How To Hire And Pay Employees In South Africa

Emerald Technology's guide to hiring employees in South Africa

CURRENCY

South African Rand is the official currency of South Africa. Its currency symbol is R, ZAR.

CAPITAL CITY

Pretoria, Bloemfontein, and Cape Town are the three capital cities of South Africa.

LANGUAGE

IsiZulu is the most commonly spoken language, with 23% of the population speaking it.

POPULATION The current population of South Africa is 60.04 Million 2021 based on World bank numbers.
PAYROLL FREQUENCY

In South Africa, there is no set payroll cycle. The payroll cycle is typically stipulated in the employment contract,

PUBLIC HOLIDAYS

South Africa has 12 public holidays.

GROW YOUR TEAM IN SOUTH AFRICA

NO ENTITY, NO PROBLEM

To start growing your team in South Africa, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN SOUTH AFRICA

South Africa offers many benefits to organisations that chose to expand here, with the country on the rise with noticeable growth, as well as having the second largest economy on the continent makes it an attractive expansion location to companies and investors.

The crime rate in South Africa is quite high which is a deterrent for business, as well as the skyrocketing unemployment rates. Also, the infrastructure is relatively poor which can be a challenge for businesses looking to expand.

WHY SOUTH AFRICA IS GOOD FOR REMOTE WORKERS

Many digital nomads and remote workers are setting up shop in South Africa to live and work as it becomes a popular destination. The cost of living is attractive to remote workers, which is significantly lower when compared to other countries. It is also relatively easy to move to South Africa, a foreign national wanting to live and work in the country can do so without a visa (dependant on if your passport is from one of the 50 countries allowed) for up to 90 days, all they need is a temporary residence.

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN SOUTH AFRICA

The maximum permissible working week is 45 hours – 9 hours per day over a 5-day week, or 8 hours over a longer week, excluding lunch breaks. Employees may work a maximum of 3 hours’ overtime per day, up to a maximum of 10 hours per week. Overtime is paid at 1.5x normal rate, and 2x normal rate for Sundays and public holidays. 

ANNUAL LEAVE AND PUBLIC HOLIDAYS

Every employee is entitled to 21 consecutive days’ annual leave on full pay in every leave cycle. This equates to 15 working days per annum if the employee works a five-day week, and 18 working days per annum if the employee works a six-day week. 

January 1st: New Year's Day 
March 21st: Human Rights Day
April 15th: Good Friday
April 18th: Family Day
April 27th: Freedom Day 
May 2nd: Workers' Day 
June 16th: Youth Day 
August 9th: National Women's Day
September 24th: Heritage Day
December 16th: Day of Reconciliation
December 25th: Christmas Day 
December 26th: Day of Goodwill

PROBATION PERIOD IN SOUTH AFRICA

There is no set limit for probation periods in South Africa, but they must be deemed reasonable in accordance with the circumstances of the role.

RESIGNATION AND DISMISSAL IN SOUTH AFRICA

Employees or employers may give notice to terminate the employment relationship according to the following schedule: 

  • Under 6 months' employment: 1 week's notice
  • 6 months- 1 year's employment: 2 week's notice
  • 1+ year's employment: 4 week's notice

These are the minimum time periods allowed by law and the consent of both parties is required to agree to a shorter notice period. In terms of severance, an employee who is made redundant must be paid at least 1 week’s pay for each completed year of continuous service. 

RESTRICTIVE COVENANTS

Restrictive covenants are enforceable under South African law in principle, assuming that there is a demonstrable proprietary interest, and that the limitations to competition do not go beyond what is reasonably necessary to protect legitimate business interests. The restraint must be reasonable in nature, duration, and the geographical area in which the restraint applies. A restraint period of 12 months is generally regarded as reasonable. Employee and customer non-solicitation clauses are also permissible. 

READY TO HIRE YOUR EMPLOYEES IN SOUTH AFRICA?

CONTRACT OF EMPLOYMENT IN SOUTH AFRICA

In South Africa, employment contracts can be oral or written, but it is best practice to put a strong, written contract in place, in English, which spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Country should always state the salary and any compensation amounts in South African Rand (ZAR) rather than a foreign currency. The general rule in South Africa is that employment contracts are executed for an indefinite duration. South African labour law prohibits the use of a fixed-term hiring contract for tasks that are permanent in nature. The duration of a fixed-term contract must be clearly specified between parties if a fixed-term contract is applicable. 

MATERNITY LEAVE IN SOUTH AFRICA

Pregnant employees have a right to four months’ maternity leave. This is not legally required to be paid. The maternity leave may begin at any time from at least four weeks before the birth of the baby. There is no specific provision for paternity leave under South African law, but any employee who is the parent of a child is entitled to 10 consecutive days of parental leave. 

SICKNESS LEAVE IN SOUTH AFRICA

Employees are entitled to paid sick leave during each 36-month cycle starting from the first day at work. This should be equivalent to the exact number of days that they usually work in a typical 6-week period. For example, an employee who works five days per week would be entitled to 30 days’ sick leave on full pay. When distributed across the three years, employees are entitled to an average of 10-12 days’ sick leave. 

SOCIAL SECURITY

South Africa does not have a social security system in the traditional sense; however, it does have have contributions that are similar to social security. Limited unemployment insurance and accident or illness benefits are provided. The Unemployment Insurance Fund, which employers contribute to at a rate of 1%, provides benefits to unemployed people and to dependents of deceased contributors. Employers are also required to make contributions to the Compensation Fund, which was created under the Compensation for Injuries and Diseases Act to insure employees against industrial accidents or illnesses that result in death or disability, at a rate determined by the Compensation Commissioner after the employer reports the annual total remuneration of employees.  

HEALTHCARE AND INSURANCE

Although not compulsory, medical cover is typically paid partly by the employer. 

Employment of

FOREIGN NATIONALS IN SOUTH AFRICA

Foreign nationals that want to work in South Africa must have a valid passport/ID and a work permit. Work permits or temporary visas are issued by the Department of Home Affairs.

Critical skills work visa:

This visa is issued for a period that does not exceed five years.

General work visa (or a period not exceeding 5 years):

Can be issued in cases where a critical skills visa does not apply, providing that the employer can prove that they have conducted a diligent search and been unable to find a suitable citizen or permanent resident with qualifications or skills and experience equivalent to those of the applicant.)

Intracompany transfer work visa (for a period not exceeding 4 years):

Can be issued if an employee is seconded from his or her place of employment abroad to an affiliated company or branch in South Africa, if the foreigner’s employment contract with the company abroad is valid for a period of not less than six months before transfer. These types of visas are non-renewable. The intent of this visa category is that the expatriate transfers his or her skills to South African employees and leave South Africa at the end of the four-year secondment. 

Corporate work visa:

May be issued to a corporate applicant to employ foreigners to conduct work for the applicant in South Africa. 

START PAYROLLING YOUR EMPLOYEES IN SOUTH AFRICA

Salary Taxes

MINIMUM WAGE INSOUTH AFRICA

The minimum wage in South Africa is ZAR 23.19 for each ordinary hour worked. 

INCOME TAX

Taxable Income  Tax On Excess
0 -195,850 18%
195,850 - 305,850 26%
305,850- 423,300 31%
423,300 - 555,600 36%
555,600 - 708,310 39%
708,310 - 1,500,000

41%

1,500,000+

45%

 

SALARY PAYMENTS IN SOUTH AFRICA

In South Africa, there is no set payroll cycle. The payroll cycle is typically stipulated in the employment contract, which is to be agreed upon by the employee and employer. The payroll cycle can run monthly, weekly, or bi-weekly. Though there is no statutory requirement to pay a 13th month salary or Christmas bonus, it is widely paid in practice. 

SOCIAL SECURITY CONTRIBUTIONS IN SOUTH AFRICA

There is no Social Security in South Africa. 

SOCIAL CONTRIBUTIONS RATES

The employee contributes 1% of their salary to the Unemployment Insurance Fund, in addition to 1% contributed by the employer. Both local and foreign national employees are required to contribute to this fund. 

WORKER MISCLASSIFICATION IN SOUTH AFRICA

Similar to other countries, South Africa has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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