Employing in South Africa
Known as the ‘Rainbow Nation’ due to its multiculturalism, South Africa is one of the most promising and vibrant emerging market economies across the world and has immense potential as a global expansion destination. Boasting one of the largest economies in Africa (second to Nigeria), South Africa is also one of the continent’s most industrialised countries, and many multinational companies have a South African branch — particularly in the populous urbanised areas of Cape Town, Johannesburg and Durban.
Thanks to its excellent infrastructure — including a modern transportation network, world-class telecommunication system and great tourism facilities — South Africa is an increasingly popular destination with investors. Plus, with a potential market of about one billion people, South Africa also serves as a gateway to the rest of the African continent, providing additional market opportunities for the countries along its borders. Several excellent seaports and other entry and access points also create opportunities to reach markets further afield, including South America, Central America, the Far East and South Asia.
If you’re looking to move existing employees over, South Africa won’t be a hard sell, either. The country has plenty to offer and an abundance of stunning landscapes and experiences, including panoramic views from the top of Table Mountain in the capital city of Cape Town, lush sandy beaches, safari trips at the world-famous Kruger National Park or even cage-diving with great white sharks (if they’re feeling adventurous!).
An overview of employing in South Africa
A contract may not be terminated without a justified reason as outlined by the Labor Relations Act (LRA). The Basic Conditions of Employment Act (BCEA – Section 37) outlines the minimum notice period based on the length of service.
|Length of service||Minimum notice period|
|> Six months||One week|
|< Six months > one year||Two weeks|
|One year +||Four weeks|
An employer may not require an employee to take annual leave owed during the notice period. This must instead be paid out as part of the employee’s salary.
There’s no prescribed time limit set for a probation period. The probation period must be reasonable, given the circumstances of the job.
The preferred practice in South Africa is six months probationary period for a new employee and three months probationary period for an internal transfer. Extensions to the probationary period are permissible if performance is not satisfactory.
Being on probation doesn’t give an employee any specific legal rights. An employee can be dismissed with one week’s notice while on probation.
There are no mandatory pension contributions in South Africa. The employee can choose to have a private pension which would be under their own personal remit and would remain separate to their employment.
The maximum normal working time allowed (section 9 BCEA) is 45 hours weekly. This is nine hours per day (excluding lunch break) if the employee works a five-day week, and eight hours per day (excluding lunch break) if the employee works more than five days per week.
It’s important to note that employees earning in excess of the earnings threshold are excluded from the BCEA provisions which regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, Sunday pay, pay for night work and pay for work on public holidays.
The current threshold in effect from 1 March 2021 is an annual amount of R211,596.30.
Meal and rest breaks are unpaid and are, therefore, not included in the calculation of working hours. The statutory meal break is one hour, but by agreement between the employee and employer, this may be reduced to 30 minutes.
Overtime can only be required when there’s an agreement between the employer and the employee, and such agreement may not require the employee to work more than 12 hours in any day. An employee may not work more than 10 overtime hours in a week cycle.
Workers’ compensation (employer liability)
Employers are required to pay into the Workers’ Compensation Fund once a month to provide compensation for workers who get injured at work, contract occupational diseases, or for death as a result of these injuries or diseases. The contribution is solely the employer’s responsibility and money mustn’t be deducted from a worker’s salary.
The annual assessment fee is calculated on workers’ earnings and an assessment tariff based on the risks associated with the type of work being done.
Assessment fee = total workers’ pay ÷ 100 x assessment tariff. Assessment tariffs, reviewed annually, are based on the risks related to a particular type of work.
The amount of R506, 473.00 per employee per annum is the maximum amount on which an assessment of an employer shall be calculated on with effect 1 March 2021.
Keen to engage an EOR in South Africa? At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey
To find out how we can help your business with our employment solutions, contact us today.
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