Payroll and Benefits Guide South Africa

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee Income Tax

General

The minimum wage in South Africa is 25.42 ZAR an hour.

Payroll Cycle

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 Salary

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

General

The standard working week in South Africa can be no longer than 45 hours a week, 9 hours per day.

Overtime

If work time limits are passed, overtime pay is compulsory. The maximum overtime hours are up to 10 hours per working week.

Overtime is paid after working the maximum hours of 45 hours in one week and is paid at the statutory rate of 150.00% for employees who earn below the threshold of 205,433.30 ZAR annually on weekdays and 200.00% for overtime hours worked on a weekend.

Employees who earn over the threshold of 205,433.30 ZAR annually are not entitled to any overtime compensation. It is not possible in the employment contract to have a salary which already includes overtime pay.

Working Week

Monday–Friday

Paid Time Off

A full-time employee in South Africa is entitled to 21 consecutive days (15 working days) of paid annual leave; this is the minimum mandatory leave entitlement. The employee can accrue paid annual leave monthly at the rate of 1.25 days per month (1 day for every 17 days worked). Unused leave carries over into the next year.

Public Holidays

When a public holiday falls on a Sunday, the following Monday shall be a public holiday in lieu.

Sick Days

In South Africa, the amount of paid sick leave (at 100% of the employee’s regular rate of pay) is based on a three-year cycle.
For the first six months of employment, the employee is entitled to 1 day of paid sick leave for every 26 days worked.
From the first day of the seventh month, the employee receives:

• 30 days if they work a 5-day workweek
• 36 days if they work a 6–day workweek
• 33 days days if an employee works Monday- Friday and a Saturday every two weeks over a 3 years period minus the days already taken within the first 6 months
• No paid sick leave if an employee works less than 24 hours per month

The number of sick days taken is subtracted from these amounts to determine the total number of sick days the employee is entitled to. At the end of the three-year cycle, the number of sick days resets. If the employee is absent for more than two consecutive days, they must produce a medical certificate.

Maternity Leave

In accordance with South African labor law, a pregnant employee is entitled to four months of unpaid maternity leave. The leave can be taken anytime from four weeks before the due date, and the employee must not return to work until six weeks after the delivery date. This is relevant for any job role unless the employee works less than 24 hours a month.

If the employee has been contributing to UIF, they would be eligible for a maternity benefit of up to a maximum of 60.00% of the regular salary rate, depending on the level of income/insurance coverage. These maternity benefit payments are made for a maximum of 121 days.

Paternity Leave

There is no statutory paternity leave in South Africa, as this is covered within the parental leave.

Parental Leave

New parents, including fathers, adopting parents, and surrogates, are entitled to Parental Leave of 10 consecutive calendar days when their children are born/given to the parent(s).

Adoption Leave of 10 consecutive weeks is in place for the adoption of a child below the age of 2. A single parent is entitled to 10 consecutive weeks’ adoption leave. If there are two adoptive parents, only one can benefit from this leave, however, the other can use the regular Parental Leave.

Commissioning Parental Leave is in place for the primary parent who will take care of the child when subject to being a commissioning parent in a surrogate motherhood agreement. The entitled length is at least 10 weeks consecutive leave. Where there are two commissioning parents, only one would be entitled to 10 consecutive weeks’ commissioning parental leave. The other parent is entitled to use the 10 consecutive calendar days’ regular Parental Leave.

All types of Parental Leaves are unpaid, however, employees can claim 66% of their earnings subject to the maximum income threshold from the Unemployment Insurance Fund (UIF). In order to qualify an employee must have at least 13 weeks continuous service.

Other Leave

Study leave: At the employer’s discretion, an employee who is in school can take 2 paid days per subject per year with a maximum of 10 days per year. After the 10 days, any additional leave for the purpose of studying would have to be taken as unpaid leave.

Work-related injury leave: If an employee is injured at work and takes more than 4 days of leave due to the injury, they are entitled to 75% of their regular pay for up to 3 months. After 3 months of leave, the employee must claim compensation from the compensation fund and receives 75% of their normal pay.
In addition, for the first 3 months, the employer is able to request payment from the compensation fund.

Family Responsibility Leave: Workers may take up to 3 days of paid leave a year to attend to certain family responsibilities such as:

• Birth of their child
• Child sickness
• in the event of the death:
  • Of their spouse or life partner
  • Parent or adoptive parent
  • Grandparent
  • Child or adopted child
  • Grandchild
  • Sibling.

This doesn’t apply on:

Workers in senior management, Workers who work less than 24 hours in a month, Sales staff who travel and control their working hours, Workers engaged in emergency work are excluded from specific provisions,  Workers who earn more than the amount stated in section 6 (3) of the Act.

Termination Process

The termination process varies according to the employment agreement or collective agreement in place and is based on the type of contract and reason for termination.

On termination of employment, the employee is entitled to a certificate of service reflecting their full name, the name and address of their employer, a description of any council or sectoral employment standard by which the employer’s business is covered, the date of commencement and date of termination of employment, the job title or a brief description of the work for which the employee was employed at the date of termination, the remuneration at the date of termination, and if the employee so requests, the reason for termination.

Notice Period

In South Africa, the notice period for a permanent employee is dependent on the employee’s length of service as below:

• 0 – 6 months of service: 1 weeks’ notice
• 6 months – 1 year of service: 2 weeks’ notice
• 1+ years service: 4 weeks’ notice

The notice period for employees can differ and is stipulated in the employment contract/collective bargaining agreement; the notice period can be no less than two weeks’ notice following six months of service.

Severance Pay

Severance pay in South Africa is referred to as transition payment and stipulated in the employment contract/collective agreement. In general, employees are entitled to one week’s severance pay for every year employed unless the employment contract has been terminated due to poor performance or misconduct; in this case, no severance payment is due.

Probation Period

Probation or trial periods are generally set within the employee’s employment contract; however, standard practice in South Africa is three months. It is possible to use a longer probation period provided the length is deemed reasonable given the circumstances of the job.

VISA

Any foreigner who wishes to work in South Africa has several options 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 foreigners are increasingly finding work in South Africa as detailed in 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

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.

General

The standard rate of VAT in South Africa is 15.00%.