South Africa: A Guideline to Payroll and Employer of Record

Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in South Africa using its highly efficient payroll system.

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South Africa is a country located in the continent of Africa, sharing its borders with Zimbabwe, Mozambique, Namibia, Botswana, Lesotho, and Swaziland. The prominent industries in the country include agriculture and food processing, tourism, financial services, services industry, business process outsourcing, and industrial manufacturing and mining.

Neeyamo provides assistance for the onboarding and management of employees in South Africa along with the processing of a firm's payroll, compliance, benefits, and more.

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Cape Town, South Africa
Neeyamo Enterprise Solutions (Pty) Ltd 1st Floor
Block B North Park Black River Park 2 Fir Street Observatory Western Cape, Cape Town, 7925

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats


Cape Town, Bloemfontein, Pretoria


South African Rand (R)

Official Languages

English, Afrikaans, Ndebele, Xhosa, Zulu, Swati, Southern Sotho, Sepedi, Tsonga, Tswana and Venda

Fiscal Year

01 April - 31 March

Date Format


Country Calling Code


Time Zone

South African Standard time (UTC +2:00)

Global Payroll


What is payroll?

Payroll means the list of compensation to be paid to employees of a company or organization for a set period or date.

Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity.

Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform - Neeyamo Payroll. Neeyamo's in-house payroll software allows you to process payroll online in 5 clicks or less, making processing payroll in South Africa significantly easier.

What is Global Payroll?

Global payroll is the management of the entire payroll function of an organization across all countries of operation. Organizations use a single solution capable of doing this from one central location.

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.

Employee Taxes

The employee taxes in South Africa are computed as follows:

1.00% - Unemployment Insurance

1.00% - Total Employee Cost

Effective from March 1, 2023, here are the income tax rates from March 1, 2023, to Feb. 29, 2024:

Taxable Income (R) Rate of Tax
Up to 237,100 18%
237,101 - 370,500 R42,678 plus 26% of the amount in excess of R237,100
370,501 - 512,800 R77,362 plus 31% of the amount in excess of R370,500
512,801 - 673,000 R121,475 plus 36% of the amount in excess of R512,800
673,001 - 857,900 R179,147 plus 39% of the amount in excess of R673,000
857,901 - 1,817,000 R251,258 plus 41% of the amount in excess of R857,900
More than R1,817,001 R644,489 plus 45% of the amount in excess of R1,817,000

BCEA Earnings Threshold Increased

Effective March 1, 2023, the earnings threshold determined by the Minister of Employment and Labor (Minister) in accordance with the Basic Conditions of Employment Act (BCEA) has increased from its current value of R224,080.48 per annum to R241,110.59 per annum.

For employees earning less than the threshold, the BCEA regulates working hours, overtime, and the normal number of hours worked over compressed work weeks, meal breaks, and rest periods.

Legislative changes with effect from March 2023 to February 2024: 

  • Changes in rates for Retirement fund lump-sum withdrawal benefits are now effective from March 1, 2023 until February 29, 2024.
  • Tax credit amounts have been revised for medical scheme fees.
  • For Local employees, Subsistence Allowances have changed from the prior year. Revision in rates for calculation of per km travel allowance.

Employer Taxes

The employer taxes in South Africa are computed as follows:

Skills Development Levy (SDL) - 1.00%

Unemployment Insurance (UIF) - 1.00%

Total Employment Cost- 2.00%

Payroll Cycle


Undoubtedly, payroll is a critical process for any organization. Pay cycle in South Africa refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.


In South Africa, there is no set payroll cycle. The payroll cycle is typically stipulated in the employment contract, which is to be agreed upon by the employee and employer. The payroll cycle can run monthly, weekly, or bi- weekly.

13th Month Cycle

13th-month salary payments are customary in South Africa and should be paid in December every year.

Global Work


An Employer of Record services (EOR) provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account, prior to making a job offer to an international hire.

An Employer of Record services (EOR) provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits ensuring compliance with local tax laws and regulations.

This allows organizations to focus on collaborating with the employee in South Africa for operational tasks, with the knowledge that they have a cost-effective solution support their global payroll & HR requirements, as they continue their global expansion.

HR Mandates and Practices

Minimum wage 

Effective 1 March 2024, South Africa announced a new National Minimum Wage (NMW) determination of R25.42 to R27.58 for each ordinary hour worked. This also includes the vulnerable sectors of farm workers and domestic workers, who have been aligned with the NMW rates since 2022. 


All overtime is voluntary and may only be worked by agreement between employer and employee. Maximum permissible overtime is three hours on any one day or 10 hours in any one week. Remuneration must be at 1.5 times the normal wage rate except for Sunday work and work on public holidays, which must be remunerated at twice the normal wage rate. The same goes for part-time employee.

Employer Annual Declaration

Effective from April 1, 2023 to May 31, 2023 

  • Employers must file yearly reconciliation statements (EMP501), which must include correct and up-to-date payroll information for their employees.
  • Employers must submit all incomplete monthly statements (EMP201) and yearly reconciliations (EMP501) before submitting the annual EMP501 for 2023.
  • Administrative penalties will be imposed if an employer submits the EMP501 after the deadline. Employers must check the status of submissions to ensure their EMP501 has been successfully filed at SARS.
  • Employer should keep records for, at least 5 years.

BCEA Earning:

With effect from March 1, 2023 there is an increase in the Basic Conditions of Employment Act (BCEA) Earnings Threshold will bring more employees into the protection net provided by the BCEA provisions.

Data Retention Policy

The data retention policy in South Africa is as follows:

15 years: Accounting records, including supporting schedules to accounting records and ancillary accounting records Annual financial statements, including annual accounts and the report of the accounting officer.

Indefinite: Registration certificate, Register of company secretary and auditors, Employer must keep prescribed details of any strike, lock-out or protest action involving its employees 3 years: Written particulars of employee must be kept after termination of employment, Employee’s name and occupation, Time worked by each employee, Remuneration paid to each employee, Date of birth of any employee under 18 years of age.

5 Years: Income Tax record kept for 5 years. The document retention can be done in hard copy or soft copy, But employee personal files need to store in hard copy format.

Hiring and Onboarding Requirements


An employer is legitimately entitled to place reliance on the race, gender, and/or disability of an applicant during the recruitment process in deciding whether or not to appoint the applicant.

This does not amount to racial discrimination and is consistent with section 6(2) of the EEA, which permits employers to take affirmative action measures consistent with the purpose of the EEA;

An applicant for employment may not rely on unfair discrimination where such an application is not, first and foremost, suitably qualified for the position in question;

Employers may not hide behind the defence of having a collective agreement in place, where those provisions are discriminatory in nature. The mere fact that a discriminatory practice is codified in a collective agreement will not serve as a defense to an unfair discrimination claim.


The following documents can be asked for onboarding an employee in South Africa:

  • ID Document
  • CV
  • Certified Copy of Qualifications
  • Certified Copy of Drivers License (only if applicable)
  • Passport and Work Permit for Foreigners
  • Copy of Tax Registration Confirmation
  • Birth certificate
  • Marriage certificate if applicable


The labor relation act expressly provides a probationary period. The Code contains that the probationary period must be reasonable and given under the circumstances of the job and the time it takes to determine the employee’s suitability for the job.

The labor relation act states that probationary employees should not be dismissed unless they have been given appropriate remedial treatment and they have been allowed a reasonable period for improvement but have failed to improve their performance. If the employer fails to counsel the probationary employee and thereafter fails to confirm the employee’s employment, such termination will amount to a dismissal.

However, standard practice in South Africa is three months.


National Holidays

Employees who work on a public holiday are paid double their normal wage.

A public holiday can be exchanged for another day off if the employer and the employee agree.

There are 12 paid holidays under the Public Holidays Act:

  • Jan. 1 and Jan. 2: New Year's Day
  • March 21: Human Rights Day
  • April 7: Good Friday
  • April 10: Family Day
  • April 27: Freedom Day
  • May 1: Workers' Day
  • June 16: Youth Day
  • Aug. 9: National Women's Day
  • Sept. 24: Heritage Day
  • Dec. 16: Day of Reconciliation
  • Dec. 25: Christmas Day
  • Dec. 26: Day of Goodwill

Whenever a holiday falls on a Sunday, the following Monday is considered a public holiday. During election years, a 13th annual paid public holiday is usually declared to allow workers to vote in local government elections.

Sick Leave

In South Africa, sick leave is based on a 36 month cycle. The employee is entitled to 1 day of sick leave for every 26 days worked during their first 6 months of employment. From the first day of the 7th month, the employee receives: 30 days if they work a 5-day work week or 36 days if they work a 6–day work week 33 days if an employee works Monday- Friday and a Saturday every 2 weeks but does not apply to employees who work less than 24 hours a month.

In this case, sick leave would need to be determined when negotiating the employment contract.

The number of sick days taken is subtracted from these amounts to produce the total number of sick days the employee can take. At the end of the 36–month cycle, the number of sick days resets.

If the employee is absent for more than 2 consecutive days, they must produce a medical certificate. However, if the employee is sick from Friday to Monday, it is not considered consecutive days of sick leave, and are not obligated to produce a medical certificate (Depending on the company’s policies).

During a leave due to illness, the employee is entitled to full pay and cannot be terminated as long as they have a valid medical certificate.

Maternity Leave

In South Africa, a woman is entitled to 4 months of unpaid maternity leave. This entitlement can begin at least 4 weeks before the birth.

However, If the woman is not able to work due to her medical condition, it is possible to begin the leave earlier. The employer is not obligated to pay the employee for maternity leave. Instead, a claim can be made from the Maternity Benefit Fund if contributions have been made to the Unemployment Insurance Fund (UIF).

If a woman suffered a pregnancy loss after 28 weeks gestation, they are entitled to 6 weeks of maternity leave.

Female employees are eligible for 4 consecutive months of maternity leave of which benefits are paid by the Unemployment Insurance Fund. Pregnant employees are entitled to start the leave within four weeks of the due date, or on a date from which a medical practitioner certifies that it is necessary for the employee’s health or that of her unborn child.

Women are not permitted to work for six weeks after giving birth unless certified by a doctor. An employee who suffers a miscarriage during the third trimester of pregnancy or who gives birth to a stillborn child receives six weeks’ leave after the loss, regardless of whether maternity leave had begun.

Employees can also receive paid maternity benefits based on a collective agreement or employment contract in which the employer agrees to provide payment above its contribution to the Unemployment Insurance Fund. Employers cannot require or allow pregnant or nursing employees to perform work that is hazardous to their health or that of their children and if possible provide alternative work.

Paternity Leave

There is no separate leave type for paternity leave in South Africa, as this is covered within the Parental leave.

Parental Leave

An employee who is a parent of a child will be entitled to 10 unpaid consecutive days' parental leave. This will effectively replace the three days' paternity leave currently provided for in the BCEA. Parental leave may commence on the day the child is born. The employee will have to give at least one month's written notice of the expected date of birth.

Study leave

At the employer’s discretion, an employee who is in school (tertiary institution) can take 2 paid days per subject per year with a maximum of 10 days a year, depending on the Employer’s internal leave policy. After the 10 days, any additional leave for the purpose of studying would have to be taken as unpaid leave.

Work-related injury leave

South Africa makes provision for compensation for injuries/ diseases on duty in cases where an employee is booked off work as a result thereof (beware, only if it is for more than three days), or where the employee suffers a permanent disability as a result of an injury on duty. Employers are also required to meet the compliance standard that states that it is their responsibility to make up payment of 75% of the wages or salary of the injured employee for the first three months after the injury on duty. The amount is refundable by the Compensation Commissioner. After 3 months of leave, the employee must claim compensation from the Compensation fund. Although the employer is not required to pay the employee any salary, the employer may decide to continue paying 75% of their normal pay (subject to certain conditions) but is entitled to claim it back from the Compensation Fund.

Voting leave

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


Notice Period

Notice period is prescribed in Section 37 of the Basic Conditions of Employment Act (the Act). They are as follows:

  • one week if the employee has been employed for six months or less; 
  • two weeks, if the employee has been employed for more than six months but not more than one year; 
  • four weeks, if the employee has been employed for one year or more or is a farm worker or domestic worker who has been employed for more than six months. The employee can resign without notice if the situation has become so intolerable at work that the employee cannot remain in the workplace anymore.

Severance Pay

If the employee is terminated due to operational requirements, the company is obligated to pay one week's severance pay for every year employed.



Any foreigner who wishes to work in South Africa has several types of temporary work visas. These include general employment, inter-company transfer, highly skilled migrant, or business entrepreneur.

As South Africa has a growing economy and manufacturing sector, the country has many job opportunities for skilled workers in various positions, and increasingly foreigners are finding work in South Africa as detailed in South Africa reported critical skills lists. However, there are fewer opportunities for employment in South Africa in unskilled or semi-skilled positions.

There is also an emphasis on attracting entrepreneurs in South Africa, particularly where this will result in:

  • capital being brought into South Africa from abroad
  • the manufacture of goods for export
  • the employment of South Africans

Types of visas

The various types of South African work visas depend on the applicant’s employment/ financial/skills position.

Two of the most commonly requested visas are:

  • Critical Skills Work Visa: The South African Department of Home Affairs periodically publishes a list of critical skills in demand by the government. Applicants who possess these skills can apply for a Critical Skills Work Visa. It is not necessary to secure employment before the visa, but the applicant must prove that they possess the essential skills. The duration of the visa is five years, though it is possible to apply for permanent residency in South Africa under some conditions.
  • Corporate Visa: A Corporate Visa is granted to a corporate entity, allowing the company to hire a pre-determined number of foreign workers for three years.

Employee Background Checks

Legal and Background Checks

Background checks are generally permitted.

They do not involve checks that amount to unfair discrimination under the EEA (Employment Equity Act).

A Code of Good Practice issued under the EEA stipulates that an employer should only conduct an integrity check – such as contacting credit references and investigating whether the applicant has a criminal record – if this is relevant to the requirements of the job. The National Credit Act No. 34 of 2005 also stipulates that a credit bureau can only issue a credit report to a prospective employer when the employer is considering the candidate for a position that requires trust and honesty and entails the handling of cash or finances, and only with the prior consent of the candidate.

Medical testing is only permitted if legislation permits or requires it or if it is justifiable in the light of medical facts, employment conditions, social policy, the fair distribution of employee benefits, or the inherent requirements of the job. Testing an employee for his or her HIV status is prohibited unless determined to be justifiable by the Labour Court. Psychological testing and other similar assessments are also prohibited unless the test has been scientifically shown to be valid and reliable, and that it can be applied fairly to all employees and is not biased against any employee or group of employees.

The Immigration Act and regulations are there to provide that medical reports and chest X-rays must be submitted in support of temporary and permanent residence visa applications. Police clearance certificates are also required from all countries where the temporary or permanent residence visa applicant has resided for more than a year since their 18th birthday.

Last updated on February 4, 2024

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