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South Africa – Employer of Record

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Country Introduction – South Africa

Capital – Pretoria
Currency – South African rand (ZAR)
GDP – 419 billion USD (2021)
People/Nationality – African
Language – English, Afrikaans
Major Religion – Christianity
Population – 60,644,023 (as of November 17, 2023)

South Africa has one of the most diversified and industrialised economies on the African continent. It is a member of the BRICS group of emerging economies, which includes Brazil, Russia, India, China, and South Africa. The country has a mixed economy, with a combination of agriculture, mining, manufacturing, and services sectors.

It has one of the largest GDPs in Africa. Historically, South Africa has been known for its rich mineral resources, including gold, platinum, and diamonds. The mining sector has been a significant contributor to the economy. Agriculture also plays a role, with the country producing a variety of crops and livestock. South Africa has a well-developed manufacturing sector, producing a range of goods, including automobiles, chemicals, textiles, and processed food. The services sector, including finance, real estate, and tourism, is a crucial component of the economy. Johannesburg is a major financial hub in Africa.

South Africa boasts some of the world’s most stunning natural landscapes, diverse climates across its provinces, and abundant wildlife. The country is home to eight UNESCO World Heritage Sites, attracting travellers with its rich history and varied attractions. According to an Ipsos Global Advisor survey involving over 20,000 participants, South Africa ranks as the third most inclusive nation globally. Whether in terms of religion, gender, political views, or other potential sources of judgment, South Africans tend to be more accepting than rejecting. Known for their friendliness, South Africans are considered among the most welcoming people globally.

Contract of Employment

Determine the employment status of an individual at the outset of the employment connection, whether it be permanent, fixed-term, temporary, etc. The Basic Conditions of Employment Act mandates the provision of specific written details of employment as a minimum requirement. Employers are legally obligated to furnish all employees with these essential particulars in writing no later than the commencement of employment.

While meeting this minimum requirement is essential, it is recommended for employers to go beyond and formalize the employment relationship by entering a written employment contract with each employee.

Probation Period

The duration of a probationary period can vary and is typically three to six months.

Termination

The  minimum notice period is based on the length of service:

One week if employed for four weeks or less.

Two weeks if employed for more than four weeks but less than one year.

Four weeks if employed for one year or more.

Working Hours

45 hours weekly.

Overtime

Participation in overtime work is optional and requires mutual consent between the employer and employee. The highest allowable overtime is 3 hours in a single day or 10 hours in a week. Compensation for overtime should be at a rate of 1.5 times the regular wage, except for Sunday work and public holidays, which necessitate remuneration at double the standard wage.

 13^th Month Pay

In South Africa, there is no legal requirement for employers to provide a 13th-month pay. The payment structure in South Africa typically involves a monthly salary or wage, and additional bonuses or benefits may be provided based on individual employment contracts or company policies.

However, some employers may choose to offer a year-end bonus, commonly referred to as a 13th-month pay or a Christmas bonus, as a discretionary benefit to employees. This bonus is usually an additional payment equivalent to one month’s salary and is often given in December.

Annual Leave

Employees are entitled to a maximum of 21 consecutive days of annual leave or, through mutual agreement, accrue 1 day of leave for every 17 days worked or 1 hour for every 17 hours worked.

Annual leave must be utilized within six months following the conclusion of the annual leave cycle. Payment for any outstanding leave is only applicable upon the termination of employment.

Sick leave

Employees are entitled to sick leave of up to 30 days over a three-year sick leave cycle. The sick leave cycle is a fixed period of 36 months from the commencement of employment or the completion of the previous sick leave cycle.

Maternity and Paternity Leave

Pregnant employees are entitled to at least four consecutive months of maternity leave. This period includes the time before and after the birth of the child. Maternity leave may commence at any time from at least four weeks before the expected date of birth, or at a mutually agreed time between the employer and the employee.

Starting from January 1, 2020, a new type of ‘parental leave’ was implemented. Biological fathers gained the right to take 10 consecutive days of unpaid parental leave.

VAT / GST

VAT is applicable solely to taxable supplies, referring to goods and services on which either the standard rate (presently 15%) or a zero rate (0%) of VAT is imposed. Only a specific set of goods and services fall under either the zero-rated or exempt categories, limiting the scope of items subject to VAT.

Income Tax

South Africa has a progressive tax rate structure with several tax brackets. The rates may change, so it’s important to check the latest figures. The tax rates for individuals range from 18% to 45%.

Employer / Employee Contributions

 In South Africa, employers and employees make various contributions:

1. Employees’ Tax (PAYE):
   Employers deduct PAYE from employees’ salaries and remit it to SARS monthly.

2. Unemployment Insurance Fund (UIF):
   Both employers and employees contribute to UIF to provide financial support in times of unemployment, illness, or adoption.

3. Workmen’s Compensation Fund:
   Employers contribute to this fund to provide compensation for workplace injuries or diseases.

4. Skills Development Levy (SDL):
   Employers contribute to SDL to promote skills development.

5. Provident Fund / Pension Fund:
   Employers and employees may contribute to these funds for retirement benefits.

6. Medical Aid Contributions:
   Contributions to medical aid schemes are shared between employers and employees.

7. Bargaining Council Levies:
   In specific industries, contributions may be made to Bargaining Councils.

8. Income Protection Insurance:
   Some employers provide income protection insurance, and contributions involve both employers and employees.

Contributions vary based on factors like employment nature, industry, and contracts. Employers ensure compliance with laws, and employees should be aware of contributions and benefits.

Public Holidays

January 1 – New Year’s Day
March 21 – Human Rights Day
Good Friday: Date varies (Christian religious holiday)
Family Day: Date varies (Monday after Good Friday)
April 27 – Freedom Day
May 1 – Labour Day
June 16 – Youth Day
August 9 – National Women’s Day
September 24 – Heritage Day
December 16 – Day of Reconciliation
December 25 – Christmas Day
December 26 – Day of Goodwill

Severance Pay

In South Africa, severance pay is not a statutory requirement for all employees. It is typically associated with retrenchment, where employees with at least one year of service may be entitled to severance pay based on their length of service. Other circumstances, such as voluntary severance packages or dismissal for operational reasons, may also warrant severance pay. The specific entitlements depend on the applicable labour laws, collective agreements, or employment contracts.

Work and Residence Permits (Expatriates)

In South Africa, expatriates (foreign nationals seeking to work and reside in the country) are required to obtain both a work permit and a residence permit. Here are key points regarding work and residence permits for expatriates in South Africa:

1. Work Permits:
   Work permits are required for foreign nationals intending to work in South Africa. The specific type of work permit depends on the nature of employment, such as critical skills work visa, intra-company transfer visa, or general work visa.

2. Critical Skills Work Visa:
   This type of visa is granted to individuals with skills and qualifications deemed critical to the development of South Africa. Applicants must have their qualifications evaluated by the South African Qualifications Authority (SAQA).

3. Intra-Company Transfer Visa:
   This visa is for employees transferred from a foreign branch to a South African branch of the same company. It is subject to certain conditions, including proof of employment with the foreign company.

4. General Work Visa:
   Issued for general employment not covered by critical skills or intra-company transfer categories. Employers must demonstrate efforts to recruit locally before hiring foreign nationals.

5. Business Visas:
   Business visas are available for foreign nationals engaging in business-related activities in South Africa. This includes entrepreneurs, investors, or individuals conducting business on behalf of a foreign entity.

6. Residence Permits:
   Expatriates also need a residence permit to legally reside in South Africa. The type of residence permit depends on the purpose of stay, such as temporary residence, permanent residence, or retirement.

7. Temporary Residence Permits:
   Temporary residence permits are issued for a specific period and can be granted for reasons like work, study, or family reunification.

8. Permanent Residence Permits:
   Permanent residence permits are for individuals intending to reside in South Africa permanently. Different categories exist, such as business, retirement, or exceptional skills.

9. Application Process:
   The application process for work and residence permits involves submitting the required documentation to the Department of Home Affairs. Employers and applicants must adhere to specific criteria and regulations.

It’s essential for expatriates and employers to familiarise themselves with the latest immigration laws and requirements in South Africa, as these may change.

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