Employer of Record & PEO in South Africa
Hire & manage teams remotely in South Africa without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
How NNRoad Employment & PEO Services Work?
NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in South Africa. Registering a legal entity in South Africa as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in South Africa in full accordance with local labor laws in under a week.
Employer of Record in South Africa
Employer of Record (EOR) services are for companies who do not have a legal entity in South Africa, but who want to hire in South Africa. Employment and full liability are outsourced to NNRoad.
➊ You interviews & select the candidates you want to hire in South Africa.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes payroll in South Africa in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in South Africa while NNRoad manages payroll & HR liabilities.
- Engaging employees through local labor contracts including contract administration, engagement, extension termination and conversion to permanent hire
- On-boarding and off-boarding employees following local labor law practice
- Registration of contractors/employees with social security board and with tax office
- Complete payroll solution and mandatory benefit administration
- Employee management according to local laws, including employee record, time keeping, bonus and allowance management, expense and claims etc
- Payments of local taxes and local social contributions to the relevant authorities
- Year-end tax filing, if required
- Payment management, including invoicing customers/clients and salary payments
- Support with Work permit sponsorship for expat employees
Payroll & PEO in South Africa
Professional Employment Organization (PEO) services are for companies who have a legal entity in South Africa, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
➊ You interviews & select the candidates you want to hire in South Africa.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in South Africa while NNRoad manages payroll & HR compliance.
- Registering and de-registering the necessary company and personnel information for payroll calculation in compliance with local rules
- Registering all local employees with the social security board, if required
- Calculation of gross salary, salary deductions, such as withholding taxes, social insurances, unpaid leaves, etc., and net salary based on information provided by the Company including irregular payments such as incentive/bonus, allowance, etc. if applicable
- Handling entire payroll administration function including collection and payment of taxes and statutory deductions to the government authorities
- Pro-rata calculation for people who join/resign
- Providing a monthly payroll summary to the Company
- Monthly issue of electronic pay-slips
- Preparation of monthly/annual income tac calculation and contributions
- Prepare annual payroll related reconciliation report
Advantages of NNRoad's South Africa Employment Services
- With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in South Africa.
- Pay as you go
- Dedicated account manager – One point of contact for multiple locations
- Employment & termination processing
- Complete payroll solution and statutory benefit according to local laws
- With EOR/PEO solutions you can hire staff while waiting for the registration of your company in South Africa.
- NNRoad only works with professional locally licensed partners
- GDPR compliant
- NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
- NNRoad provides foreigner VISA application services, if needed
Employment Compliance in South Africa
Taxes & Payroll in South Africa
Employee Income Taxes:
Individual income tax rates in South Africa are based on progressive tax brackets.
18%: 0 – 216,000 ZAR
26%: 216,001 – 337,800 ZAR
31%: 337,801 – 467,500 ZAR
36%: 467,501 – 613,600 ZAR
39%: 613,601 – 782,200 ZAR
41%: 782,201 – 1,656,600 ZAR
45%: Over 1,656,601 ZAR
Yearly income = 450,000 ZAR
18% * 216,000 = 38,880
26% * 121,800 = 31,668
31% * 112,200 = 34,782
38800+31668+34782 = 105250
Yearly income tax = 105,250 ZAR
Employer Costs in South Africa
1% – Skills Development Levy (SD)
1% – Unemployment insurance (UIF)
Total employment cost: 2%
1% – Unemployment insurance (UIF)
Total employment cost: 1%
Working Hours in South Africa
Working Hours per Week
The Basic Conditions of Employment Act (BCEA) stipulates that the maximum weekly regular working time is 45 hours. If the employee works a five-day week, this is nine hours per day (excluding lunch), and if the employee works more than five days per week, this is eight hours per day (excluding lunch). This does not imply that the employee must work normally for 45 hours per week. The amount of typical time worked is determined by a contract between the employer and the employee.
All overtime is optional, and it can only be worked if both the company and the employee agree. The maximum amount of overtime that can be worked in a single day is three hours or ten hours in a week. Except for Sunday and public holiday labor, which must be paid at twice the standard wage rate, remuneration must be 1.5 times the normal salary rate.
Benefits & Insurance in South Africa
Unemployment Insurance Fund
The Unemployment Insurance Fund (UIF) gives short-term relief to workers when they become unemployed or are unable to work because of maternity, adoption and parental leave, or illness. It also provides relief to the dependants of a deceased contributor.
South African citizens and permanent residents get free primary healthcare, however, it is means-tested and mostly provided to individuals with lower earnings. Those who earn more than the poverty line will have to pay for some or all of the treatment they receive from the government health system.
Termination Laws in South Africa
An employee has the right to a fair dismissal under the Labour Relations Act 66 of 1995 (“LRA”).
A fair dismissal must be equitable in both substance and procedure.
In terms of the LRA, there are three recognized fairgrounds of dismissal:
- Operational Requirements (redundancy/retrenchment); or
- Incapacity (this is inclusive of ill health, poor work performance and incompatibility).
The notice period for termination depends on the length of service:
- 1 week – in case the employee has been with the company for 6 months or less
- 2 weeks – in case the employee has been with the company for more than 6 months but less than one year
- 4 weeks – in case the employee has been employed for more than one year
In South Africa, severance pay usually consists of 1 week’s salary for every year of service. This is usually only given for redundancy, not for other types of dismissals.
Holidays in South Africa
Public Holidays in South Africa
- New Year’s Day – January 1st
- Human Rights Day – March 21st
- Good Friday – April 15th
- Family Day – April 18th
- Freedom Day – April 27th
- Labour Day – May 1-2
- Youth Day – June 16th
- National Women’s Day – August 9th
- Heritage Day – September 24th
- Day of Reconciliation – December 16th
- Christmas Day – December 25th
- Day of Goodwill – December 26th
Paid Leave in South Africa
An annual leave cycle is a 12-month period with the same company, beginning with the employee’s first day on the job or ending with the employee’s previous leave cycle. In each annual leave cycle, an employee is entitled to 21 consecutive days of paid annual leave; if an employee works a five-day week, this equates to 15 working days; if an employee works a six-day week, this equates to 18 working days.
Employment Contract in South Africa
It is critical that an employee’s status – permanent, fixed-term, temporary, and so on – be determined from the start of the employment relationship. Section 29 of the Basic Conditions of Employment Act mandates that certain written employment particulars be provided as a minimum, and every employer is legally obligated to disclose these minimum particulars in writing to all employees no later than the first day of employment. Even if there isn’t any legal requirement to give a written contract, it is strongly advised for employers to provide a written contract to the employees, so to avoid potential problems in case of labor disputes.
Probationary durations should be kept to a minimum. This will be determined by the nature of the job, which will determine how long it takes to evaluate whether or not the employee is functioning properly. As a general rule, the longer the probation time, the more complicated the task is.
Types of Leaves in South Africa
In South Africa, paid sick leave is calculated on a three-year cycle (at 100% of the employee’s usual rate of pay). For every 26 days worked during the first six months of employment, the employee is entitled to one day of paid sick leave.
From the first day of the 7th month, the employee receives:
- 30 days if they work a 5-day work week
- 36 days if they work a 6–day work week
- 33 days days if an employee works Monday- Friday and a Saturday every two weeks
- No paid sick leave if an employee works less than 24 hours a month.
A pregnant employee is entitled to four months of unpaid maternity leave under South African labor legislation. The employee can take the leave starting four weeks before the due date and must not return to work until six weeks after the due date. If the employee has paid into UIF, they may be eligible for a maternity benefit of up to 60% of their usual salary rate, depending on their income and insurance coverage.
There isn’t any statutory paternity leave for father but when their children are born/given to the parent, all new parents, including fathers, adopting parents, and surrogates, are entitled to ten days of unpaid parental leave (s).
Unpaid Childcare Leave
In South Africa, mothers are entitled to up to four months of unpaid leave within four weeks after giving birth, or sooner if a medical expert deems it appropriate. In the contract between the employer and the employee, more liberal terms can be negotiated.
An employee in school can take two paid days per topic per year, up to a total of ten paid days per year, at the employer’s option. Any additional absence taken for the purpose of studying after the ten days must be taken as unpaid leave.
Immigration Laws in South Africa
The Department of Home Affairs issues work permits or temporary work visas. Foreigners are granted General Work Visas if it can be demonstrated beyond a reasonable doubt that South African citizens and permanent residents with the necessary credentials, abilities, and experience are unavailable for the job.
Highly skilled migrants can apply for the Critical Skills Work Visa, which allows foreign citizens to enter South Africa without the need for a job offer.
Individuals that intend to go to South Africa to open a business can apply for the Business Visa.