Employer of Record South Africa
Our Employer of Record in South Africa service enables clients to hire employees without the need to operate a local legal entity there.
It makes a big difference to develop a new market with your own personnel on the ground. Particularly for functions related to sales & marketing, business development, distributor management, and service & maintenance, our customers are very satisfied using our South Africa Employer of Record Service.
Our customers and their local teams can be free of the distractions of administrative tasks and complex local requirements. So you can fully focus on the development of your core business.
If your local business grows large enough, you can easily transfer the employees to your own subsidiary. It also provides a quick exit strategy if necessary. In addition to South Africa, we offer Employer of Record services in several other countries.
- Employer of Record South Africa – FMC Group’s Approach
- Hiring an Employee
- Income Tax
- Typical Benefits
- Visa for the Employees
- Time off Policies
- Terminating an Employee
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Employer of Record South Africa - FMC Group's Approach
- Quick, flexible, and easy entry into Netherlands in compliance with local employment laws
- Complete control over business development with your own team
- Good option for building up, managing, and supporting your distributors and key accounts by directly observing local developments and adjusting the strategy whenever necessary
- Using our comprehensive recruitment experience for international clients, we can form a local team that fits your corporate culture.
- Focusing on your core business instead of dealing with the time-consuming and complex local administrative tasks
- Allowing for easy market exit if necessary
- Integrating your employees into our team through motivational events and special meetings
EOR South Africa Management & Reporting Flow
Hiring an Employee
In South Africa, the employment contract is a fundamental aspect of the hiring process, and it can be established as either an oral or a written agreement. However, it is advisable to have written contracts to ensure clarity and to comply with legal requirements.
The employment contract should include clear and specific details regarding various aspects of the employment relationship, such as:
- Start date: The contract should specify the date when the employment relationship begins.
- Place of work: The location or locations where the employee will be expected to perform their duties.
- Designation and responsibilities: The job title and a description of the employee’s roles and responsibilities.
- Working hours: The standard working hours expected from the employee.
- Compensation: Details of the employee’s salary, including the currency, which is typically the South African Rand (ZAR).
- Leave entitlements: Information about the types of leave (e.g., annual leave, sick leave) and the conditions under which they can be taken.
- Termination criteria: The terms and conditions under which the employment contract can be terminated, including notice periods.
It’s important to note that most employment contracts in South Africa are of indefinite duration, as the law discourages the use of fixed-term contracts for permanent positions. This means that employees are typically hired with the expectation of ongoing, open-ended employment. Having a well-drafted employment contract helps ensure that both employers and employees understand their rights and obligations, contributing to a transparent and legally compliant employment relationship.
Employment Contract – indefinite vs. fixed term
In South Africa, there are two main types of employment contracts:
- Fixed-Term Contracts:
- Fixed-term contracts are for a specified duration and may extend for a specific period or until the completion of a particular task or project.
- These contracts cannot be terminated without the mutual agreement of both the employer and the employee.
- It’s important to note that South African labor laws specify that full-time fixed-term contracts must be renewed. Failure to renew such contracts is treated as the dismissal of a contract in legal terms. This means that if an employer wishes to discontinue the fixed-term contract, they should not simply let it expire without proper notice or agreement.
- Indefinite Period Contracts:
- Indefinite period contracts do not have a specified duration and continue until they are terminated by either the employer or the employee.
- Either party can terminate the contract with notice, provided there is a valid reason for termination. Valid reasons for termination can include factors such as misconduct or incapacity.
- Additionally, a contract can be terminated if there has been a fundamental breach of contract by one of the parties.
Both employers and employees need to be aware of the specific terms and conditions outlined in their employment contracts, as these agreements define the rights and responsibilities of each party during the employment relationship.
In South Africa, the law does not prescribe a specific or definite duration for the probationary period in employment contracts. Instead, it leaves it to the discretion of the employer to define the period of probation. However, the labor code does require that the probationary period be of a “reasonable time period” given the circumstances of the job and the nature of the work.
As a result, the standard probationary period can vary and typically ranges from 3 months to 6 months in practice. During this probationary period, both the employer and the employee have the opportunity to assess whether the employee is a suitable fit for the position and the organization.
If either party is dissatisfied with the employee’s performance or suitability, the contract can be terminated with notice or agreement, as per the terms of the employment contract.
It’s essential for employers to clearly outline the terms and conditions of the probationary period in the employment contract to ensure that both parties understand the expectations and rights during this initial phase of employment.
Work Week, Overtime & Maximum Working Hours
In South Africa, the standard working week typically consists of 45 hours spread over five workdays. However, it’s important to note that beyond the standard working hours, any additional hours worked are considered overtime. Overtime work is subject to specific regulations and compensation rates:
- Overtime Limit: Overtime is limited to a maximum of ten hours per week. If an employee works beyond the standard working hours, those additional hours are classified as overtime.
- Overtime Pay Rates: The overtime compensation varies depending on when the overtime work is performed:
- Overtime work on a weekday (Monday to Saturday) is typically paid at a rate of 1.5 times the employee’s normal hourly wage.
- Overtime work on a Sunday or a public holiday is usually paid at double the employee’s normal hourly wage (2 times the rate).
In South Africa, individual income tax is calculated based on progressive tax rates, meaning that the tax rate increases as an individual’s income level rises. The income tax rates in South Africa typically range from 18% to 45%
|Tax Rate (%)
|ZAR 1 – ZAR 226,000
|18% of taxable income
|ZAR 226,201 – ZAR 353,100
|ZAR 353,101 – ZAR 488,700
|ZAR 488,701 – ZAR 641,400
|ZAR 641,401 – ZAR 817,600
|ZAR 817,601 – ZAR 1,731,600
|ZAR 1,731,6001 and above
In South Africa, healthcare is provided through both public and private healthcare systems. The public healthcare system is funded by the government and offers healthcare services to all South African citizens, while the private healthcare system is operated by private healthcare providers and is typically accessed by individuals who have private health insurance or can afford to pay for private medical services.
While employers in South Africa are not required to offer private health insurance as part of their employee benefits, many choose to do so as a way to attract and retain employees and provide additional healthcare coverage. Private health insurance plans can offer employees access to private healthcare facilities, shorter waiting times for medical services, and a wider range of healthcare providers and specialists.
The specific benefits offered by private health insurance plans can vary widely, so employees need to review their employment contracts and company policies to understand the healthcare coverage provided by their employer, if any.
Additionally, employees can choose to purchase private health insurance independently if it is not provided by their employer and if they desire additional coverage beyond the public healthcare system.
Visa for the Employees
In South Africa, there are several types of work visas available for foreigners who wish to work in the country. These visas are categorized based on the specific circumstances of the applicant and the job offer they have. Here are the main types of work visas in South Africa:
- General Work Visa:
- This visa is for foreign individuals who have a specific job offer from a South African employer.
- To qualify for this visa, the employer must prove that they were unable to find a suitable South African citizen or permanent resident for the position.
- The visa is generally issued for a period of 5 years and can be renewed within South Africa.
- Critical Skills Work Visa:
- Designed to attract individuals with specific critical skills that are in demand in South Africa.
- The list of critical skills is determined by the South African government and is periodically updated.
- Applicants who possess skills listed in the critical skills list may apply for this visa without a job offer.
- The visa is issued for a period of up to 5 years and allows the visa holder to seek employment related to their skills.
- Intra-Company Transfer Work Visa:
- Intended for multinational companies that need to transfer foreign employees to their South African branch or subsidiary.
- To qualify for this visa, the employee must have been employed by the foreign company for at least 6 months and meet certain criteria regarding their qualifications and experience.
- This visa is initially issued for a maximum period of 4 years and can be extended while in South Africa.
- Corporate Visa:
- Designed for companies that need to employ a large number of foreign employees in South Africa.
- Allows a company to apply for a single visa to bring multiple skilled foreign workers to the country.
- The company must demonstrate a need for a significant number of foreign employees and a good track record of employing South African citizens.
- The Corporate Visa is issued for a period of up to 3 years and can be extended within South Africa.
Time off Policies
South Africa celebrates 12 national holidays:
- New Year’s Day
- Human Rights Day
- Good Friday
- Family Day
- Freedom Day
- International Workers’ Day
- Youth Day
- National Women’s Day
- Heritage Day
- Day of Reconciliation
- Christmas Day
- Day of Goodwill
In South Africa, employees are entitled to a minimum of 15 days of annual leave per year, as per the Basic Conditions of Employment Act. However, it is a common practice for employers to provide 20 days of annual leave, which is the equivalent of four weeks.
It’s important to note that employment contracts and company policies may vary, so employees should check their specific terms of employment to determine their exact entitlement to annual leave. Additionally
In South Africa, employees working a five-day week from Monday to Friday are entitled to 30 days of paid sick leave over a three-year cycle. However, during the first six months of employment, workers are only entitled to 1 day of paid sick leave for every 26 days worked.
After the initial six months, the full entitlement of 30 days of paid sick leave becomes available to employees over the subsequent three-year period.
Other Leave Types
In South Africa, maternity leave is a legally mandated entitlement, and workers are entitled to a minimum of 4 consecutive months of maternity leave. Maternity leave can begin at any time from at least 4 weeks before the expected date of birth. After giving birth, the employee is not permitted to work for at least 6 weeks, unless declared fit to do so by a medical practitioner.
On the other hand, South African law does not specifically cover paternity leave. However, employees are entitled to parental leave for 10 working days after the birth of a child. It’s important to note that employment contracts and company policies may vary, so employees should check their specific terms of employment for details regarding parental leave.
Terminating an Employee
In South Africa, compliant terminations can occur voluntarily by either the employer or the employee, by mutual agreement, or unilaterally by the employer. However, it’s important to note that unilateral termination by the employer, especially if not done in compliance with labor laws, can result in unfair dismissals.
When an employee believes they have been unfairly dismissed, they have the option to approach the High Court of South Africa for resolution.
Notice periods for termination in South Africa depend on various factors, including the nature of termination, length of employment, and the terms of the employment contract. Here are some general guidelines for notice periods:
- Notice period during probation: 2 weeks
- Up to 4 weeks of employment: 1 week
- Between 4 weeks to 1 year of employment: 2 weeks
- More than 1 year of employment: 4 weeks
These notice periods can vary based on specific circumstances, so both employers and employees need to be aware of the terms outlined in their employment contracts and the relevant labor laws.
Disclaimer: Although we carefully researched and compiled the above information, we do not give any guarantee with respect to the actuality, correctness, and completeness.