South Africa

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 254,371.67 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.

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.

A recent judgment was issued by the High Court of South Africa on October 2023. The ruling stated that all parents, regardless of gender, should be entitled to four months of parental leave from their employers. This also applies to adoptive parents, specifically those adopting a child younger than two years. While this ruling is still under review, it has already been implemented by many employers.

Paternity Leave

Fathers are entitled to leave through the Parental Leave policy.

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.

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.

Employers typically offer private insurance to their employees even though South Africa has a public health care system.

Employer Payroll Contributions
1.00% - Skills Development Levy (SDL) - (Maximum 212,544 ZAR)

1.00% - Unemployment Insurance (UIF) - (Maximum 212,544 ZAR)

Variable - Workers Compensation Fund (OID) – the ratio varies based on the workers’ earnings, type and field of work, risks associated with the work (the OID earnings limit for 2023/24 is R568, 959)

2.00% and up - Total Employment Cost

Employee Payroll Contributions
1.00% - Unemployment Insurance (UIF) (Maximum 212,544 ZAR)

1.00% - Total Employee Cost

Employee Income Tax

18% - Up to 237,100 ZAR

42,678 + 26% of taxable income above 237,000 ZAR - taxable income above 237,101 – 370,500 ZAR

77,362 + 31% of taxable income above 370,500 ZAR - taxable income above 370,501 ZAR – 512,800 ZAR

121,475 + 36% of taxable income above 512,801 ZAR - taxable income above 512,801 – 673,000 ZAR

179,147 + 39% of taxable income above 673,000 ZAR - taxable income above 673,000 – 857,900 ZAR

251,258 + 41% of taxable income above 857,900 ZAR - taxable income above 857,900 – 1,817,001 ZAR

644,489 + 45% of taxable income above 1,817,001 ZAR - taxable income above 1,817,001 ZAR

Annual Tax Rebates
Primary - 17,235 ZAR
Secondary (Persons 65 and older) - 9,444 ZAR
Tertiary (Persons 75 and older) - 3,145 ZAR

Age Tax Threshold
Below age 65 - 95,750 ZAR
Age 65 to below 75 - 148,217 ZAR
Age 75 and over - 165,689 ZAR

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.

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

Setting Up a Business

Setting up a legal entity

New companies should register with the Companies and Intellectual Property Commission (CIPC), it can be done through the eService system (for private and non-profit companies with standard memorandum of incorporation) or manually using the forms available on http://www.cipc.co.za/.

A foreign company can only be registered manually

The steps to register a company are as follows:

• Register online as a CIPC client (you will be asked for your ID/passport number, a valid email address and a mobile phone number) after the registration is completed, the CIPC customer code will be send to your mobile phone and email address.

• Add credit to your customer code- Make a deposit into the CIPC bank account. Using your customer code as reference. The bank details may be found here. Customers are urged to only deposit funds that are required for the transaction. Bulk deposits are discouraged.

• Fill in the required forms. The compulsory forms for a foreign company are CoR 20.1, CoR20.1A, CoR21.2.

• Submit the documents to E-mail: companydocs@cipc.co.za, The following supporting documents must be included in your e-mail:
  
  

  Certified identity copy of the applicant

  Certified identity copy or passport of all incorporators, directors and representative

  Power of attorney (if applicable)

  All forms required

  Lodgement of a passport copy is only accepted as proof of identity for non-residents of South Africa. For South African residents a green bar-coded/ smart ID copy must be lodged. In addition, the company should register with the South African Revenue Service (SARS), Unemployment insurance Fund (UIF), Compensation fund, B-BBEE Commission (Broad-Based Black Economic Empowerment) and open a company bank account.

Registration as an employer

According to law, an employer must register with the South African Revenue Service (SARS) within 21 business days after registering as an employer and prior to employing employees.

Where an employer expects that the total salaries will be more than R500 000 over the next 12 months, that employer becomes liable to pay SDL. In this situation, the employer must register with SARS and show the jurisdiction of the Skills Education and Training Authority in South Africa (SETA) within which they must be classified. (Even though some employers are exempt from paying SDL, all employers must be registered). Where an employer is liable to pay UIF contribution, the employer must register with either SARS or the UIF office (whichever is applicable) for the payment of the contributions.

New Employee Registration

South African regulations dictate that all employers– whether part-time or full-time – must register themselves and their employees with the Compensation commissioner, the relevant SARS, and insurance companies prior to the start date of employment.