Employer of Record South Africa
Payroll & Tax in South Africa
A beginners guide to understanding payroll and tax in South Africa
Employer of Record South Africa
Download our full South Africa Employment Guide
Find out all about employing in South Africa
How we can help
Our fully-compliant payroll service in South Africa ensures your employees are paid on time, every time
Whatever the territory or region, you need to attract and retain the best talent. But different countries and different cultures mean different employee expectations. South Africa is no exception.
Payroll is key for any business; paying the correct salary to your business’s employees is vital. Using Agility EOR means that your employees in South Africa are paid on time, every time.
Agility EOR offers the following payroll services in South Africa:
- Salaries paid per month, in local currency
- Electronic payslips
- Statutory filing completed by us
- End of year reporting
what to expect
How does Payroll in South Africa work?
Pay your staff once a month
In South Africa there is only a requirement to pay salary in 12 equal instalments. The cycle of salary payments is not regulated by law. The compensation may be paid weekly, bimonthly, or monthly, depending on the arrangement.
Discretionary bonuses
Bonuses are generally defined as discretionary, and therefore not required to be placed in the contract of employment. In most cases, a performance bonus is based on a percentage of the employee's base income and is given to them if they do a good job. It can also be paid in a single sum to a department, which would then distribute the funds among its members.
National minimum wage
Minimum hourly wage is 25.42 ZAR per hour. This equates to approximately 4,020 ZAR per month for a full-time worker working a 40 hour week.
Our approach
It is common in South Africa to pay employees once per month, and Agility EOR make the payment on the last working day of every month. You can also agree whether overtime should be paid (this is not a requirement so long as they receive the national minimum wage rate) or given as time off in lieu.
what to expect
Understanding Tax in South Africa
South Africa Employers Cost
Compensation for Occupational Injuries and Diseases Act (COIDA). The average rate paid is between 0.11% and 8.26%, though this can vary significantly from sector to sector, depending on the risks involved. This sum is to be paid annually.
Skill Development Levy (SDL) is a levy imposed to encourage learning and development in South Africa. The rate is 1% of total employee salary, including wages, overtime payments, leave pay, bonuses, fees, commissions and lump sum payments.
If the majority of a new hire’s duties will take place in South Africa, the employer must pay value-added tax at the rate of 15% on the total cost of employment in South Africa. If they are not registered for VAT and conduct their business operations outside of South Africa, they are exempt from paying VAT.
Unemployment Insurance Fund (UIF): When an employee loses their job or is temporarily unable to work due to an illness, maternity leave, or adoption leave, or when a contributor passes away, they or their heirs may apply for assistance through the UIF. The employer must pay a total contribution of 2% of the employee’s salary, with half of that coming from employee contributions.
South Africa Employees Tax
Employees contribute half of the UIF contribution, which amounts to 1% of their salary.
Personal income is taxed between 18% and 45%. The tax system applies progressive rates on income as follows:
Income (ZAR) | Tax Rate |
0 – 226,000 | 18% |
226,001 – 353,100 | 26% |
353,101 – 488,700 | 31% |
488,701 - 641,400 | 36% |
641,401 – 817,600 | 39% |
817,601 - 1,731,600 | 41% |
1,731,601 and above | 45% |
Wondering if expanding
in South Africa is right for you?
Read on or speak to a member of our team now
learn more
We are South Africa Employer of Record experts
We have extensive experience helping businesses expand their workforce in the South Africa. Take a look at our areas of expertise below:
We provide a fully-managed EOR Service in South Africa, including HR, Payroll and Legal Compliance support
Enhance your understanding of what your employee is entitled to when working in South Africa
Learn more about how you can attract and retain staff in South Africa with both statutory and enhanced employee benefits
Unsure about what’s required when employing staff in South Africa? Find out about South African Work Permits and Visas
Wondering what it’s like to live and work in South Africa? We’ve got you covered in our extensive guide, including the do’s and don’ts
Without Agility EOR, our ability to move quickly and scale would be extremely limited. Superb work from A to Z.
Carol Oliveira
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Frequently Asked Questions
Payrolling the employees is a key part of the service offered by an employer of record company. The EOR will calculate and remit all taxes, social securities and similar payments, on behalf of both employer and employee. The client will be invoiced in advance by the EOR company, for the total cost of the payroll.
Yes. Our clients are free to dictate the structure of the employees’ remuneration including any bonuses or commissions they wish to offer. In some countries, there is a statutory requirement to provide “bonuses”, for example in the form of Christmas or holiday allowances.
Yes. Agility EOR will calculate what pay is due upon termination of an employee, factoring in such things as any untaken leave entitlements.
We find that most of our clients are in the Tech, IT, Finance and Professional Services industries. However, we have acquired the skills, knowledge and experience to help all industries across the globe.
As a private company, we’re not beholden to shareholders or asset-shredding Private Equity targets. We aim to build long-term relationships with our clients. At Agility EOR, our approach is that we never forget that our business is all about people. Our Employer of Record solutions are tailored to each requirement, not a one-size-fits-all tech platform. We do the right thing by our clients and by the laws of each country we operate in. And we believe in openness; if we don’t feel we can offer you the best solution for a specific territory, we’ll say so.
We pride ourselves on our personable-approach so once you enter your new employees details into our dedicated platform, we’ll arrange a call with you to go through the details of the employment contract where together we can review and amend to your requirements. We liaise directly with your employee to build a rapport and obtain the necessary information to hire them compliantly, and set them up ready for their first payroll.
We never stop delivering! Even if you’re employee has been onboarded and is happily working for you and being paid each month, we’re here to partner with you whenever you or your employees need us. Even your ex-employees may need our assistance for tax documents, proof of employment requests etc… Our service never stops!