Employer of Record in South Africa

Your firm may grow into South Africa with the aid of the EOR (Employer of Record) solution without the requirement to set up an entity. You can hasten the onboarding of your remote staff and efficiently handle their payroll, benefits, and other needs thanks to our centralised and automated global HR platform. With the knowledgeable support of our global network, we aid you in streamlining the process of global growth. 

Overview of South Africa

• Estimated Population: 59.6 million (2019)
• Currency: South African Rand (ZAR)
• Capital city: Pretoria
• Official language: There are 11 official languages – Sepedi, Sesotho, Setswana, siSwati, Tshivenda, Xitsonga, Afrikaans, English, isiNdebele, isiXhosa and isiZulu.
• GDP: $748 billion PPP (2021) Wikipedia

Employment Landscape in South Africa

All employees, including those from foreign nations, are intended to get employment protection under South African labour laws. Employers are prevented from breaking the law thanks to statutory standards of practice endorsed by NEDLAC and non-statutory codes of practice established by CCMA. Collective bargaining agreements between employers and trade unions are enforceable in the United States unlike in other nations. The BCEA compels employers to communicate employment information prior to the employment in order to safeguard vulnerable employees, even if a written contract is not required to establish an employment connection. The disciplinary standards should be outlined in detail in the contracts that the employer signs with the employees, rather than being disclosed on an as-needed basis.

In South Africa, there are two sorts of employment contracts: fixed-term agreements lasting for a set amount of time or until a specified task is finished and long-term agreements that continue until either side terminates them for good cause or until death.

Entitlements	Explanation
Statutory Working Hours	A five-day workweek with a 45-hour maximum (one hour each day)
Rest Period	In South Africa, workers are permitted to work up to three hours per day and ten hours per week in overtime at a pay rate equal to 1.5 times their usual income. However, an agreement between the employer and employee is required in order to work overtime. The number of overtime hours, the overtime rate, and the length of the agreement should all be included in this agreement.
Paid Public Holidays	1 January: New Year’s Day 2 January: Public holiday New Year’s Day observed ** 21 March: Human Rights Day 7 April: Good Friday * 10 April: Family Day 27 April: Freedom Day 1 May: Workers’ Day 16 June: Youth Day 9 August: National Women’s Day 24 September: Heritage Day 25 September: Public holiday Heritage Day observed ** 16 December: Day of Reconciliation 25 December: Christmas Day 26 December: Day of Goodwill
Paid Leave	Employees receive 21 days of paid leave in addition to the public holidays after completing a full year of employment; paid leave cannot be carried over from one year to the next.
Medical/ Sick Leave	Depending on their term of work and documentation of a medical condition, South African employees are entitled to a set amount of sick time. For every 26 days worked in the first four months of employment, employees are granted one day of sick time. Following this first term, workers are entitled to paid sick leave for as many days as they worked in a six-week period, calculated over a cycle of 36 months. However, if an employee presents a medical certificate from a licensed medical professional, they are only qualified for sick leave that lasts more than two days. As a result, employees are safeguarded, and receive fair pay for their illness or injury, and sick leave rules aren’t abused.
Maternity Leave	Maternity leave is a paid absence that is available to female employees for four months prior to the birth of the child. The Unemployment Insurance Act governs the payment of these payments. Depending on the insured person’s income level, a worker who contributes to UIF is qualified for a maternity benefit of up to 60% of average earnings for the previous six months.
Paternity Leave	When their children are born, all parents, including dads, adoptive parents, and surrogates, are entitled to ten days of unpaid parental leave.
Family Responsibility Leave	Employees who have worked for the same company for at least four months and for at least four days per week are eligible for fully compensated family responsibility leave. In the event of a child’s birth, a sick kid, or a death in the family, this is often taken by male employees.
Employee Protection	The South African constitution forbids discrimination and guarantees everyone’s right to equality. The Employment Equity Act was put into place to encourage ethical workplace conduct and remedy historical prejudice. Trade unions are allowed in the nation, and they are essential to the process of establishing collective bargaining agreements that safeguard employees’ rights. The unions must adhere to a number of legal criteria, including possessing a formal constitution.

Contractors Vs Full-time Employees

Depending on their connection with the employer, employees and independent contractors are treated differently under South African law. Employees provide subordinate services while working within an employee-employer relationship, whereas independent contractors provide specified services within a set time limit. The following are significant distinctions between independent contractors and employees:

• Payment/Remuneration: While independent contractors are paid based on previously agreed-upon deliverables and submit invoices for payment, employees get regular or periodic compensation depending on the amount of hours worked.
• Tools of the Trade: While independent contractors frequently use their own tools of the trade, employees normally use the instruments of the trade given by the employer.
• Expenses: Employees often cover their own costs for things like transportation, whereas independent contractors usually foot the bill.
• Benefits: Among other things, employees receive paid time off, allowances, and payments to provident funds. On the other hand, independent contractors are solely entitled to the agreed-upon compensation for the particular deliverables specified in the contract.

It’s critical to comprehend these differences in order to follow the law and choose the proper legal and financial arrangements for people working as either employees or independent contractors.

Recruitment in South Africa

Due to the country’s stringent employment rules, which also apply to international businesses setting up subsidiaries here, hiring staff in South Africa may be difficult.

An employment contract, which may be oral or written, is often the first step in the recruiting process in South Africa. The contract must precisely define remuneration, perks, and termination requirements. The company must offer written information on the start date, location, job title, duties, working hours, pay, and leave privileges. All workers must be paid in South African Rand, the country’s official currency. Since fixed-term contracts are illegal for permanent employment, employees are typically given indefinite-term contracts.

While many South Africans still heavily rely on personal networks and referrals while looking for a job, the internet has become increasingly important as employment portals gain popularity. employsa ,bestjobs,findajobinafrica  ,careerjunction , and jobs.co are a few popular job search engines in South Africa.

An additional resource for locating work possibilities is recruitment companies that are featured in directories and on websites. Youth and the jobless are frequently helped by trade unions and industry organisations by way of employment recommendations. These job openings might not be published and rely on personal connections to be filled.

In South Africa, the use of newspaper classifieds as a traditional way of job searching is still important. Jobs that are available in a certain region are listed in the classified sections of newspapers like The Times South Africa and Mail & Guardian South Africa.

Partnering with an employer of record (EOR) can be a viable choice for firms developing in South Africa when it is necessary to hire workers rapidly. This makes it possible to outsource HR-related tasks and guarantees legal compliance. EORs speed up the recruiting process by offering choices for electronic signatures and virtual onboarding, which helps the business save time and money.

Probation & Termination

When recruiting new staff, South African employers frequently use a probationary term. Since the length of this period is not specifically specified by law, employers are free to choose a “reasonable time period” depending on the demands of the position and the necessity to judge an applicant’s fitness.

Before reaching a final judgement on an employee’s employment, businesses are required to give adequate remedial therapy during the probationary term and a reasonable opportunity for improvement. The employer has the power to terminate the employee’s employment if the two parties are unable to come to an agreement.

According to South African law, a person’s employment may be terminated for a number of reasons, such as the end of the employment period, the completion of a specified task, the giving of notice by either party, a breach of a contract, a mutual agreement, a person’s death, the employer’s insolvency, or the inability of either party to carry out their assigned duties.

Employees have 30 days from the termination date to contact the appropriate legal advice if they think they were fired unfairly. If the employee has worked for the business for at least a year and the dismissal is ruled unjust, the firm may be obliged to pay compensation.

Additionally, employers have the authority to unilaterally fire a worker for misbehaviour, subpar job output or incapacity, or for operational reasons. Unanimous termination, however, may result in wrongful dismissals. Although utilising this power is not common, the employee may file a lawsuit through the High Court of South Africa in such circumstances.

We offer writing services for well-written labour contracts that follow the rules set forth by South African authorities. To find out more about our specialised solutions created to meet your unique needs, get in touch with us.

EOR Solution

It’s crucial to have a partner to handle legal and compliance-related issues for you given the variety of rules in South Africa pertaining to both recruiting employees and forming a business. Our business is well-versed in South Africa’s domestic laws and rules. Connect with our specialists if you want to grow your business in South Africa now.

Outsourcing Employment Through an EOR in South Africa

An EOR aids in the reduction of costly resources that may be used for tasks like tax administration, payroll management, hiring, and other related issues handled by the HR department. We specialise in drafting custom contracts that abide with South African regulations. Our skills also include cutting-edge techniques like e-signing paperwork to speed up the recruiting process and update contracts.

Types of Visas in South Africa

Visa Category	Explanation	Duration
South Africa Visit Visa	This visa permits an individual to remain longer than the exemption period and may be utilised for either travel or business.	A maximum period of 90 days
South Africa Business Visa	With this visa, people can go to South Africa to work or make investments. To invest or launch a business, they must fill out the BI-1738 form.	A maximum period of 90 days
South African Work Visa	This visa is given to foreign nationals with certain talents, and it enables multinational corporations to move staff to South African offices.	Duration depends on the type of work

Work Permits

The Department of Home Affairs offers work authorizations or short-term visas. The Department of Home Affairs’ abroad offices are where applications are received, processed, and issued for various visas. Until your visa has been issued, you cannot make travel plans.

Payroll and Taxes in South Africa

Payroll Details

Employers must register and file with both the South African Revenue Service (SARS) and the South African Department of Labor, rather than just one tax body. According to the “Pay, as You Earn” principle, businesses immediately deduct tax from employees’ wages when making tax contributions.

The standard income tax withholdings, Standard Income Tax on Employees (SITE), Unemployment Insurance Fund (UIF), and Skills Development Levy are the recipients of the taxes you pay in South Africa. This implies that each employer must register with two governments and four tax destinations.

Taxation in South Africa

The beginning of the tax year is January 1 and it finishes on December 31. By the end of January, all workers must file income tax returns. Anyone who owes more tax after filing returns may be invoiced by the government through SARS.

Employer Taxation

Tax	Explanation
Corporate income tax	28%

Employee Taxation

Tax

Explanation

Income Tax

Income Range (in Rand) Income Tax Amount Income Tax Rate Excess* R 1 – 205,900 (1 – 216 200 from 2022) — 18% R 205,901 – 321,600 (216 201 – 337 800 from 2022) R 37,062 26% R 321,601 – 445,100 ( 337 801 – 467 500 from 2022) R 67,144 31% R445,101 – 584,200 (467 501 – 613 600 from 2022) R105,429 36% R 584,201 – 744,800 (613 601 – 782 200 from 2022) R 155,505 39% R 744,801 – 1,577,300 (782 201 – 1 656 600 from 2022) R 218,139 41% R 1,577,301 and above (1 656 601 and above from 2022) R 559,464 45%

Bonuses

Employers are not compelled by law to provide bonuses. In accordance with a contract, custom, or at the employer’s discretion, bonuses may be given.

With few constraints, South Africa offers favourable circumstances for the development of new businesses or branches. To avoid having your profits doubly taxed, it is suggested that you research the tax agreements that currently exist between South Africa and particular nations.

Pty Ltd, which permits unlimited shareholder ownership and allows for complete foreign entity ownership, is the most popular corporate form in South Africa.

The actions listed below must be fulfilled in order to create a Pty Ltd:

• Notify the Companies and Intellectual Property Commission (CIPC) of a name reservation.
• Sign up for Pay As You Earn (PAYE) and Standard Income Tax on Employees with the South African Revenue Service (SARS).
• The completion of these procedures might take many months.
• It’s also necessary to create a bank account.
• To guarantee that they are treated fairly by their employers, all employees must be registered with the Department of Labor.

You may create a Pty Ltd in South Africa and make sure that all legal and tax obligations are met by doing so.