How to hire and pay employees in South Africa
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Before hiring
Before hiring employees in South Africa, there are a few important things you’ll need to know. Firstly, in South Africa, non-compete agreements are typically enforced for periods between six and 12 months.
It’s also important for employers to know that employees in South Africa are entitled to four months of unpaid maternity leave, which must begin at least four weeks before birth. The employee must give the employer one month’s notice of the commencement of maternity leave.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in South Africa below.
At a glance
CURRENCY
ZAR
OFFICIAL LANGUAGE
11 official languages including English, Afrikaans, Xhosa, and Zulu
PAYROLL FREQUENCY
MONTHLY, BI-WEEKLY, WEEKLY
EMPLOYER TAXES
2%
13th / 14th SALARY
Non-mandatory customary 13th salary is generally paid in December
Good to know
- Many companies in South Africa have a shutdown period over December. They can ask employees to take their annual leave to coincide with this period. Should an employee take their annual leave at another time during the year, then the shutdown period is treated as unpaid leave.
- VAT of 15% is required on the total cost of employment in South Africa if the new hire's main areas of work are based in South Africa (e.g. managing team in South Africa, business interactions are mainly in South Africa). If they are not, and their business activities are outside South Africa, then VAT does not apply.
- Parental leave is unpaid in South Africa. But parents can claim payment from the Department of Labour’s Unemployment Insurance Fund (UIF) if they have contributed to it.
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Labor laws in
South Africa
Working hours and overtime
Employees in South Africa work nine hours daily, 45 hours weekly.
In South Africa, up to 10 hours overtime per week is permitted.
Employees earning below a threshold of 205,433.30 ZAR per year are paid 150% of their normal wage for overtime worked on weekdays and 200% for Sundays. Employees cannot opt out of these provisions.
Employees earning in excess of the threshold are not subject to overtime pay, but cannot be forced by their employer to work overtime without compensation without prior agreement.
Minimum wage
Employment contracts
In South Africa, the probationary period is typically three months.
IP protection and non-compete agreements
Non-compete agreements are typically enforced for periods between six and 12 months. Employers do not need to pay employees separately for these agreements to be enforceable.
Calculate costs to hire internationally
Benefits and leave in
South Africa
Vacation time
Employees in South Africa are entitled to fully paid leave of 21 consecutive days in a leave cycle (a period of 12 months commencing from their first day of employment).
To qualify, employees must have worked for 24 hours or more a month for the same employer.
Annual leave is accrued from days worked, usually at the rate of 1.25-1.5 vacation days for each month of work, depending on the number of days worked per week.
South Africans are also entitled to three days of Family Responsibility leave per annum.
Sick leave
Sick leave is based on a 36-month cycle (from the commencement of employment) and is fully paid by the employer.
For the first six months of employment, the employee is entitled to one day of sick leave for every 26 days worked.
From the first day of the seventh month, the employee receives:
- 30 days if they work a five-day work week
- 36 days if they work a six-day work week
- 33 days if an employee works Monday to Friday and a Saturday every two weeks
At the end of the 36-month cycle, the number of sick days resets.
Maternity and paternity leave
Parental leave
Employees in South Africa are entitled to four months of unpaid maternity leave, which must begin at least four weeks before birth. The employee must give the employer one month’s notice of the commencement of maternity leave.
The employer is not mandated to pay for maternity leaves. But employees can claim payment from the Maternity Benefit Fund if they have contributed to the Unemployment Insurance Fund (UIF). They can receive up to 60% of their regular pay from this fund, for up to 121 days.
Employees are also entitled to 10 days of unpaid parental leave, but can claim payment from the UIF at a rate of 66% of their regular pay.
Holidays
View a list of recognized public holidays in South Africa here.
Employer tax
An employer’s social contributions in South Africa total 2% and includes contributions for Skills Development Levy (SDL), unemployment insurance, and workers compensation.
VAT of 15% is also required on the total cost of employment in South Africa if the employee's main areas of work are based in South Africa (e.g. managing team in South Africa, business interactions are mainly in South Africa). If they are not, and their business activities are outside South Africa, then VAT does not apply.
Individual tax
In South Africa, employees pay between 18% and 45% depending on their income bracket. They also pay a social security tax of 1%.
Termination in
South Africa
In South Africa, if the employee is terminated due to operational requirements, their employer is obligated to pay the employee one week’s severance pay for every year employed. No severance pay is payable for dismissal for other reasons.
The notice period for both dismissals and resignations depends on the length of the employment relationship. The breakdown is as follows:
- Six months or less: One weeks’ notice
- Six months to less than a year: Two weeks’ notice
- More than a year: Four weeks’ notice
Start hiring employees in
South Africa
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
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