EOR and PEO — 13 min
South Africa’s labor laws reveal a business culture that values collaboration with a healthy amount of respect for the individual. For people who have never worked or hired workers in the country before, adapting to that culture may pose a challenge at first.
If your company does not own a local legal entity in South Africa, you must use an employer of record like Remote to hire local employees. Our guide on hiring remote workers in South Africa provides a high-level overview of the rules, payroll guidelines, common benefits, and other factors you should know before hiring your first South African employee.
This guide answers common questions about labor laws in South Africa for businesses in other parts of the world. If you have questions about how to employ workers in the country in compliance with local laws, start here.
No, the South African government does not recognize at-will employment. Outside of probationary periods, employers must provide due notice and valid reasoning to terminate an employee.
During a probationary period, an employer can terminate an employee for any reason not covered by laws protecting against discrimination. After the probationary period ends, employers can terminate employees for misconduct, poor performance, or operational requirements specific to the employer.
Yes, employees with more than six months of continuous service for the same employer are entitled to severance pay in South Africa.
Anyone who has worked for the same employer for six months must receive a severance payment of at least one week’s wages. Alternatively, the employer may provide one week’s notice.
Employees who have worked for more than six months but less than a year are entitled to two weeks’ pay or two weeks’ notice. After a year of continuous employment, employees are entitled to four weeks’ pay or notice. Employers may reduce this obligation in the employment agreement but may not lower severance entitlements to less than two weeks’ pay or notice.
Employees may be entitled to additional severance pay beyond the pay guaranteed for continuous employment under certain conditions. Employees made redundant, or laid off, are entitled to receive one week’s pay for every year worked for the company. If a company shuts down, the company must provide all employees laid off with redundancy payments.
South Africa’s government does not enforce a strict limit on probationary periods at the start of employment. However, employers cannot keep employees on probation indefinitely. In most cases, employers keep employees on a probationary period for three months. This time frame can change depending on the nature of the role, though.
As of 2020, the minimum wage for most positions in South Africa is R20.76 per hour, which is about the $1.26 in US dollars. In certain industries, including farming and domestic labor, wages may be lower.
Employees in South Africa earn a minimum of 150% pay for the first 10 hours worked after 45 hours in a week. Overtime is capped at 10 hours per week and three hours per day. Employers are not allowed to force employees to work overtime, but employees can volunteer to work up to 15 hours of overtime per week for a maximum of two months per year. This can be helpful for people who work in farming during busy seasons or retail workers during holiday shopping times.
South Africa also requires employers to pay overtime on Sundays, even when employees always work on Sundays. Regular Sunday workers earn 150% for all Sunday shifts, while people who do not normally work on Sundays earn 200% pay.
At their discretion, employees may choose to receive their overtime pay as extra paid time off instead of wages. Employers may not force employees to accept extra time off instead of extra pay, though. Employees who choose this option earn time at the same rate they would earn overtime pay. So, an employee who would normally earn 200% pay on Sunday would earn two hours of PTO for every one hour worked.
South Africa’s Employment Equity Act prohibits unfair discrimination in interviews and in the workplace. Because South Africa has a recent history of issues with discrimination, South African law requires certain types of employers to follow affirmative action policies to provide more opportunities for marginalized groups.
Employers are also required to provide managers with training to respond to issues of harassment at work. When an employee raises a complaint about the behavior of a manager or colleague, employers must take “reasonable action” to remedy the situation.
Although employers are allowed to use fixed-term contracts for employees in South Africa, Remote advises against the practice in most circumstances. South African law prohibits employers from putting workers on repeated fixed-term contracts and could penalize companies for doing so. Certain roles are also exempt from fixed-term contracts because of the nature of the work.
Verbal employment agreements are valid in South Africa. Unspecified employment agreements default to indefinite contracts. That said, employers should always seek to clarify expectations with a written employment agreement.
Ready to hire in South Africa? Not sure which labor laws apply to your organization?
Whatever your employment needs in South Africa, Remote can help. We offer employer of record services for full-time employees as well as free international contractors payment and management tools. Contact us today at email@example.com to learn more about Remote’s global employment solutions.
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