Employment Law in South Africa

Contracts

South African employers must ensure their contracts abide by the Basic Conditions of Employment Act (BCEA), which stipulates certain information that must be included, such as the pay rate and frequency, termination notice period, and amount of leave. Many South African employment contracts are also based on collective bargaining agreements. 

Although the BCEA requires that employers offer written contracts, it’s important to note that in South Africa, verbal employment agreements may also be legal binding.

Termination and notice periods

In South Africa, labor laws generally require a written notice for termination, with periods of one week for employees employed for six months or less, two weeks for those employed for more than six months but not more than one year, and four weeks for those employed for more than one year. In most cases, terminated employees are entitled to a warning and a fair hearing. 

Employees dismissed for operational requirements are entitled to severance pay of at least one week’s remuneration for each completed year of continuous service. There is no statutory gratuity payment in South Africa; however, additional compensation may be provided based on employment contracts or collective agreements. As your Employer of Record (EOR) in South Africa, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with labor laws and minimize legal risks.

Probation periods

In South Africa, probation periods are indirectly addressed in local law, typically ranging from three to six months in the private sector, and up to twelve months in government roles, as guided by the Labour Relations Act and the Code of Good Practice.

Working hours and overtime

The standard working week in South Africa typically consists of 45 hours, spread across five days, with a legal maximum of nine hours per day for a five-day week or eight hours per day for a six-day week. Employees are entitled to a daily rest period of 12 consecutive hours and a weekly rest period of 36 consecutive hours, which should include Sunday whenever possible.

Any work beyond the standard working time is considered overtime. South African law limits overtime to 10 hours per week, unless a collective agreement allows up to 15 hours per week for a maximum of two months per year. Overtime must be compensated at 1.5 times the normal wage, or double the rate if worked on Sundays or public holidays.

Taxes

In South Africa, withholding tax is known as Pay-As-You-Earn (PAYE) and is deducted by employers before paying salaries to employees. Employers must deduct PAYE from employee salaries based on applicable income tax rates and submit it to the South African Revenue Service (SARS).

Employer payroll contributions

South Africa’s social security system requires employer contributions that are dependent on the total number of employees, and these contributions cover pensions, medical care, disability insurance, and gratuity payments. In addition, workers’ compensation is financed by contributions from state governments, employers, and employees.