South Africa Employer of Record

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in South Africa, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in South Africa―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in South Africa and how our employer of record service, Global Employment Outsourcing (GEO), and local HR experts can help you manage your international employment needs.

Hiring in South Africa

There are three major employment laws that govern working conditions in South Africa. The Basic Conditions of Employment Act 75 of 1997 regulates issues like working time, leave and termination. The Labour Relations Act governs freedom of association, collective bargaining, strikes, lockouts and other forms of industrial action, and the Employment Equality Act regulates discrimination and affirmative action.

Since employment in South Africa is highly regulated, it is essential that your employment practices are compliant. As your employer of record and PEO in South Africa, we can ensure that every contract, for every worker, meets all requirements. We can also provide you with guidance about cultural norms and hiring best practices and keep you up-to-date with employment regulations as they change.

Employment contracts in South Africa

As you look to hire employees in South Africa, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours
The regular workweek varies, but the maximum allowable is 45 hours. For employees who work five days a week, the workday cannot exceed nine hours, and for those who work more than five days a week, it cannot exceed eight. The maximum hours in a workday cannot exceed 12, even with overtime. Some collective agreements allow employers to average work hours and overtime over a period of up to four months.

Between workweeks, employees are entitled to 36 consecutive hours off, which must include a Sunday unless employer and employee agree otherwise.

Employees cannot be required to work at night. If they agree to night work, they are entitled to extra pay or a reduction in working hours. Transportation between home and work must be available at the beginning and end of each shift.

Employees who work between 11 p.m. and 6 a.m. on a regular basis (e.g., more than one hour five times a month or more, or 50 times per year) must be informed about the potential health and safety hazards related to night work. They also have the right to get medical exams at their employer’s expense.

Compensation
As you consider the appropriate salary to offer new employees, keep in mind:

Minimum wage is 21.69 rand per hour for most employees.
Overtime is generally limited to three hours a day and 10 hours a week, although a collective agreement can increase it to 15 hours a week for up to two months in any 12-month period. The overtime pay rate is 150% of the normal wage.
Employees are paid double on Sundays unless the day is part of their regular workweek, in which case they receive 150% of their normal salary.
Employers and employees also can agree to paid time off if an employee works on a Sunday, but it must be at the higher rate of 150%.
Collective agreements may regulate the legal salary range.

As your employer of record in South Africa, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses
Employers are not required to offer bonuses, but a 13th-month bonus is customary around Christmas or at year end.

Probationary period
Employers can require probationary periods, which usually last three months and may be extended if the employer has not yet decided whether the employee is a good fit for the job. In this case, however, the company must give the employee a chance to defend their performance.

Termination and severance
Employees are entitled to advanced written notice and/or payment upon termination, except in cases of gross misconduct.

The amount of notice depends on the employee’s tenure:

Six months or less: A minimum of one week’s notice
More than six months but not more than one year: Two weeks’ notice
More than one year: Four weeks’ notice (although collective bargaining agreements may reduce it from four weeks to two)

Employers can pay employees for the notice period in lieu of providing notice.

Employers must provide terminated employees with a certificate of service that includes the start and end dates of employment, job title, a description of the work performed and the salary.

Under the Labour Relations Act, a dismissal is considered legitimate if it is based on employee misconduct, incapacity due to ill health, poor performance or on an employer’s operational requirements such as the need to close, downsize or restructure.

Upon termination, employers must pay workers for any leave or compensatory time they have earned but not taken. When workers are dismissed because of downsizing or restructuring, the employer must pay severance equal to at least one week’s pay for each full year of service. Employees who “unreasonably” refuse an employer’s offer of alternative employment lose their right to severance pay.

Workers who feel they were fired unjustly can sue their employer. If a termination is deemed unfair, the worker can get his or her job back or receive compensation of up to 24 months’ salary. Employees who leave a job because their employer made the atmosphere intolerable can claim constructive dismissal, and employees who believe they have been discriminated against can sue for damages under the Employment Equity Act.

As your employer of record in South Africa, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.

Employee benefits and paid leave in South Africa

When negotiating terms of an employment contract with a candidate in South Africa, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave
Pregnant employees are eligible for four consecutive months of maternity leave, with benefits paid by the Unemployment Insurance Fund. They can begin leave within four weeks of their due date, although earlier or later start dates are allowed by mutual agreement or when medically necessary. An employee who suffers a miscarriage during the third trimester of pregnancy or who gives birth to a stillborn child receives six weeks’ leave.

Employees may not work for six weeks after giving birth unless certified by a doctor or midwife.

Maternity benefits are based on an employee’s monthly salary. Employees can receive additional benefits if stipulated in a collective agreement or contract.

Vacation
Employees who work 24 hours or more per month are entitled to 21 consecutive days of paid annual leave during every 12-month period when they are employed by the same organization.

If the employee and employer mutually agree, the employee may take one day of leave for every 17 days worked or one hour of leave for every 17 hours.

An employee must finish the entire 12-month leave cycle before taking leave, although employers have the right to change this rule. Employers can mandate when leave will be taken as long as it is granted within six months of the end of the year in which it was earned.

Holidays
The Public Holidays Act grants 12 paid holidays:

New Year’s Day
Human Rights Day
Good Friday
Family Day
Freedom Day
Workers’ Day
Youth Day
National Women’s Day
Heritage Day
Day of Reconciliation
Christmas Day
Day of Goodwill

During election years, a 13th paid public holiday is usually declared to allow employees to vote in local elections.

If a holiday falls on a Sunday, the following Monday is considered a public holiday.

Employees who work on a public holiday are paid double their normal wage or they can exchange it for another day off if the employer agrees.

Sick leave
Paid sick leave is granted in three-year cycles, beginning from an employee’s start date, and is equal to the number of days the employee would normally work during a six-week period. For example, during the three-year cycle, an employee who works a five-day week is eligible for 30 days of sick leave.

During the first six months with an employer, employees cannot take more than one sick day for every 26 days they work.

Employers are not required to pay for sick leave if an employee is absent for more than two consecutive days or more than twice in an eight-week period without providing a medical certificate.

Unused sick leave is not carried over to the following year.

Health coverage
The South African constitution guarantees healthcare to everyone. Public hospitals operate on a sliding scale, with those in higher income brackets required to pay out of pocket. Private healthcare is higher quality but also expensive and typically requires payment upfront.

Higher income patients who pay directly for private healthcare are largely responsible for funding the public system.

Bargaining councils often provide health insurance plans, as do employers who not covered by a bargaining council plan. Employers and employees contribute in equal amounts to such plans.

As your employer of record in South Africa, we may be able to provide optional supplementary medical insurance coverage for professionals and their dependents at a more cost-effective rate.

Pension
There is no official retirement age in South Africa, and retirement funding is private and voluntary. Employers often provide plans or employees may set up their own. Generally, employers and employees contribute equal amounts to private pension plans, although it is not mandatory.

Workers’ compensation
The Compensation for Occupational Injuries and Diseases Act does not require workers to prove employer negligence to be compensated for workplace injuries or illnesses. Employees receive compensation if an injury or illness requires them to miss more than three days of work.

Employers make contributions to the Compensation Fund based on their total payroll and the type of business they run. Employers are required to make payments for the first three months of a temporary disability and are then reimbursed.

Benefits go to temporarily disabled workers, permanently disabled workers and families of individuals who die in work accidents or because of work-related illnesses. A worker is considered to have a temporary disability for up to two years, after which it is considered permanent.

Employers must report all workplace injuries to the compensation commissioner’s office or the body that administers workers’ compensation benefits within seven days, and occupational diseases within 14 days.

Employer social costs will cover a large portion of employee benefits in South Africa, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance, if needed.

Employee onboarding with an employer of record in South Africa

We write and validate all local employment contracts, streamlining the onboarding process for you and your South Africa employees—all you have to do is provide relevant information and review and approve the employment agreement.

As your employer of record in South Africa, we will:

Schedule a welcome call to discuss HR and employment information for South Africa, as well as answer any questions
Prepare a customized employment contract in English (or other local language)
Share the employment contract and benefits information with the new employee for signature and review
Gather tax and banking information from the employee to set up payroll
Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your South Africa employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on Global Employment Outsourcing (GEO) to expand and hire in over 179 countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in South Africa. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations—in more than 150 countries and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.

Learn more about Global Employment Outsourcing

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