Hire and pay employees in South Africa quickly and compliantly

Complying with labor and employment laws in South Africa

South Africa’s labor and employment laws are rooted in strong worker protections and detailed regulations that cover working hours, leave entitlements, unionization rights, and more. To stay compliant, employers need to understand a range of statutes, including the Basic Conditions of Employment Act (BCEA) and the Labour Relations Act (LRA).

If you’re looking to hire in South Africa, you can simplify compliance work by partnering with Rippling EOR. A trusted EOR partner can provide ongoing support and guidance, ensuring that your HR practices stay aligned with South Africa’s evolving regulatory landscape.

Employment contracts in South Africa

In South Africa, a written employment contract is not strictly required for all employment relationships (though employers must provide all employees with written notice of certain aspects of their employment no later than their first day). Written agreements help define key terms—like job duties, remuneration, working hours, leave policies, and notice periods—which provides clarity for both employer and employee. While verbal agreements can be binding, they make it more challenging to resolve disputes that may arise later.

Employers must comply with the BCEA when drafting employment contracts. The BCEA sets minimum employment standards for areas like work hours, leave, and termination notice. Certain industries and sectors may have Bargaining Council agreements that can override or supplement the BCEA's standards. Employers should carefully draft contracts that reflect statutory requirements and any relevant collective agreements set by their workers.

Labor unions in South Africa

Unionization is well-established in South Africa. The country has a long history of worker activism, and the LRA provides a strong legal framework that gives employees the right to join trade unions and participate in collective bargaining.

Today, major trade union federations—such as the Congress of South African Trade Unions (COSATU), the Federation of Unions of South Africa (FEDUSA), and the National Council of Trade Unions (NACTU)—play a key role in shaping workplace conditions, pay scales, and employment policies.

Employers should understand the unionization landscape in South Africa before hiring. Collective bargaining agreements (CBAs) may affect wages, working hours, and grievance procedures. South African law prohibits discrimination against employees for joining or participating in union activities.

Mitigating permanent establishment risk in South Africa

A permanent establishment (PE) in South Africa generally arises when a foreign company has a fixed place of business or a dependent agent continuously conducting activities on its behalf within the country. Establishing a PE may subject your business to local corporate taxes on income sourced in South Africa.

To mitigate PE risk, companies should:

• Limit local presence: Restrict the extent and duration of employee activities on the ground.
• Keep meticulous records: Document employees’ work locations and functions to demonstrate that their activities don’t constitute a fixed place of business.
• Consider a local entity: If you anticipate a long-term presence in South Africa, establishing a local subsidiary may simplify tax and compliance obligations.
• Seek expert support: Consult with tax professionals and legal advisors who understand South Africa’s tax treaties and PE guidelines.

Protecting company IP in South Africa

Intellectual property (IP) in South Africa covers trademarks, patents, designs, and copyrights. IP laws are administered by the Companies and Intellectual Property Commission (CIPC). Registering your IP at the national level helps secure legal protection against unauthorized use.

These are the primary types of IP you can protect as a business in South Africa:

• Patents: Patents can be registered to protect new, useful inventions. They are generally valid for 20 years from the filing date, subject to annual renewal fees.
• Trademarks: Trademarks protect distinctive names, logos, designs, and symbols. Registrations last 10 years and can be renewed indefinitely.
• Designs: Designs protect the aesthetic and functional aspects of products. Aesthetic designs can be renewed for up to 15 years, while functional designs can last up to 10 years.
• Copyrights: Copyrights protect original literary, musical, artistic, and cinematic works. Copyright is automatic upon creation and generally lasts for the author’s lifetime plus 50 years.

Local laws in South Africa

South Africa’s labor and employment landscape is influenced by many different statutes, collective agreements, and common law principles. If you’re new to doing business in South Africa and aren’t familiar with the local laws, they can easily appear complex and overwhelming to learn. Here’s a quick primer on some key points you may want to learn as an employer:

• Working hours: Under the BCEA, a standard working week is a maximum of 45 hours, typically nine hours per day for a five-day workweek or eight hours per day for a six-day workweek. Overtime is generally capped at 10 hours per week and must be compensated at 1.5 times the normal wage rate. Employees earning above the earnings threshold set by the Minister of Employment and Labour (currently ZAR 254,371.67 per year as of 2024) may be excluded from certain protections, including the standard working hours. Their working hours must instead be governed by contract.
• Minimum wage: South Africa has a national minimum wage that gets reviewed annually. Employers must pay at least the minimum wage to all employees unless a sectoral determination or collective agreement sets a higher standard.
• Leave entitlements: According to the BCEA, employees are entitled to paid annual leave (at least 21 consecutive days per year, which is the equivalent of 15 working days for employees who work a standard five-day workweek, or 18 days for employees who work a six-day workweek), sick leave, and maternity leave (at least four consecutive months).
• Retirement age: While some employers include a retirement age in their policies or contracts, South African law does not set a statutory retirement age.
• Contract language: There are no explicit statutory requirements that employment documents be in any specific language. However, clarity is crucial, and it is best practice to use a language both employer and employee understand. Many employers choose English, as it is commonly used for business communication.

Worker classification and misclassification in South Africa: Contractors vs. employees

Before you start hiring South African workers, you need to determine the proper working arrangement for your needs—independent contractor or full-time employee. Like most countries, South Africa treats these two classifications differently. And when determining whether a worker is an independent contractor or an employee, South African courts look beyond just the contractual relationship between the parties—they examine the full working relationship to see whether a “dominant impression” test would apply. Below are some of the factors that influence the test.

Worker classification in South Africa: Key differences between contractors and employees

Consequences of misclassification in South Africa

Like in other countries, misclassifying workers in South Africa can come with serious legal, financial and reputational consequences. Companies may have to pay backdated employee benefits (such as annual leave, sick leave, and other statutory leave entitlements, as well as overtime pay), backdated taxes, and missed social security contributions, plus administrative fines, civil penalties and interest for noncompliance with South African employment laws. They can also face legal action from employees who claim that they were misclassified and unfairly terminated.

Wages and payroll in South Africa

A combination of national legislation and sector-specific agreements guides South Africa’s wage and payroll regulations. While the country enforces a national minimum wage, collective bargaining agreements (CBAs) may set higher standards for certain industries. Understanding local payroll practices is essential for staying compliant when hiring in South Africa.

Minimum wage in South Africa

As of the latest adjustment on March 1, 2024, the national minimum wage in South Africa is set at R27.58 per hour. However, CBAs or sectoral determinations can establish higher rates for specific industries, setting wages that meet or exceed the statutory minimum.

Payroll frequency in South Africa

Payroll frequency in South Africa typically depends on the nature of employment and industry norms. Many salaried employees are paid monthly, while certain sectors—particularly those with more casual or hourly-based roles—may pay weekly or bi-weekly. Employers should outline payment schedules in the employment contract and adhere to BCEA standards, including ensuring wages are paid within seven days of the end of the pay period.

13th month pay in South Africa

Unlike some countries that mandate a 13th month payment, South Africa does not legally require employers to provide a 13th cheque or bonus. Still, many companies voluntarily offer it as a discretionary bonus or performance-related incentive. If you choose to include a 13th cheque, it should be stipulated in the employment contract or company policy to avoid misunderstandings.

Run payroll compliantly in South Africa

Managing payroll compliantly in South Africa means staying on top of statutory deductions, adhering to local laws, and paying your workforce accurately and on time. Rippling EOR makes it easier than ever to hire and pay employees across the globe—in South African rand and other currencies—with a reliable global payroll solution.

Employer and employee taxes in South Africa

Employers in South Africa have to comply with payroll tax regulations, which include withholding and remitting Pay-As-You-Earn (PAYE) taxes, UIF contributions, and SDL payments. Noncompliance, including failing to correctly calculate or pay these obligations can result in penalties from SARS or other authorities. Staying informed about tax regulations—or partnering with a South African employer of record—helps ensure compliance and prevents costly mistakes. Here’s what to know about employer and employee taxes in South Africa.

Employer taxes in South Africa

Employee taxes in South Africa

South Africa has a progressive income tax, meaning income tax rates vary depending on an employee’s income. Employers deduct income tax, also known as Pay-As-You-Earn or PAYE tax, and remit it to SARS on their employees’ behalf.

Employees must also make the following contributions: 

Penalties for not paying taxes in South Africa

Noncompliance with South African tax regulations can lead to hefty penalties. 

SARS may impose interest on late payments. Employers can also face administrative penalties or even criminal charges in cases of severe tax evasion. Penalties vary depending on the type of tax; for example, late payments of PAYE tax are subject to an administrative penalty of 1% of the year’s PAYE liability per month, up to a maximum of 10%.

To avoid these risks, South African employers should maintain thorough tax records, file returns on time, and make sure all deductions and contributions are accurate.

Avoid tax compliance concerns by working with an EOR, which can help manage your international compliance responsibilities, including paying taxes correctly and on time in different jurisdictions.

Employee benefits in South Africa

Providing competitive employee benefits in South Africa can help you attract and retain top candidates. Some benefits, like contributions to UIF and statutory leave entitlements, are mandatory. However, employers can also offer optional benefits—such as private medical aid contributions, retirement contributions, and performance-related bonuses—to differentiate themselves from competitors. Below is an overview of mandatory and common optional benefits in South Africa.

Mandatory benefits in South Africa

Mandatory benefits are those required by law, including:

• Contributions to the Unemployment Insurance Fund (UIF): Both employers and employees must contribute 1% of the employee’s salary to the UIF, which provides short-term relief in cases of unemployment and pays employees during maternity leave or illness.
• Compensation For Occupational Injuries And Diseases (COIDA): COIDA is South Africa’s version of workers’ compensation insurance, which compensates employees who are injured or become ill on the job due to work-related accidents or occupational diseases.
• Skills Development Levy (SDL): Employers must contribute 1% of their monthly payroll to SDL, a tax that funds workforce and skills development.

Optional benefits in South Africa

While not legally required, optional and fringe benefits can significantly improve employee satisfaction and help your organization attract and retain high-quality job candidates. Here are some of the most popular supplementary benefits in South Africa:

• Private medical aid contributions: South Africans receive public health insurance, but the system is frequently overtaxed, making private healthcare a popular benefit employers offer. 
• Retirement contributions: Employers may offer pension or provident fund benefits to help employees prepare for the future.
• Performance bonuses or a 13th cheque: 13th month payments aren’t mandatory in South Africa, but they are common. Many companies choose to reward employees with additional pay based on individual or company performance.
• Flexible working arrangements: Flexible hours and other working arrangements are increasingly popular, especially for remote workers, and can help attract and retain top talent.

Working hours, overtime, and leave in South Africa

As with many countries, South Africa’s regulations governing working hours, overtime, and leave entitlements are set at the national level. The BCEA provides most of the guidelines, though sectoral or company-level collective agreements may refine relevant standards further. Understanding these rules is essential for building compliant and sustainable work practices.

Standard working hours in South Africa

Under the BCEA, the standard working hours are a maximum of 45 hours per week. Typically, this translates to nine hours per day if the employee works five days a week and eight hours per day if the employee works more than five days a week. While these are the statutory norms, certain industries or roles may have different arrangements established via collective bargaining agreements.

Overtime laws in South Africa

Overtime is allowed if it’s agreed upon by both the employer and employee, either in the employment contract or a subsequent agreement. 

Employers must pay at least 1.5 times the normal wage rate for overtime hours or may offer paid time off instead, depending on mutual agreement. Overtime pay applies to any hours worked over 45 in a workweek or over 40 if the employee is contracted to work 40 hours per week. Overtime is generally capped at 10 hours per week—employees can legally refuse to work once they’ve reached 10 hours of overtime or enough overtime that they’ve worked 12 hours in a single workday.

Overtime pay applies only to employees earning below the earnings threshold set by the Minister of Employment and Labour. Employees above this threshold are not automatically entitled to overtime pay unless their employment contract provides for it.

Rest period and break laws in South Africa

For every five hours of continuous work, employees are entitled to a meal break of at least one continuous hour unless a shorter period is mutually agreed upon and recorded. They are also entitled to a daily rest period of 12 consecutive hours and a weekly rest period of at least 36 consecutive hours, usually including Sunday.

Leave laws in South Africa

South African employees are entitled to several types of leave under the BCEA, including:

• Annual leave: Employees receive at least 21 consecutive days of paid annual leave per 12-month cycle (or one day for every 17 days worked). This equates to 15 working days for employees working a five-day work week, and 18 working days for employees working a six-day work week. Leave must be taken within six months of the end of the leave cycle, unless otherwise agreed.
• Sick leave: Over a 36-month leave cycle, employees are entitled to the equivalent number of days they would normally work in a six-week period as sick leave. The employer pays all days of sick leave. This entitlement starts after six months of continuous employment, with prorated sick leave during the first six months.
• Maternity leave: Expecting mothers get up to four consecutive months of leave, beginning one month before the expected birth of the child, and lasting for at least six weeks after the birth. Employers are not required to pay employees’ salaries during maternity leave, but they may be entitled to UIF benefits.
• Parental leave: As of 2020, employees are entitled to 10 days of parental leave in the event of a birth, adoption, or following a surrogacy, and 10 weeks of mandatory adoption leave if they adopt a child under two years old. Employees can use parental leave as paternity leave or split it between two parents. Employers are not required to pay employees’ salaries during parental leave, but they may be entitled to UIF benefits.
• Family responsibility leave: Employers must offer three days of paid leave per year for certain family events, such as the birth of a child or the death of a close family member.
• Public holidays: South Africa celebrates 12 public holidays each year. Work on a public holiday is generally paid at double the normal rate or granted as time off in lieu. If a public holiday falls on a Sunday, employees are typically given the following Monday off.

Employee onboarding in South Africa

A thorough and well-structured onboarding process sets new employees up for success. Beyond explaining job duties and workplace policies, employers must also manage tasks like verifying their new hire’s qualifications and ensuring compliance with relevant laws. Building trust during onboarding lays the foundation for a productive long-term relationship.

A checklist can be helpful during onboarding to keep track of all the tasks that need to be done and manage all the moving parts along the way.

How to onboard employees in South Africa: A simple checklist

Help your new hire get started on the right foot by using our detailed onboarding process checklist:

Running background checks in South Africa

Are background checks legal in South Africa?

Background checks are generally legal in South Africa, provided they comply with privacy laws like the Protection of Personal Information Act (POPIA) and the Employment Equity Act. Employers must obtain explicit, informed consent from applicants before conducting such checks and make sure that the information they collect during the hiring process is directly relevant to the role.

What types of background checks are illegal in South Africa?

Not all background checks are allowed in South Africa, where POPIA has been on the books since 2013 to protect citizens’ personal privacy rights. As such, employers cannot run background checks that infringe on protected personal information or discriminate based on race, gender, religion, sexual orientation, or other protected characteristics, unless such information is legally required or directly relevant to the role. Irrelevant inquiries, such as probing an applicant’s political affiliations, religious beliefs, or health status, are generally not permitted. Any background check must be justifiable based on the position’s requirements.

Some types of background checks are restricted and only allowed in specific situations, sectors, or industries. For example, employers can only conduct pre-employment credit checks on applicants seeking roles with financial responsibilities, and the checks must comply with the National Credit Act.

Types of South African background checks

Offer letters in South Africa

While not legally required, providing a written offer letter is standard practice in South Africa. An offer letter should outline key terms of employment—such as job title, start date, remuneration, benefits, and working hours. Though not always legally binding, it sets clear expectations before the employee’s start date and may help prevent misunderstandings later. Here’s a brief list of details to include in a South African offer letter (though keep in mind that this isn’t an exhaustive list):

• Job title, description, and company name 
• Start date 
• Working hours 
• Compensation and benefits (salary, equity, vacation, and insurance)
• Termination conditions
• Contact information and phone number

NDAs and confidentiality agreements in South Africa

Non-disclosure agreements (NDAs) and confidentiality clauses are common and enforceable in South Africa, provided they’re reasonable and serve a legitimate business interest. Employers can include confidentiality provisions in the employment contract or draft a standalone agreement. These documents help protect trade secrets, intellectual property, and other sensitive information.

Probationary period in South Africa

Probationary periods are allowed in South Africa and are commonly used to assess a new employee’s suitability for the role. The Labour Relations Act (LRA) requires that probation be reasonable in duration, considering the nature of the job. A typical probationary period ranges from three to six months. During probation, employees still enjoy full statutory rights, and employers must provide guidance, training, and feedback to help the employee meet performance standards before taking any disciplinary action against them.

Work permits in South Africa

Before your new team member can start working in South Africa, you have to make sure they have the legal right to do so. Non-citizens and non-permanent residents generally need an appropriate work permit to work legally in South Africa. The specific type of visa depends on the nature and duration of their employment.

Who needs a work visa in South Africa?

Any individual who is not a South African citizen or does not hold permanent residence status will need to obtain a valid work visa to legally work in the country. This requirement applies to all foreign nationals, whether they are employed directly by a local entity, seconded from an overseas office, or working for a multinational corporation.

How long does it take to get a work visa in South Africa?

Processing times for work visas in South Africa vary based on the type of visa, the applicant’s country of origin, and the volume of applications. Generally, it can take anywhere from eight to 12 weeks or sometimes longer. Employers are encouraged to start the application process well in advance of the candidate’s intended start date.

Types of work visas in South Africa

South Africa offers several categories of work visas with different requirements, including:

• General Work Visa: For foreign nationals who do not qualify under critical skills but have a job offer from a South African employer
• Critical Skills Work Visa: For highly skilled professionals whose expertise is in demand in South Africa. The list of critical skills is regularly updated
• Intra-Company Transfer Work Visa: For employees transferred from an overseas branch of a company to a South African branch, valid for up to four years
• Corporate Visa: Allows a corporate entity to employ a pre-approved number of foreign workers, streamlining the hiring process

Termination and redundancy in South Africa

While termination is not usually at the forefront of employers’ minds when hiring, understanding termination and redundancy regulations is crucial for anyone who plans to find employees in South Africa. The country’s labor laws, primarily governed by the LRA and the BCEA, set out fair procedures and justifiable reasons for ending an employment relationship—which you’ll need to know to stay compliant if you want to part ways with a South African employee down the line.

Does at-will employment exist in South Africa?

At-will employment is a legal principle that allows either an employer or an employee to end their working relationship at any time, for any reason, or even without reason, as long as the termination isn't based on illegal grounds like discrimination.

At-will employment, which is common in other jurisdictions like the US, does not exist in South Africa. Employers must have a fair, lawful reason for terminating employees and follow a fair procedure. Acceptable grounds typically include misconduct, incapacity (poor performance or ill health), or operational requirements (retrenchments due to economic, technological, or structural reasons).

Notice periods in South Africa

The BCEA prescribes minimum notice periods for termination, which employers must follow unless the employee has a contract or collective bargaining agreement that calls for more generous notice.

Minimum notice periods under the BCEA depend on the employee’s length of service and apply when the employer or the employee terminates the employment contract. They are:

These notice periods apply unless a contract or CBA stipulates a longer period.

Severance pay in South Africa

Severance pay is mandatory when an employer dismisses an employee due to operational requirements (retrenchment). The minimum statutory requirement is one week’s pay for each completed year of continuous service. Collective agreements or company policies may provide more generous severance terms.

How to terminate employees compliantly in South Africa

Managing a global team and tracking the different termination regulations that apply across jurisdictions can be complex. Not only do employers have to stay on top of varying just-cause criteria, but they also have to understand different rules regarding notice and probation periods and statutory severance pay in different regions and countries.

Make terminating employees simpler with an employer of record (EOR) that can help oversee your global compliance. An EOR like Rippling can onboard and offboard employees around the world according to legal requirements in different countries so you can focus on what matters: growing your business.

FAQs about hiring in South Africa

Can I hire employees in South Africa without my own entity?

Yes. By partnering with an employer of record (EOR), foreign businesses can legally hire and pay workers in South Africa without establishing a local entity. The EOR serves as the local employer on paper, handling compliance with labor laws, payroll, and taxes. That frees your company and team to focus on daily management and business operations.

What is the difference between an independent contractor and an employee in South Africa?

In South Africa, an employee works under the direction and control of the employer and is typically subject to statutory protections and benefits. An independent contractor, however, usually provides services to multiple clients, controls their own work schedule, and provides their own benefits. Contractors are also not entitled to the same labor protections as employees. 

How much does it cost to hire an employee in South Africa?

The cost of hiring in South Africa includes more than just the employee’s salary. Employers also need to consider statutory contributions to the Unemployment Insurance Fund (1% of the employee’s salary), Skills Development Levy (1% of their total payroll, as long as it’s over R 500,000 annually), COIDA, and, in some cases, retirement or medical aid contributions. Industry norms and collective bargaining agreements may influence wages. Overall, total employment costs vary depending on the employee’s role, industry, qualifications, and agreed-upon benefits.

What is the annual leave entitlement in South Africa?

Under the Basic Conditions of Employment Act (BCEA), full-time employees are entitled to at least 21 consecutive days of paid annual leave per 12-month work cycle. This equates to 15 working days for employees working a five-day work week, and 18 days for employees working a six-day work week. Many employers provide more generous leave entitlements, and certain collective agreements may also offer additional days.

What are the requirements for work permits in South Africa?

Foreign nationals who are not permanent residents must obtain a relevant work visa before starting employment in South Africa. Employers need to make sure the candidate has a suitable visa category—such as a General Work Visa, Critical Skills Work Visa, or Intra-Company Transfer Work Visa—based on their qualifications and the job role. When they apply for a work visa, a candidate and their employer will need to prepare and submit documentation that proves the candidate’s suitability, qualifications, and job offer, as well as paying applicable fees and waiting for processing by the Department of Home Affairs.

What benefits are required for employees hired in South Africa?

Mandatory benefits in South Africa include contributions to the Unemployment Insurance Fund (UIF), Compensation for Occupational Injuries and Diseases (COIDA) and Skills Development Levy (SDL), and granting employees statutory leave entitlements, such as paid annual leave, sick leave, and maternity leave. Employers must also comply with the national minimum wage. Many organizations provide additional benefits to help them attract and retain talent.

What is always required when an employer terminates an employee in South Africa?

South African labor law doesn’t recognize at-will employment, so it requires a fair and lawful reason for termination. Employers must follow guidelines outlined in the Labour Relations Act (LRA), which often include conducting a disciplinary hearing for misconduct or poor performance or engaging in consultation for redundancies. Ensuring both substantive fairness (valid reason) and procedural fairness (correct process) is always mandatory when terminating an employee.

How does a US company pay a foreign employee?

A US company can pay foreign employees by partnering with a global payroll provider, using an EOR in the employee’s country, or establishing a local entity. The chosen method must comply with local labor and tax laws, ensure proper withholding of social contributions, and account for currency exchange considerations. Many companies choose an EOR or global payroll service to simplify compliance, streamline payments, and mitigate administrative burdens.

Disclaimer: Rippling and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.