Does South Africa’s Labour-Broker Three-Month Rule Apply to EOR?

South Africa does not set a universal three-month limit on employer of record (EOR) hiring. The rule applies to a particular arrangement and worker: if the provider is a temporary employment service (TES), the employee earns at or below the statutory threshold, and the work is no longer a temporary service, the client is deemed the employer for Labour Relations Act purposes.

That is the question to resolve before committing to an ongoing placement, not a reason to assume every EOR contract expires after three months. This guide is for companies evaluating a South African hire through an EOR. If you are still deciding whether to use an EOR or employ through your own company, start with our comparison of the routes for a first South African hire. Last reviewed: 22 October 2026.

The rule turns on three questions:

1. Does the actual arrangement meet the definition of a TES?
2. Does the employee earn at or below the current BCEA earnings threshold?
3. Is the work a temporary service under section 198A?

Does the arrangement count as a TES?

“Labour broker” is common shorthand in South Africa; temporary employment service is the statutory term. Under section 198 of the Labour Relations Act, as amended in 2014, the basic pattern is a provider that, for payment, supplies a person to perform work for a client and remunerates that person. The provider’s marketing label is not one of the statutory tests.

An EOR arrangement can share those features, but “EOR” does not automatically mean “TES”, or automatically place the arrangement outside TES rules. The employing and service agreements, who pays the worker, and how the work is actually performed are the starting facts. For a company buying EOR, this classification matters more than a promise that the provider will handle payroll.

Which employees are within the earnings threshold?

Section 198A does not apply to an employee earning in excess of the BCEA earnings threshold. The line is R269,600.90 a year from 1 May 2026, under the 2026 government notice. Someone earning exactly that amount is not excluded by the wording “in excess of”; someone above it is outside section 198A’s special deeming rule.

The notice measures regular annual remuneration before employee deductions. It excludes similar contributions made by the employer, as well as subsistence and transport allowances, achievement awards and overtime payments. A quoted monthly salary or an all-in cost-to-company figure can therefore be the wrong number to compare. The threshold can change by a later government notice, so a role close to the line needs a fresh comparison when the rule changes. Section 198A(2) is the reason this earnings test matters to TES placements.

What counts as temporary service?

South African law gives “temporary service” three routes. The work lasts no more than three months; the worker substitutes for a client employee who is temporarily absent; or the work falls within a category designated as temporary by an applicable bargaining-council agreement, sectoral determination or ministerial notice. Those are the section 198A(1) categories.

The second route is why a genuine five-month absence cover is not automatically caught on day 91. The third is not a general “project work” exception: it needs the applicable instrument. By contrast, an ordinary, continuing job does not become temporary merely because the service agreement is renewed every few months. For a TES placement within the earnings range, the nature and duration of the work drive the result.

What changes if the client becomes the employer?

For a covered TES worker no longer performing temporary service, section 198A(3) deems the client to be the employer and, subject to section 198B, the employment to be indefinite. Where the client has an employee doing the same or similar work, the placed worker must be treated on the whole not less favourably, unless there is a justifiable reason for a difference. That can affect pay, benefits and employee-relations decisions, not merely whose name appears on a payslip.

Ending the placement to avoid that result can itself be a dismissal under section 198A(4). The Constitutional Court’s Assign Services judgment adopted the client-as-sole-employer interpretation for Labour Relations Act purposes. It did not say the commercial agreement or the provider’s payroll role must vanish overnight. The triangular arrangement can continue while the provider remunerates the worker; the statutory allocation of employer responsibility has changed.

Three placements, three different outcomes

Each illustration assumes the provider’s arrangement meets the TES definition. They are not examples of NNRoad clients or a conclusion about NNRoad’s South African structure.

The distinction comes from the temporary-service and earnings tests in section 198A. If a future notice raises the earnings threshold, a role near today’s line may move into the second situation even if its remuneration does not change.

Is a higher salary a complete answer?

No. Earning above the threshold takes a worker outside section 198A’s deeming rule; it does not erase the rest of section 198. For a TES arrangement, the provider and client can be jointly and severally liable for specified breaches of the BCEA, applicable bargaining-council agreements, binding awards or sectoral determinations. The original section 198(4), read with the 2014 amendment, also provides routes for a worker or labour inspector to pursue the client, provider or both in the stated circumstances.

This is a narrower and more useful distinction than “above the threshold means safe.” Deeming under section 198A and liability for particular TES breaches under section 198 are different questions.

What should an EOR provider be able to explain?

A credible proposal should fit the actual role, not only the job title. Before signing, the provider should be able to explain the following for your proposed hire:

• Which party employs and remunerates the worker, and what the written employment and service agreements say.
• How the proposed arrangement has been assessed against the TES definition, and whether a bargaining-council or sector-specific rule applies.
• Which annual earnings figure is used for section 198A, including the notice’s exclusions, and how a threshold change will be handled.
• For an ongoing worker within the threshold, how the client-employer position and comparable-worker treatment would be managed.
• Who handles pay, leave, performance, disciplinary steps, ending the placement and any employee claim.

The provider can carry substantial employment administration; it cannot contract away a statutory outcome. NNRoad’s South Africa EOR service begins with the role, remuneration, expected term and working arrangement so the proposed setup can be evaluated before an offer is made.