A Deep Dive into Employment Regulations in South Africa

We’re excited to announce that we now support employment in South Africa! To help you understand this new market, our Global Infrastructure & Compliance Manager, Vincent van Biljon, guides you through all aspects of employment in South Africa, including compliance and how the Employer of Record model works.

During the webinar, we covered:

1. An overview of employment in South Africa, including the types of employment contracts commonly used and the risks associated with each
2. Key compliance considerations around unfair dismissals, employer obligations, proper employee classifications and breach of employee rights
3. Best practices for managing remote work, including health and safety requirements and expected employee benefits
4. Associated employment costs for employers
5. How the Employer of Record model works in the country and applicable regulations

This session is designed for HR and People leaders responsible for hiring and managing teams in South Africa. It will equip you with the essential knowledge you need to manage compliance effectively in this new market.

2. 1.Types of Employment Contracts
Indefinite, fixed-duration, and contractor agreements

2.Key Compliance Considerations
Terminations, unfair dismissal, employee rights and benefits,
and employer obligations

3.Employment Costs for Employers

4.How the Employer of Record Model
Works
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What we’ll
cover today:

3. ●Also known as a permanent employment contract

●Employee is hired for an unspecified duration, until
either the employer or the employee terminates it

●Employees are entitled to full employment protections
Indefinite Employment
Contracts
Risks:

1.Unfair dismissal claims
2.Redundancy costs

4. ●Employee is hired for a specific period or to complete
a specific task or project

●Contract automatically ends when the agreed period
expires
Fixed-term Employment
Contracts
Risks:

1.Unfair dismissal claims
2.Employee ‘misclassification’

5. ●Contract between a company and a self-employed
person for the performance of specific tasks or project

●Not considered part of the company’s workforce

●Not entitled to employment benefits and protections
Independent contractor
agreements
Risks:

1.Misclassification penalties
2.Tax and compliance issues

6. What makes
someone an
employee?
1.Control and supervision
2.Integration
3.Economic independence
4.Provision of tools and equipment
5.Workplace presence
6.Benefits and entitlements
7.Duration and permanence of relationship
8.Mutual obligation
Employees are usually
engaged under
indefinite or fixed-term
contracts directly related
to the employer's core
operations.

7. Key compliance
considerations in South Africa

8. Responsibilities:
1.Create work from home policies and guidelines
2.Ensure security of information
3.Maintain compliance with hours of work
Employer
Obligations &
Responsibilities
These obligations are
designed to ensure that
employers maintain a
safe, healthy, and
hazard-free environment
in compliance with the
Occupational Health and
Safety Act (OHSA).
Obligations:
1.Ensure safe working environment
2.Establish anti-harassment policy and procedures
3.Registration with UIF and COID
4.Employment contracts outlining terms of employment
5.Maintaining up-to-date employee records

9. The key employee rights in South Africa:
1.Health and safety in the workspace

2.Anti-discrimination & equal treatment

3.Protection from harassment

4.Business transfer

5.Union membership
Employee
Rights
The LRA and the BCEA
ensure that workers are
treated fairly in terms of
wages, working hours,
and conditions, while
also providing
mechanisms to address
issues such as
discrimination and
disputes.

10. 1.Annual holiday entitlement + public holidays

2.Leave policies

a. Sick leave
b.Maternity leave
c.Adoption leave
d.Commissioning parental leave
e.Parental leave
f.Family responsibility leave
g.Unpaid leave

3.Severance
Mandatory
Employee
Benefits
These obligations are
designed to protect
workers' rights, promote
equitable treatment, and
ensure a healthy and
safe work environment,
contributing to overall
social and economic
stability.

11. There are only 3 acceptable grounds for dismissal:
1.Misconduct

2.Incapacity (including poor work performance, ill health
and incompatibility)

3.Redundancy
Terminations must be procedurally fair!
Employees may refer unfair dismissal disputes to the Commission
for Conciliation Mediation and Arbitration (CCMA). If the
dismissal is found to be unfair, the employee could be awarded
reinstatement (with or without full back pay), re-employment or
compensation for 12 to 24 months.
End of
Employment
The end of employment
can occur through
resignation, mutual
agreement, or
dismissal (termination
by employer) and must
comply with the Labour
Relations Act (LRA) and
the Basic Conditions of
Employment Act (BCEA).

12. Employment costs in
South Africa

13. Employer
contributions
A few notes about salary
payments:

●Minimum wage in
South Africa is ZAR
27.58 per hour.

●Frequency is
typically monthly.

●No statutory
requirement for
payday.
Contribution Contribution amount
Unemployment Insurance Fund
(UIF)
Total of 2% each month, with the
employer contributing 1%
Skills Development Levy (SDL) 1% of total monthly payroll
Compensation for Occupational
Injuries & Diseases (COID)
Rates vary between 0.1% and 3.5%
of annual salary
Collective Labour/Bargaining Industry dependent
Employer social security contribution breakdown:

14. An employment cost calculator:

15. Employer of Record model
in South Africa

16. The Employer of Record is responsible for:
1.Ensuring employment is compliant with local
employment laws

2.Processing local payroll

3.Filing employment related taxes and returns

4.Issuing payslips to the employee

5.Distributing salary payments
An Employer of Record is
the legal employer of a
worker in South Africa.

As such, the Employer of
Record takes care of all
compliance aspects of
employment, including
payroll, taxes, statutory
benefits, employment
contracts and more.
How Employer
of Record
works
The Company:
Maintains a direct relationship with
the employee, allocates work, and
manages their performance.
The Employee:
Fulfils their obligations
as a worker for the
company.

17. What you need to
know about
employing in
South Africa via
an Employer of
Record:
1.Employer of Record services are
permitted in South Africa

2.No limit on type of contract or
length of employment

3.EOR & employing company
obligations have joint liability

4.Ensure your EOR knows these
obligations

18. Thanks!
E: [email protected]
L: linkedin.com/in/vincentvanbiljon

19. Appendix

20. A quick overview
of South Africa:
Population: 59.89 million (2022)
Currency: South African Rand (ZAR)
1 EUR = ~20 ZAR
Capital: Pretoria (executive), Bloemfontein
(judicial), and Cape Town (legislative)
Official Languages: English (primary),
Afrikaans, Zulu, Tsonga, Northern Sotho,
Southern Sotho, Swati, Xhosa, Tswana, Venda,
Ndebele
Remote Workers: ~26% of population
(approx. 15.57 M)
Working Hours/Week: 45 hours
Minimum Hourly Salary: 27.58 ZAR
Average Annual Salary: 372,000 ZAR
(approx. 18.7K EUR)
Corporate Income Tax: 27%
Income Tax: 18% - 45%

21. Flexibility
Additional days off


Healthcare
Supplementary health
insurance and life insurance
Transportation
Supplementary pension
Cash bonus
Hardware
Telephone costs
Fitness allowance
Training budget
Meals
Wellness budget
Referral program
Equity
Business travel insurance
Non-Mandatory
Employee
Benefits