Today’s productivity tools make remote work easier than ever, so companies are no longer limited to hiring in their immediate geographic vicinity. They can dip into the global talent pool, working with the best of the best. Every country has something unique to offer based on its education system and workforce trends. For hiring teams or HR managers looking for talent abroad, South Africa is a country worth exploring due to its culturally diverse, multilingual population and its highly skilled and well-educated workforce.
However, before you can start hiring in South Africa, it's important to do your research. Labor laws vary by country, and you’ll need to be compliant with all applicable employment regulations. There are also practical considerations, like making sure you pay employees in their local currency.
To solve these challenges, companies often turn to an employer of record (EOR) to help simplify hiring in South Africa. An EOR is a third-party entity that acts as the legal employer of workers on behalf of your business. It manages all aspects of employment, from contracts to payroll to taxes, and also takes on the legal liability of hiring employees.
Using an employer of record can save you time and stress, making it much easier to hire global talent. With that in mind, here’s what you need to know about working with an employer of record in South Africa.
A few things to know about hiring in South Africa
Working hours
Hiring in South Africa has logistical, financial, and legal implications. First, there are the practicalities to consider. Most employees in South Africa work 9 hours per day, totaling 45 hours per week. Up to 10 hours of overtime are allowed each week. There are also rules regarding overtime pay—only employees earning below a certain threshold are entitled to it.
Compensation, taxes, and time off
The South African currency is the Rand (ZAR), and local employees will want to be paid in that currency. They’ll also expect to get holidays off—the country has 14 public holidays, plus additional regional holidays. Many South African companies also have a shutdown period in December.
In terms of financial considerations, note that employer taxes are 2% of gross salary. It's also customary for South African companies to offer a 13th-month salary, usually paid in December, although it's not legally required.
Further, a value-added tax (VAT) of 15% of the total cost of employment is required if the employee’s main point of work is in South Africa. This could apply if the majority of the individual’s business interactions take place in the country, for instance, or if they manage a local team.
Finally, there are the legal implications of hiring in South Africa. Take parental leave, for example. Although employers aren’t required to pay for parental leave, parents can apply for funds from the Department of Labour's Unemployment Insurance Fund (UIF) if they've previously contributed to it.
Probation and termination periods
There are also laws governing probationary and notice periods. The probationary period does not have a statutory maximum duration, but it must be reasonable considering the nature of the job and the time required to assess the employee’s suitability. Typically, this period lasts for three months. However, the notice period varies depending on the duration of employment.
For example, if an employee has been working for the company for six months or less, only one week’s notice is required. If an employee has been working for the company for six months to less than a year, two weeks’ notice is required. After a year, four weeks’ notice is required.
To learn more about employment laws and customs in the country, check out our comprehensive guide to hiring employees in South Africa. If you’d like a full breakdown of the hiring costs, including employer taxes and contributions, use Oyster’s free employee cost calculator to get a detailed estimate of the cost of hiring in South Africa.
Employer of record services in South Africa
Keep in mind that a company employing South African talent must comply with the laws and regulations governing employment in the country. If you violate South African labor and employment laws, you may be subject to fines or other legal repercussions. Working with an EOR in South Africa is one way to minimize the potential risk. As the official employer, the EOR bears the legal responsibility (and associated liability) of employing people there.
Different EORs offer different services according to their operating models. However, there are a few general services that most EORs offer, including:
- Legal compliance: An EOR in South Africa will be familiar with South African employment laws and can ensure that your company is abiding by regulations regarding overtime, notice periods, and more.
- Hiring and onboarding: Some EOR providers offer comprehensive HR services, including hiring and onboarding. For example, the EOR can provide new hires with basic training and equipment setup.
- Payroll and benefits: The EOR issues payslips and takes care of technicalities like payroll tax withholding. An EOR can also manage benefits, like health insurance, vacation days, and time off.
- Taxation: When hiring abroad, international taxes can be a challenge. An EOR can handle local payroll taxes, while also ensuring that your company is in compliance with international tax laws.
- Terminations: A local EOR will be familiar with the mandatory notice periods in South Africa. The provider can help ensure that termination and offboarding procedures are handled compliantly.
Choosing an EOR in South Africa
An EOR can be a cost-efficient alternative to establishing a company subsidiary abroad. However, it's important to do your research before selecting an EOR to work with.
When selecting an EOR partner in South Africa, the first consideration is the services the provider offers. While some focus on logistical tasks—like payroll and benefits—others offer end-to-end services covering the entire HR lifecycle, from hiring to termination.
You also want to ensure that the EOR is familiar with the South African labor market and laws. Some EORs operate only in specific countries, giving employers the benefit of local expertise. However, there is the drawback that if you want to hire in other countries as well, you may have to work with multiple EORs, which can create an additional administrative burden for your HR team.
The availability of tech tools might also be a deciding factor. It’s best if the EOR has a software platform, allowing you constant oversight of your international employees. While some EORs offer this kind of transparency, others don’t have such technology in place.
There are also cost considerations. In general, an EOR is going to be cheaper than establishing a foreign entity for your company. However, if you plan to onboard talent from other countries as well, working with multiple EORs can get expensive, so that’s something to be aware of.
Using Oyster to hire South African talent
An EOR is only one option for employers hoping to hire in South Africa. But if your talent strategy includes hiring across multiple countries, a better option is to use a global employment platform like Oyster so you can consolidate your global team onto a single platform.
Oyster offers an automated, end-to-end global employment solution that’s built for compliance at every step of the employment journey from contracts and onboarding to payroll, benefits, and more. We make it easy to hire, manage, and pay employees and contractors in 180+ countries, taking care of everything from cost calculations and benefits packages to onboarding your new team members quickly. We also offer payroll support in 140+ currencies, as well as guidance on equity options and skill-building to ensure your international employees get the support they deserve.
Learn more about how Oyster’s global employment platform can help you build and manage a global workforce.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
