Labor law in South Africa is governed by several legal instruments, including the Constitution, the Basic Conditions of Employment Act, the Employment Equity Act, and the Social Assistance Act. When you partner with a PEO, it will manage compliance for you, but it’s still important to be familiar with the conditions your employees are entitled to.
1. Employment Contracts
Contracts can be written or oral in South Africa, but oral contracts must be accompanied by written particulars. Fixed-term contracts can be made only for non-durable work. There is no mandated maximum duration to fixed-term contracts, so they can be agreed upon individually.
2. Working Hours and Overtime
In South Africa, the regular workweek lasts 45 hours, with employees working up to nine hours a day, unless they sign agreements to increase that to 12 hours a day. Overtime hours are limited to ten hours per week, and employees must be paid at least 150% of their normal wages for these hours.
3. Minimum Wage
The national minimum wage in South Africa is 28.79 ZAR (South African rand) per hour, or around 1.70 USD. However, some industries have different minimums. In the civil engineering industry, for example, workers must be paid at least 41.72 ZAR/hour, while workers in the small businesses in the hospitality sector can be paid as little as 20.00 ZAR/hour.
4. Employee Benefits
South African workers are entitled to a range of mandatory benefits that include annual paid leave, paid public holidays, maternity and paternity leave, sick leave, and severance pay. They must also receive at least one uninterrupted period of 36 hours of rest per week, which should include Sunday unless otherwise agreed.
5. Payroll Tax and Social Contributions
Employers are required to withhold their employees’ income taxes from their pay and remit the funds to the SARS. Workers pay between 0% and 45% of their earnings, depending on their annual income levels.
Employees must contribute 1% of their earnings to the Unemployment Insurance Fund. Employers also contribute 1% to the same, and also 1% of their payroll to the Skills Development Levy if their payrolls are over 500,000 ZAR.
6. Termination and Severance Pay
Employees can be summarily dismissed for gross misconduct, and in other cases, employers must justify their reasons for terminating workers. Both employers and employees must typically provide notice of between one and four weeks, depending on the worker’s seniority. Severance pay is also mandated for workers who are made redundant or downsized at the rate of one week’s pay for each year of service.
7. Foreign Workers
Foreign nationals can work in South Africa if they obtain work visas from the Department of Home Affairs. However, before these visas are issued, the employee needs to have a contract offer from an employer who also has to prove that there are no available South Africans with the skills and or qualifications to do the job.