South Africa

South Africa PEO & Employer of Record

WeHG provides an International PEO and wide-ranging Employer of Record service in South Africa to companies willing to enter the South African market or hire local/expat employees in this country.

Traditional approach requires establishing a branch office in South Africa.  However, our solution allows you to start the operations in South Africa within days hence save time and money.  WeHG would hire candidates on your authority while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

South Africa fast facts

Population, million: 59
Land area: 1,221,037  km²
Capital: Pretoria
Local currency: South African rand (ZAR)

GDP per capita:$ 11,911
GDP in currency:$ 711 billion

South Africa, the southernmost country on the African continent, renowned for its varied topography, great natural beauty, and cultural diversity, all of which have made the country a favoured destination for travelers since the legal ending of apartheid (Afrikaans: “apartness,” or racial separation) in 1994.

South Africa’s remoteness—it lies thousands of miles distant from major African cities such as Lagos and Cairo and more than 6,000 miles (10,000 km) away from most of Europe, North America, and eastern Asia, where its major trading partners are located—helped reinforce the official system of apartheid for a large part of the 20th century. With that system, the government, controlled by the minority white population, enforced segregation between government-defined races in housing, education, and virtually all spheres of life, creating in effect three nations: one of whites (consisting of peoples primarily of British and Dutch [Boer] ancestry, who struggled for generations to gain political supremacy, a struggle that reached its violent apex with the South African War of 1899–1902); one of Blacks (consisting of such peoples as the San hunter-gatherers of the northwestern desert, the Zulu herders of the eastern plateaus, and the Khoekhoe farmers of the southern Cape regions); and one of “Coloureds” (mixed-race people) and ethnic Asians (Indians, Malays, Filipinos, and Chinese).

Hiring, Negotiating and Doing Business in South Africa

Necessity of written employment contract

Every employer is required by law  to provide the employee with a written contract of employment not later that the first day of commencement of employment.

Different forms of engagement: employment, contracting, work with private entrepreneur

Categories of worker

  • Employee/worker. An employee is any person excluding an independent contractor who works for another person or for the state and who receives or is entitled to receive remuneration, and any other person who in any manner assists in carrying on or conducting the business of an employer (section 213, Labour Relations Act, 1995 (LRA)).
  • Independent contractor/self-employed. South African law distinguishes between employees and independent contractors. When considering whether an individual is an employee or an independent contractor, the courts consider the substance of the agreement over its form and make a determination based on the dominant impression test gained from considering a wide range of factors. Factors considered include the person’s control over the other person’s productive capacity and whether the:
  • Hours worked are subject to the control or direction of another person.
  • Person:
  • forms part of the organisation;
  • is economically dependent on the other person for whom he or she renders services;
  • is provided with tools of trade or work equipment by the other person.

Types of Visas:

  • Visas for medical treatment
  • Visas for working in the entertainment industry
  • Visas for attending a conference
  • Visas for compliance of Treaty conditions
  • Visas for crew (maritime)
  • Visas for cultural / economic / social exchange programmes
  • Transit visas (foreigners en-route to the neighbouring countries)

Business Visa

Foreigners who are contemplating investing in the South African economy by establishing a business or by investing in an existing business in the country must apply for a business visa. As an applicant, you will be required to invest a prescribed financial capital contribution.

Work Visa

Work visas are issued only to foreigners where South African citizens with the relevant skills are not available for appointment. These visas are issued for a set duration which varies on the type of work visa being applied for and applications are lodged through Visa Facilitation Services Centres(VFS) across the country or nearest South African embassy, mission or consulate abroad.

Types of Work Visa:

  • General work Visas are valid for the duration of the contract of employment or a period not exceeding 5 years.
  • Critical skills work Visas are issued for a period not exceeding five years) and to apply one you must submit the following: a duly completed application form signed by yourself, the applicant, a passport valid for no less than 30 days after the expiry of Payment of the prescribed fee, a vaccination certificate, if required by the Act., proof of financial means to cover envisaged living expenses in the Republic until you receive a salary.
  • Intra-company Transfer Work Visa ( to transfer an existing employee from a foreign branch to a branch in South Africa)
  • A corporate visa allows a corporate entity (e.g. a mine group, farmer, etc) to employ a pre-determined number of skilled/semi-skilled/ unskilled workers.

South Africa Employment Contract

Types of employment agreements

They are various types of employment contract such as permanent employment, fixed term employment, probation employment, and project employment:

  • The contract of permanent employment

The first thing that happens is that an offer of permanent employment is given in writing to the prospective of the employee. The prospective employee then accepts the offer of employment in writing. The permanent contract of employment is then entered into.

  • The Fixed-term Contract of Employment

The fixed term contract of employment is in fact almost identical to the contract of permanent employment. The only real difference is that the fixed term contract of employment will stipulate a starting date and an ending date. The contract will state that “Upon the attainment of (state ending date) this contract of employment will terminate, and the employment relationship between the employee and the employer will cease.

  • The temporary contract of employment

This contract of employment may be terminated by either party to the contract providing to the other party to the contract 1 month written notice of intention to terminate, for any reason recognised in law as being sufficient.  The employer may terminate this contract of employment at any time during the duration of the contract, for reasons of the incapacity or misconduct of the employee, or the operational requirements of the employer.

  • The project contract of employment

The project contract of employment is also in fact a fixed term or temporary contract of employment. The difference is that instead of stipulating a starting date and an ending date (a contract which runs according to time,) the project contract of employment is a contract where an employee is employed by the employer to complete a certain project. In other words, the date of completion of the project is unknown – it may be six months, it may be 12 months or even longer.

South Africa working hours

Under the BCEA, employees may work a maximum of 45 hours a week (excluding lunch hours) at a normal rate of pay: that breaks down as 9 hours per day for a 5-day work week, and 8 hours a day for a work week of more than 5 days.

Overtime

Overtime applies when an employee works beyond their normal contracted hours – or works over 45 hours per week. Overtime in South Africa is implemented under the following conditions:

  • Employees may work a maximum of 3 hours overtime per day – or 10 hours in any one week.
  • Overtime remuneration is paid at 1.5x normal rate, and 2x normal rate for Sundays and public holidays.
  • Overtime pay is subject to an annual earnings threshold of R205,433.30.
  • All overtime is voluntary and can only be worked under an agreement between employer and employee.
  • Senior management employees do not receive overtime pay, nor do employees who work less than 24 hours a month for their employer, or employees who regulate their own hours (travelling salesmen, for example).

Employers cannot force their employees to work overtime. Similarly, employees who earn over the overtime threshold rate are not subject to overtime pay rules and cannot demand to be paid at overtime rates

Vacation leave in South Africa

Holiday leave in South Africa is accrued at the minimum rate of 1.25 days per month of employment, which equals 15 days per year.  Those days are not offered upfront and can only be taken as they accrue, so the employee starts at zero and accumulates leave time during the year.

Workers are entitled to 36 consecutive hours of rest per week. The Basic Conditions of Employment Act requires that the weekly rest day, in principle, should be Sunday for all workers unless otherwise agreed.

A written agreement may provide for a rest period of at least 60 consecutive hours fortnightly or a weekly rest period may be reduced to 8 hours if the rest period in the following week is extended equivalently.

South Africa Maternity Leave

In South Africa, moms are entitled to four months’ maternity leave, including a month’s leave before the baby’s birth if needed, but companies are not under a legal obligation to remunerate employees during this time.

South African moms who contribute to the Department of Labour’s Unemployment Insurance Fund (UIF) are eligible for 38% to 58% of their salary, capped at a maximum gross salary of R14,872. According to UIF Matters this works out as follows:

  • If you earn R14,872 or more per month you will receive about R5,651 per month. You cannot receive more than this amount.
  • If you earn R5,000 per month you can expect to receive R2,065 per month.

South Africa Severance Laws

Notice periods

There are minimum notice periods for termination of the employment contract either by the employer or employee. The duration of the notice period that each party must provide depends upon the employee’s length of service:

  • One week’s notice is required during the first six months of employment.
  • Two weeks’ notice is required for employment of more than six months to up to one year.
  • Four weeks’ notice is required for employment of more than one year.

Severance payments

An employer must pay severance pay of at least one week’s remuneration for each completed year of service to the employee if the employee is dismissed for operational reasons, provided that the employee did not unreasonably refuse alternative employment. Severance pay is subject to a consultation process. No severance pay is payable for dismissal for other reasons.

South Africa Tax

Individuals and companies that are not “tax residents” in South Africa are taxed on a source basis, subject to any relief provided by an applicable double taxation agreement. In relation to services, the “source” is typically where the services are rendered, (and so an employee not tax resident in South Africa who provides services in South Africa will be subject to tax on a source basis).

Under recent amendments to the SAITA, some South African tax residents who render services outside of South Africa within an employment context (excluding independent contractors or self-employed persons) for more than 183 days may lose out on the benefit of previous tax exemptions (effective 1 March 2020).

Employees and employers must contribute towards the Unemployment Insurance Fund.

Under the Skills Development Levies Act, 9 of 1999, companies with a payroll of more than ZAR500,000 per annum must contribute 1% of their payroll per month to the South African Revenue Services as a contribution towards the sector education and training authority in their jurisdiction.

Health Insurance Benefits in South Africa

An employee who works 5 days per week is entitled to 30 days every 36 months. An employee who works 6 days per week is entitled to 36 days sick leave every 36 months. Where an employee works Monday to Friday, plus every second Saturday, the employee is entitled to 33 (30 + 3 Saturdays) day sick leave.

During the first six months of employment, an employee (this also applies to an employee employed on a fixed-term basis for a period of 6 months or less) is entitled to 1 day’s paid sick leave for every 26 days worked. If the employee needs extra sick leave, it will be in the form of unpaid leave.

Additional Benefits in South Africa

Both contractual and discretionary bonuses are a common feature of employment contracts in South Africa.

While an employer may exercise discretion when granting a bonus, that discretion must be exercised fairly.

  • Restriction of activities

While an employee is employed, the employer can require an employee to disclose any interests or business activities that they undertake outside of their employment and prohibit such activities. Employers do not need to pay employees separately for these restrictions to be enforceable.

  • Post-employment restrictive covenants

A restraint of trade clause in an employment contract can be enforceable where the employer has a proprietary interest that requires protection, and that interest outweighs the right of the employee to work in his chosen profession. An employee who seeks to set a restraint of trade aside has the onus of proving that it is unreasonable and contrary to public policy. Ex-employees can be restrained for a limited time usually between six and 12 months, and in a specific area, from conducting activities such as soliciting clients, suppliers or employees, or engaging in activities in unlawful competition with the previous employer. Employers do not need to pay employees separately for these restrictions to be enforceable.

General market practice benefits/additional allowances

  • The Value Proposition

South Africa boasts a strategic location, a favorable regulatory environment, a sophisticated financial infrastructure, a well-developed transportation system, an established manufacturing base, and a sophisticated information technology structure. The country’s favorable demographics and rising middle class make it an attractive market opportunity for consumer as well as business-to-business products and services.

  • Strategic Location

South Africa is a gateway to the rest of Africa. This country accounts for six percent of the population, 18% of the total gross domestic product, and 50% of the purchasing power on the continent, according to U.S. Commercial Service estimates. South Africa is the best entry point into the bigger African market, and most companies are using it to test the waters before a full-fledged dive into Africa.

  • Favorable Regulatory Environment

Since the World Trade Organization’s (WTO) Uruguay Round in 1994, Southern African Customs Union (SACU) countries, led by South Africa, have reformed and simplified their common tariff structure. Tariff rates have been reduced from a simple average of more than 20% to 5.8%. Notwithstanding these reforms, importers have complained that the SACU tariff schedule remains complex and can create uncertainty.

  • Sophisticated Financial Sector

South Africa’s financial services sector, backed by a sound regulatory and legal framework, is superb. Dozens of domestic and foreign institutions provide a full range of services: commercial, retail and merchant banking; mortgage lending; insurance; and investment.

Foreign banks are well represented and electronic banking facilities have nationwide networks of automatic teller machines (ATMs) and internet banking facilities. The Banks Act is primarily based on similar legislation in the United Kingdom, Australia and Canada.

  • Transportation Infrastructure

South Africa has a modern and well-developed transportation infrastructure. The air and rail networks are the largest on the continent. And the country’s ports provide a natural stopover for shipping to and from Europe, the Americas, Asia, Australia and both coasts of Africa. In 2009, the Chinese Ministry of Commerce reported that about 1,000 Chinese enterprises do business in Africa, spanning fields such as trade, transportation, agriculture and the processing of agricultural products.

  • Established Manufacturing Base

South Africa has developed an established, diversified manufacturing base that has shown its resilience and potential to compete in the global economy. The main sector of South African manufacturing includes automobiles and their associated parts, textiles and clothing, food processing and beverages, mineral-based industries, machinery and equipment, and pulp and paper. The manufacturing sector provides a locus for stimulating the growth of other activities and industries.

  • Information and Communications Technologies

The country’s established and sophisticated indigenous information and communications technology (ICT) and electronics sector comprises more than 3,000 companies. It has ready access to cutting-edge technologies, equipment and skills and has the advantage of access to the rapid expansion of telecommunications and IT throughout the African continent. South African software developers are recognized as world leaders in innovation, production and cost efficiency backed by an excellent local infrastructure.

  • Favorable Demographics

South Africa’s black middle class has grown by 30% in just over a year, with their numbers increasing from two million to 2.6 million. The percentage of South African households with a middle class standard of living increased from 23% in the period 1998-2000 to 26% in 2004-2006.

The black middle class in South Africa are called Black Diamonds. They are a product of the South African government’s Black Economic Empowerment (BEE) program that began in 1994 after the end of the apartheid era. They form approximately 10% of the 22 million over-18-year-old black South Africans and contribute up to 40% of the spending in this group. This segment is growing rapidly.

South Africa Holidays

There are 13 public holidays in South Africa:

  • 1 January: New Year’s Day
  • 21 March: Human Rights Day
  • 10 April: Good Friday
  • 13 April: Family Day
  • 27 April: Freedom Day
  • 1 May: Workers’ Day
  • 16 June: Youth Day
  • 9 August: National Women’s Day
  • 10 August: Public holiday
  • 24 September: Heritage Day
  • 16 December: Day of Reconciliation
  • 25 December: Christmas Day
  • 26 December: Day of Goodwill

If a public holiday falls on a Sunday, the following Monday is also a public holiday. Public holidays are not included in the leave entitlement: an employee must be paid for these days over and above their annual leave. An employee must be paid at least double their usual rate for working on a public holiday.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

FAQ South Africa

  • Working hours in South Africa

    Under the BCEA, employees may work a maximum of 45 hours a week (excluding lunch hours) at a normal rate of pay: that breaks down as 9 hours per day for a 5-day work week, and 8 hours a day for a work week of more than 5 days.

  • What are the main holidays in South Africa?

    • 1 January: New Year’s Day
    • 21 March: Human Rights Day
    • 10 April: Good Friday
    • 13 April: Family Day
    • 27 April: Freedom Day
    • 1 May: Workers’ Day
    • 16 June: Youth Day
    • 9 August: National Women’s Day
    • 10 August: Public holiday
    • 24 September: Heritage Day
    • 16 December: Day of Reconciliation
    • 25 December: Christmas Day
    • 26 December: Day of Goodwill
  • What are payroll taxes in South Africa?

    Individuals and companies that are not “tax residents” in South Africa are taxed on a source basis, subject to any relief provided by an applicable double taxation agreement. In relation to services, the “source” is typically where the services are rendered, (and so an employee not tax resident in South Africa who provides services in South Africa will be subject to tax on a source basis).

    Under the Skills Development Levies Act, 9 of 1999, companies with a payroll of more than ZAR500,000 per annum must contribute 1% of their payroll per month to the South African Revenue Services as a contribution towards the sector education and training authority in their jurisdiction.

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