working with new business partners should expect to spend some time getting to know their new acquaintances. In many cases, initial meetings do not accomplish any concrete business objectives beyond introductions.
Teamwork and collective decisions are important in South Africa. While it is common for the boss to make the final call, workers in South Africa generally expect to be apprised of most situations and to have the ability to make their voices heard. This can lengthen the decision-making process, which may be frustrating for leaders used to making decisions more quickly.
Deadlines follow a similar pattern. People from countries where deadlines are concrete may be frustrated by South Africans’ attitude toward timeframes. If it is critical that a project be completed within a certain deadline, employers should be explicit about when and why.
South Africa consists of several different local cultures and racial groups. If you want to employ multiple people within the country, make sure you understand local culture and have good leadership on the ground.
Companies should pay their South African employees in South African Rand (ZAR). Salaries in the country are set in Rand, so companies attempting to pay in other currencies could run into both legal troubles and issues with conversion rates.
Employees in South Africa typically work 40-hour or 45-hour workweeks. Employees who work more than five hours per day are guaranteed at least one break lasting at least one hour unless otherwise stipulated in a formal employment agreement or if the employee’s schedule is flexible. Salespeople who travel frequently, for example, may be excluded from this requirement.
The minimum wage in South Africa as of February 2020 is R20.76 per hour, which equates to about $1.26 USD in 2020. However, certain positions may pay lower minimum wages:
Overtime in South Africa is limited to 10 hours per week and must be paid at a minimum rate of 150% of the worker’s standard wages. Employers cannot force employees to work overtime, but they can increase the maximum to 15 hours per week for up to two months per year, if the employee agrees to the change in the employment agreement.
South Africa enforces mandatory overtime on Sundays. An employee who does not normally work on Sundays earns 200% normal wages for every hour worked on a Sunday. Employees who regularly work on Sunday must receive at least 150% of their regular wages for all Sunday shifts.
Employees may choose to accept their overtime pay as paid time off instead of wages. Any employee working overtime earns paid time off at a rate of at least 1.5 hours PTO per hour worked.
The South African Revenue Service, or SARS, is South Africa’s tax authority. Employers are responsible for withholding taxes for their employees.
Income tax rates in South Africa follow a sliding scale. Individual rates range from 18% on income up to R205,900 up to 45% on income over R1,577,300. Because these tax rates also apply to benefits, such as health insurance stipends, employers should be cautious not to underestimate their employees’ tax liabilities.
Although South Africa does permit employers and employees to work together on verbal contracts, employers should always use written contracts with clear terms. Employment contracts should clarify things like salary, benefits, and expected working hours.
Employers may offer fixed-term agreements in South Africa in certain circumstances, but unspecified contracts default to indefinite terms. Employment law in South Africa forbids employers from enforcing fixed-term contracts for certain roles. An engineer brought in to complete one specific task may qualify for a fixed-term agreement, but employers should be cautious before taking this route. Remote’s legal team can help businesses make these decisions.
To transfer an employee to South Africa, the transfer must meet a few requirements.
First, the employer must transfer the employee to a company officially operating in the country. This can be an employer of record, like Remote, which owns a local legal entity in South Africa.
Employees being transferred must also intend to return to employment with the same employer outside South Africa at the end of the term of employment. These terms are typically limited to two years. Exceptions exist in certain circumstances.
Employees may bring their families to live with them, but family members may need specific types of permits depending on the activities they will perform in the country, such as working or studying. South Africa does not discriminate based on sexual orientation for purposes of transfer rights, and couples do not need to be legally married to transfer together.
Employers may offer performance bonuses in South Africa. However, they may not withhold taxes throughout the year to account for bonuses, as performance bonuses may fluctuate depending on the work of the employee or team.
Employers in South Africa should avoid overly rigid disciplinary policies. In certain cases, employers have lost the ability to hold disciplinary proceedings because of unenforceable and excessively strict policies.
South African law requires employers to prevent and address discrimination and harassment within the workplace. If an employee experiences harassment, the employer must take “reasonable action” to address the situation. Employers must provide sufficient training to managers to protect themselves against issues of liability and to protect employees from experiencing hostile work environments.
South African law permits employers to forbid employees from expressing political views or displaying political imagery at work. However, the employer must practice the same policy for employees no matter what their political beliefs.
Employees in South Africa are guaranteed at least 15 days off per year in addition to public holidays. Workers in South Africa who earn PTO throughout the year must earn PTO at a rate of at least one hour of PTO for every 17 hours worked.
South Africa recognizes 12 public holidays throughout the year. Employers must provide paid time off for employees on these 12 days. If a holiday falls on a Sunday, workers receive paid time off the following Monday.
Employers may not take away unused PTO at the end of the year. If an employee leaves, the employee is entitled to a payout of all accumulated and unused PTO earned up to the date of departure. Employers may be able to set an expiration date on unused PTO in certain cases. Remote can help with this process to ensure your PTO policy remains compliant in South Africa.
In South Africa, employees receive three days of family responsibility leave per year. This year is measured from the date of employment, not from January 1st. Employees are only eligible to take family responsibility leave after working for the same employer for an average of four days per week for four consecutive months.
Family responsibility leave can only be used under specific circumstances. Employees may use family responsibility leave for the birth of a child or to care for their own sick child. Employees may also use family responsibility leave as bereavement leave after the loss of one of the following family members:
Unlike regular PTO, family responsibility leave does not accrue and cannot be carried over from year to year. Family responsibility leave resets on the anniversary of the date of employment.
While employers are always allowed to provide more leave than the minimum, most provide the standard three days per year.
Sick leave is distinct from PTO in South Africa. Like family responsibility leave, sick leave is calculated based on the start date of the employee. Sick leave is a paid benefit, so employers must pay employees on days they take official sick leave.
Employees earn sick leave in South Africa at two different rates:
Employees who work six-day workweeks receive a sick leave bank of 36 days instead of 30.
Sick leave resets every three years on the anniversary of the employee’s start date. Employees may not carry over unused sick leave from one three-year period to the next.
When employees take sick leave for two consecutive days, they must be able to provide a medical certificate confirming the need for the absence. This consecutive day rule does not apply when employees take sick leave on a Friday and again the following Monday.
The South African government guarantees at least four months of maternity leave for new mothers. Employees may begin taking maternity leave one month before their due date in most circumstances. Unless the employee receives special medical clearance, an employee on maternity leave cannot return to work within six weeks of giving birth.
Employers are not required to pay employees on maternity leave, as government programs cover some of the costs. Employees on maternity leave receive a maximum of 60% salary from the government’s Unemployment Insurance Fund for a maximum of 121 days.
South Africa enacted new legislation on paternity and parental leave in January 2020. Now, employers must offer their employees at least 10 days of unpaid leave after the birth of a child. Employees may only take this leave once per calendar year. When employees take parental leave, they may apply to receive a percentage of their wages from the South African government’s Unemployment Insurance Fund.
The South African government guarantees public health insurance to all. However, public insurance tends to be of significantly lower quality than private insurance, which provides access to much higher standards of treatment. As a result, the South African system operates similarly to the US system in which employers commonly offer health insurance as an employee benefit.
Employers may partner with health insurance providers to offer plans for their employees or pay a stipend for employees to use on a plan of their choosing. South African healthcare plans tend to be expensive, so health insurance is a highly coveted benefit for top talent.
Companies in South Africa generally provide employees with a 13th month bonus payment, although this bonus is not a statutory requirement. The 13th month bonus usually amounts to one month’s salary, as the name implies. Payments are expected in December. Employers can choose to withhold taxes throughout the year with the 13th month bonus in mind so employees do not receive an unexpectedly high tax bill.
South Africa’s UIF pays for maternity leave, unemployment, and other social programs run by the government. Employees contribute 1% of their pay to fund these programs, while employers pay much more, usually around 8.5% of employee pay.
South Africa’s COIDA provides workers’ compensation payments to people injured while working. Rates for employers vary widely by industry. Contact Remote to learn more about your tax liability for remote workers in South Africa.
Employees in South Africa have rights regarding notice of termination of employment. Companies may use probationary periods to evaluate workers before accepting them as full employees, during which time the employer may terminate the employee at any time.
When terminating employees, companies in South Africa must either provide notice or a severance payment, depending on the amount of time the employee has worked there. This termination process has three tiers:
In addition to notice pay, employees may also be entitled to a separate severance payment. Employees laid off due to economic reasons are entitled to one week’s pay per year of employment with the company. This applies even when the company shuts down operations completely.
Employers may be able to terminate an employee without severance pay if the employee is terminated for underperformance or for breaking workplace rules.
No. South Africa does not recognize the concept of at-will employment.
Probationary periods in South Africa typically last three months. Although the government does not set a firm time limit, probationary periods must be reasonable in the context of the employee’s role.
South Africa’s employment laws and business culture can be challenging, especially for companies that have never hired in the country before. Remote helps companies of all sizes employ top talent in South Africa for one low flat rate. Our payroll, benefits, tax, and compliance solution provides the best experience for your employees in South Africa while protecting your business in the process. Contact Remote today at [email protected] to learn more about our South Africa global employment and employer of record solutions.
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