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Outsourcing to South Africa

Having one of the youngest and most English proficient talent pools out of all emerging economies, South Africa offers tremendous potential for outsourcing. The world-class infrastructure and advanced education system that South Africa offers have helped create a talented workforce that is well-versed in international business practices and easily adapts to different working cultures. Proof of that is the presence of hundreds of multinationals in the country.

FMC Group simplifies outsourcing to South Africa by assisting international companies throughout the entire recruitment process, as well as afterward, during the operational phase of local employees. This allows businesses to benefit from the potential that the South African talent pool has to offer with minimal resources and without having to worry about administrative regulations and local laws, or about establishing a local subsidiary in South Africa.

Content:

  • Advantages of Outsourcing to South Africa
  • FMC Group’s Outsourcing Approach
  • Advantages of Outsourcing with FMC Group
  • Labor Laws in South Africa
    • Working Hours
    • Paid Vacation and Public Holidays
    • Other Types of Leave
    • Minimum Wage
    • Social Contributions and Taxes
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Stephan Dorn FMC Group

Advantages of Outsourcing to South Africa

  • South Africa has a very young talent pool. Out of the 59 million individuals in the South African population, nearly 38 million are aged under 35, and the country’s labor force is estimated to be over 22 million individuals.
  • South Africa is home to some of the best universities in Africa and the world. According to the 2022 Times Higher Education Ranking, five South African universities are among the world’s top 400 higher education institutions. These universities produce more than 200,000 graduates every year with a diversified skill set, notably skills in business management, education, and engineering.
  • The South African population has one of the highest literacy rates in Africa, estimated by the World Bank in 2019 to be over 95%. Moreover, South Africans are highly fluent in English and more than 10% speak it as a native language. According to the 2021 EF English Proficiency Index, the South African population ranks first in Africa and 12th in the world. English is also the main language used in the media and by the government in South Africa.
  • Thanks to the local time in South Africa, only two hours ahead of GMT, it can be beneficial for European businesses to nearshore to South Africa as it allows them to maintain synchronized communication with their employees. Outsourcing to South Africa can also be beneficial for North and South American companies, as well as Australian and Asian businesses, allowing them to maintain around-the-clock activity during their respective nighttime or early morning hours.

FMC Group’s Outsourcing Approach

Selection and interviews

  • Selection of the best candidates based on the client’s criteria;
  • Conduction of job interviews with preselected candidates;
  • Establishment of reports on the best candidates;
  • Conduction of personality tests if needed.

Recruitment

  • Presentation of video interviews to clients so they can make the final hiring decision;
  • Inviting the successful candidates to work from our offices in South Africa.

Operations

  • Day-to-day functional management of the employees by the client;
  • Execution of payments, monitoring of vacations, and overall administrative management of the employees by FMC Group;
  • Provision by FMC Group of all the tools and infrastructure needed by the employees to do their job.
Approach for Nearshoring

Advantages of Outsourcing with FMC Group

  • Search for candidates according to the client’s needs;
  • Advertisement of job offers on the adequate platforms and search for potential candidates on FMC Group’s growing talent database;
  • Preselection of candidates, interviews, reference checks, and contract negotiations;
  • Management of the employees’ missions and tasks by the client;
  • No need for setting up a local company in South Africa;
  • Flexibility and reduction of labor costs.

Labor Laws in South Africa

Working Hours

  • The legal working hours limit in South Africa is set at 45 hours per week and nine hours per day.
  • Overtime work cannot exceed 10 hours per week and it is paid at a rate of 150% of the normal pay on regular days and 200% on public holidays and weekends.
  • Employees with an annual salary higher than ZAR 205,433.30 (~EUR 12,250) are not entitled to compensation for overtime work.

Paid Vacation and Public Holidays

  • South African employees can take up to 15 days of paid vacation every year.
  • South Africa commemorates 12 public holidays:
    • January 1st: New Year’s Day
    • March 21st: Human Rights Day
    • Between late March and late April: Good Friday
    • April 18th: Family Day
    • April 27th: Freedom Day
    • May 1st: Labor Day
    • June 16th: Youth Day
    • August 9th: National Women’s Day
    • September 24th: Heritage Day
    • December 16th: Day of Reconciliation
    • December 25th: Christmas Day
    • December 26th: Day of Goodwill

Other Types of Leave

  • Maternity Leave: Women in South Africa can take up to four months of unpaid maternity leave, starting from four weeks before delivery and for at least six weeks afterward. The Unemployment Insurance Fund can compensate up to 60% of the employee’s salary during the leave, for a maximum duration of 121 days.
  • Parental Leave: Parents with a newborn child can take up to 10 days of unpaid parental leave immediately after the birth of their child.
  • Sick Leave: South African employees can take 30 to 36 days of sick leave per year after they complete their first six months of service. The number of available sick leave days can accumulate for three years before it resets. Employers have to cover 100% of their employee’s salary during the sick leave, provided the employee has a medical certificate attesting to their inability to work.
  • Study Leave: Employees who are still studying can take two days of paid leave per subject per year, up to a maximum of 10 days, if their employer had agreed before hiring them. Any additional study leave after 10 days is considered unpaid.
  • Injury Leave: Employees who get injured at work and need more than four days of rest can receive 75% of their regular salary for up to three months. Afterward, they have to request compensation from the South African Compensation Fund. The employer can also request compensation from the Compensation Fund during the first three months of the injury leave.

Minimum Wage

  • The national hourly minimum wage in South Africa is ZAR 23.19 (~EUR 1.40).

Social Contributions and Taxes

  • Employers in South Africa have to pay 2% of their employees’ gross salaries as social contributions. The contributions include 1% that goes to the Skills Development Levy and 1% to the Unemployment Insurance.
  • Employees only have to pay 1% of their gross salary as a social contribution. It goes to the Unemployment Insurance.
  • The employee income tax in South Africa ranges from 18% to 45%, depending on the annual salary.