Employer of Record in South Africa

With the help of the Marzuna EOR (Employer of Record) solution, your company may expand into South Africa without having to create an entity. With our centralized and automated global HR platform, you can expedite the onboarding process for your remote workers and effectively manage their payroll, benefits, and other requirements. We assist you in simplifying the process of worldwide expansion with the informed assistance of our extensive global network.

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

In South Africa, labor laws extend employment protection to all workers, including those from foreign nations. To ensure adherence to the law, statutory standards of practice endorsed by NEDLAC and non-statutory codes of practice established by CCMA are in place. Unlike many other countries, collective bargaining agreements between employers and trade unions hold legal weight in South Africa. Even when no written contract is required to establish an employment relationship, the BCEA mandates that employers communicate employment details before hiring to protect vulnerable workers. Rather than addressing disciplinary standards on an as-needed basis, these standards should be thoroughly outlined in the contracts that employers enter into with their employees.

In South Africa, employment contracts come in two primary forms: fixed-term agreements, which are valid for a specified period or until a specific task is completed, and long-term agreements, which continue until either party terminates them with good cause or until the employment is concluded, often due to retirement or other such factors.

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

South African labor law distinguishes between employees and independent contractors based on their relationship with the employer. Employees work within a traditional employee-employer relationship, providing services as subordinates, while independent contractors are engaged to deliver specific services within a defined time frame. Here are some key differentiators between employees and independent contractors:

• Payment/Remuneration: Independent contractors receive payment based on predefined deliverables and typically submit invoices for their services. In contrast, employees receive regular or periodic compensation, often based on the number of hours worked.
• Tools of the Trade: Independent contractors often use their own tools and equipment, while employees typically use tools and equipment provided by the employer.
• Expenses: Employees typically cover their own expenses, such as transportation costs, while independent contractors are responsible for their own expenses related to the contracted work.
• Benefits: Employees generally receive benefits like paid time off, allowances, and contributions to provident funds, among other perks. Independent contractors, on the other hand, are entitled only to the agreed-upon compensation for the specific deliverables outlined in their contract.

Understanding these distinctions is crucial for both legal compliance and for determining the appropriate legal and financial arrangements for individuals working as either employees or independent contractors in South Africa.

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) like Marzuna 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 often implement a probationary period. The specific duration of this probationary period is not explicitly defined by law, allowing employers to determine a “reasonable time period” based on the role’s requirements and the need to assess an applicant’s suitability.

Employers are legally required to offer sufficient remedial assistance and a fair chance for improvement during an employee’s probationary period before making a final decision on their employment. If both parties cannot come to an agreement, the employer has the authority to terminate the employee’s contract.

Under South African law, employment can be terminated for various reasons, including the expiration of the employment term, completion of a specific project, mutual notice from either party, contract breaches, mutual consent, death of the employee, employer insolvency, or the inability of either party to fulfill their duties.

Employees have a 30-day window after termination to seek legal counsel if they believe their dismissal was unjust. If the employee has served the company for at least a year and the dismissal is deemed unfair, the firm may be required to provide compensation.

Furthermore, employers can unilaterally terminate an employee for reasons such as misconduct, inadequate job performance, incapacity, or operational necessities. However, unilateral terminations can potentially lead to wrongful dismissal claims. While the exercise of this authority is relatively uncommon, employees can initiate legal action through the High Court of South Africa in such situations.

We offer professional services to draft well-structured employment contracts that align with the regulations set forth by South African authorities. To learn more about our tailored solutions designed to meet your specific needs, please reach out to us.

EOR Solution

Navigating the intricate landscape of employment and business regulations in South Africa can be a daunting task, making it imperative to have a knowledgeable partner to address legal and compliance-related matters on your behalf. With our deep understanding of South Africa’s domestic laws and regulations, our experts are ready to assist you in expanding your business in South Africa.

Outsourcing Employment through an EOR in South Africa

Employing an Employer of Record (EOR) can significantly reduce the allocation of valuable resources that might otherwise be tied up in tasks like tax administration, payroll management, recruitment, and other HR-related responsibilities. We specialize in the creation of tailored contracts that align with South African legal standards. Additionally, our expertise extends to cutting-edge solutions such as e-signing of documents to expedite the hiring process and streamline contract updates. Reach out to our team for assistance in your South African business expansion endeavors.

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.

South Africa offers an accommodating environment for new businesses or branch development, characterized by relatively few constraints. To maximize your profits while avoiding double taxation, it is highly advisable to research the existing tax agreements between South Africa and specific countries.

One of the most popular corporate structures in South Africa is the Pty Ltd, which not only allows unlimited shareholder ownership but also permits complete foreign entity ownership.

Here’s a breakdown of the steps to establish a Pty Ltd:

• Initiate the process by notifying the Companies and Intellectual Property Commission (CIPC) to reserve your chosen business name.
• Register for Pay As You Earn (PAYE) and Standard Income Tax on Employees with the South African Revenue Service (SARS). Please note that this may take several months to complete.
• It’s crucial to establish a bank account.
• To ensure that all employees are treated fairly and in accordance with labor laws, it’s essential to register them with the Department of Labor.

By establishing a Pty Ltd in South Africa, you can rest assured that you’re not only forming a business but also fulfilling all the necessary legal and tax obligations.