Overview of payroll data for S. Africa
South Africa, which officially is known as the Republic of South Africa, is a country located on the southernmost part of the continent of Africa. South Africa is unique among countries in that it has three capital cities: Cape Town, the legislative capital; Pretoria, the administrative capital; and Bloemfontein, the judicial capital. There are nine provinces in South Africa. They are Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, and Western Cape. The countries that border South Africa are Namibia to the northwest, Botswana to the north, Zimbabwe to the northeast, Mozambique to the northeast, Eswatini (Swaziland) to the east, and Lesotho, which is an enclave totally bordered by South Africa. The Atlantic Ocean borders South Africa to its west and the Indian Ocean borders South Africa to its east.
The primary written and spoken language used in South Africa is isiZulu (Zulu), although the English language is the primary language used in governmental and business operations. In addition to isiZulu and English, both of which are official languages of South Africa, the country’s other nine official languages are Afrikaans, isiNdebele (Ndebele), isiXhosa (Xhosa), Sepedi (Sesotho sa Leboa, Northern Sotho), Sesotho, Setswana (Tswana), SiSwati (Swati, Swazi), Tshivenda (Venda), and Xitsonga (Tsonga). The writing system for the isiZulu language is an alphabetic writing system with Latin script that includes 48 letters, among which are five vowels (a, e, i, o, and u), two semivowels, (w and y) and 41 consonants. Among the consonants are the other 19 letters of the English alphabet, 18 digraphs (bh, ch, dl, gc, gq, gx, hl, kh, kl, nc, ng, nq, nx, ph, qh, sh, th, and xh), and four trigraphs (ngc, ngq, ngx, and tsh). The directionality that is used for written isiZulu text, as is used for English writing, is progression along horizontal lines from left to right, with successive horizontal lines read from top to bottom. South Africa’s name in the isiZulu language is iNingizimu Afrika.
South Africa’s currency is the South African rand.
Employers in South Africa are responsible for withholding income taxes from employee wages under the Pay-As-You-Earn (PAYE) system. Additional withholding is required to fund unemployment benefits and a skills development levy (SDL) through the PAYE system.
Employment conditions and benefits generally are addressed by the Basic Conditions of Employment Act, which is administered by the Department of Labor with the advice of the Employment Conditions Commission. There are no mandated pension plan requirements for employers.
Foreign workers in South Africa are subject to taxation and the country’s labor-related laws.
South African residents working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.
News articles regarding payroll in South Africa are available in
CURRENCY DETAILS
The currency of South Africa is the South African rand ®, also known in South Africa simply as the rand. The internationally recognized three-letter currency code for the South African rand is ZAR. The plural form of South African rand is the same as its singular form.
When an amount of South African rand is written using the currency symbol R, the symbol precedes the numerical value with no space between the numerical value and symbol.
One hundredth (1⁄100) of a South African rand is referred to as a cent, with the plural form of cents.
When amounts of South African rand are written in South African dialects of English, the comma that in dialects of American English and British English separates the thousands place from the hundreds place sometimes instead is rendered as a space, although some government entities prefer to merely have the numbers in the thousands place and hundreds place adjacent to each other with no symbol or space between them.
TAXES
Income taxes under the Income Tax Act 58 of 1962 apply to both “normal” income and capital gains; any taxable capital gain is included in the normal taxable income of a person, rather than being subject to a separate tax. All employees are subject to mandatory withholding from wages by their employer, which is referred to as employees’ tax or Pay-As-You-Earn (PAYE) and is applied by SARS to the employee’s income tax liability at the end of the year.
For individuals, the tax year runs from March 1 through the last day of February. For companies, it is the applicable financial year. Tax years for individuals sometimes are referred to by both years included in the 12-month span with a forward slash separating the years, and sometimes are referred to only by the year that includes the last day of February of the particular tax year.
For example, the tax year for individuals that spans from March 1, 2020, to Feb. 28, 2021, also is referred to as Tax Year 2020/2021 and as Tax Year 2021, and the tax year for individuals that spanned from March 1, 2019, to Feb. 29, 2020, also is referred to as Tax Year 2019/2020 and as Tax Year 2020.
In addition to income taxes, South Africa has several social taxes collected via the PAYE system. These taxes are withheld from employees and include taxes for the Unemployment Insurance Fund (UIF) and the skills development levy (SDL).
Coronavirus (Covid-19) Guidance: Employers that have gross income of up to R100 million during a financial year that ends from April 1, 2020, to March 31, 2021, and have no outstanding returns or liabilities for any South African tax to which they are subject, may postpone 35% of their PAYE deposits due for April, May, June, July, and August 2020. The postponed portions of the deposits must be paid in six monthly installments due Oct. 7, Nov. 6, and Dec. 7, 2020; and Jan. 7, Feb. 5, and March 5, 2021.
All employers subject to the Skills Development Levy do not have to pay the levy for May, June, July, and August 2020.
Income Taxes
Coverage: All businesses must withhold employees’ tax from remuneration paid to their employees. An employee is any person who earns remuneration, other than an independent contractor, and includes persons who earn remuneration as a result of services rendered to or on behalf of a labor broker. The definition of employee also includes directors of private companies and members of close corporations who perform duties similar to a director of a private company.
Payments made by a business to an independent contractor are excluded from employees’ tax withholding. However, the independent contractor’s income is deemed to be remuneration subject to employees’ tax if work is required to be performed at the business’s premises under the control and supervision of any other person with respect to how the work is performed or the hours of work.
Where a third party provides workers to a business, the third party may qualify to obtain an exemption certificate, which absolves the business from having to withhold employees’ tax from payments made to the third party for those workers.
Employees: Employees who are South African residents are subject to tax on their worldwide income and capital gains.
There are two tests for determining residency in South Africa. A person is “ordinarily resident” in South Africa if South Africa is the person’s permanent home, regardless of where the person is physically present at any given time. A person is also deemed to be resident in South Africa if the person is physically present in South Africa for more than:
• 91 days total during the relevant tax year;
• 91 days total during each of the previous five tax years; and
• 915 days total during those previous five years.
A person who is deemed to be a South African resident because of the physical presence test, but who thereafter is absent from South Africa for a continuous period of 330 days, will no longer be deemed to be a resident as of the day after leaving South Africa.
In addition, South African residents are exempt from tax on any foreign remuneration earned while they are away from South Africa for more than 183 days and at least 60 continuous days in any 12-month period.
Rates and Thresholds: Income tax rates are levied on a progressive scale, with rates ranging from 18% to 45%.
Effective for the tax year for individuals from March 1, 2021, to Feb. 28, 2022, South Africa’s personal income tax rates and minimum and maximum amounts of tax-year income for each tax bracket are as follows:
| Range of Income for Tax Year (South African Rand) | Income Tax Rate |
| Up to R216,200 | 18% |
| More than R216,200 and up to R337,800 | R38,916 plus 26% of the amount in excess of R216,200 |
| More than R337,800 and up to R467,500 | R70,532 plus 31% of the amount in excess of R337,800 |
| More than R467,500 and up to R613,600 | R110,739 plus 36% of the amount in excess of R467,500 |
| More than R613,600 and up to R782,200 | R163,335 plus 39% of the amount in excess of R613,600 |
| More than R782,200 and up to R1,656,600 | R229,089 plus 41% of the amount in excess of R782,200 |
| More than R1,656,600 | R587,593 plus 45% of the amount in excess of R1,656,600 |
Effective for the tax year for individuals from March 1, 2020, to Feb. 28, 2021, South Africa’s personal income tax rates and minimum and maximum amounts of tax-year income for each tax bracket were as follows:
| Range of Income for Tax Year (South African Rand) | Income Tax Rate |
| Up to R205,900 | 18% |
| More than R205,900 and up to R321,600 | R37,062 plus 26% of the amount in excess of R205,900 |
| More than R321,600 and up to R445,100 | R67,144 plus 31% of the amount in excess of R321,600 |
| More than R445,100 and up to R584,200 | R105,429 plus 36% of the amount in excess of R445,100 |
| More than R584,200 and up to R744,800 | R155,505 plus 39% of the amount in excess of R584,200 |
| More than R744,800 and up to R1,577,300 | R218,139 plus 41% of the amount in excess of R744,800 |
| More than R1,577,300 | R559,464 plus 45% of the amount in excess of R1,577,300 |
Individuals are required to pay income tax for a tax year if they earn at least the income tax threshold applicable to them for that year based on their age.
Effective for the tax year for individuals from March 1, 2021, to Feb. 28, 2022, the income tax threshold for individuals younger than 65 years of age is R87,300; for individuals from 65 to 74 years of age, R135,150; and for individuals at least 75 years of age, R151,100. Effective for the tax year for individuals from March 1, 2020, to Feb. 28, 2021, the income tax threshold for individuals younger than 65 years of age was R83,100; for individuals from 65 to 74 years of age, R128,650; and for individuals at least 75 years of age, R143,850. Effective for the tax year for individuals from March 1, 2019, to Feb. 29, 2020, the income tax threshold for individuals younger than 65 years of age was R79,000; for individuals from 65 to 74 years of age, R122,300; and for individuals at least 75 years of age, R136,750.
Registration: An employer must register with SARS for employees’ tax purposes using Form EMP101e within 21 days of becoming an employer, unless none of their employees is liable for normal tax. Individual branches of a business may be registered as separate employers, using Form EMP102e. If an employer changes its name or address or ceases to be an employer, it must notify SARS in writing within 10 business days.
In addition, all employees who receive any form of employment income must also register by visiting a SARS branch. Previously, employee registration was required only for persons who received net remuneration of more than R60,000 per year.
Taxable Amounts: Remuneration includes, but is not limited to, any salary, fee, bonus, wage, gratuity, pension, leave encashment, emolument, voluntary award, commission, annuity, stipend, overtime, superannuation allowance, retirement allowance, lump sum benefit, payment and director’s remuneration.
Employer-provided fringe benefits are also included in the definition of remuneration, and employers should consult the applicable tax year’s Guide for Employers in Respect of Employees’ Tax released by SARS for additional details on how to determine amounts that must be included in taxable remuneration when a fringe benefit is granted to an employee. The Guide for March 1, 2021, to Feb. 29, 2022, and the Guide for March 1, 2020, to Feb. 28, 2021, were published by SARS.
Taxable income is determined by subtracting exempt income and allowable deductions from gross income. Examples of exempt income include workers’ compensation and pension benefits, foreign dividends and foreign interest, and up to R23,800 of domestic interest income for persons under the age of 65 (reduced by the amount of exempted foreign dividends and foreign interest). Examples of allowable income tax deductions include contributions to approved pension funds, medical scheme contributions and incurred medical expenses not paid by the medical scheme, contributions for income protection insurance, business travel expenses, and donations to approved public benefit organizations.
Foreign Earned Income Exclusion: Effective since March 1, 2020, up to R1.25 million of employment income earned outside of South Africa by South African residents may be excluded from income tax assessment per tax year. This exclusion is known in South Africa as the foreign employment income exemption. Effective until Feb. 29, 2020, all employment income earned outside of South Africa by South African residents may be excluded from income tax. To qualify for the exemption, an employee must work outside of South Africa for more than 183 days in a 12-month period, including a period of 60 consecutive days in the same 12-month period.
Withholding Methods: Employees’ tax withholding is calculated based on the balance of remuneration after deducting all of the employee’s allowable income tax deductions of which the employer is made aware, such as pension fund contributions, retirement annuity fund contributions, income protection policy premiums, medical scheme contributions (for employees over age 65) and donations.
Employers must use the tax deduction tables available from SARS to calculate the amount of tax that they must withhold from employment income paid to employees.
For employees in nonstandard employment, such as casual workers, part-time lecturers, and persons who work fewer than 22 hours per week, employees’ tax must be deducted at a straight rate of 25%. Employees may request in writing that the employer withhold more than the required amounts, to ensure that the employee will have no tax liability at the end of the year. SARS ultimately applies the amount of employees’ tax withheld to the employee’s income tax liability.
Employment Tax Incentive: Employers may receive a reduction in PAYE taxes known as the employment tax incentive for hiring South African workers between the ages of 18 and 29, which is to be in effect until Feb. 28, 2029. Employers may claim the incentive for a maximum of 24 months per qualifying employee. Employees for whom the employer wishes to claim the incentive must be paid at least the applicable minimum wage, or at least R2,000 per month if no minimum wage applies, and up to R6,500 per month. The amount of the incentive varies depending on the employee’s wages, but is a maximum of R1,000 per month for the first 12 months of employment and of R500 per month for the second 12 months of employment.
Returns and Remittance: The employer is required to withhold employees’ tax from remuneration paid to an employee and forward the withheld tax to SARS on a monthly basis in connection with the employer’s monthly EMP201 return. The EMP201 return must be filed with SARS monthly, within seven days after the end of the month during which the funds were deducted.
Employers must file an annual reconciliation. The reconciliation statement, EMP501, covers the period of March 1 of the previous year to the last day of February of the following year. For example, the statement due in 2021 covers salaries and wages paid to employees from March 1, 2020, to Feb. 29, 2021. The deadline for filing the reconciliation statement for a reported tax year is the immediately following May 31.
Effective for the tax year from March 1, 2021, to Feb. 29, 2022, the deadline for filing the reconciliation statement for that tax year is May 31, 2022. Effective for the tax year from March 1, 2020, to Feb. 28, 2021, the deadline for filing the reconciliation statement for that tax year is May 31, 2021.
The employer must annually issue to employees an employee income tax certificate to each employee, on form IRP5/IT 3(a), which itemizes the amount of employees’ tax that has been withheld by the employer. The due date for this certificate to be delivered to employees ranges from 60 days after the end of the year of assessment for existing employees
Employee Share Plans: Employees entering into an employee share plan are taxed based on whether the share has been vested, which generally occurs when a share is acquired without restrictions or if restrictions on a share are lifted. Shares that are sold after being held as capital assets are subject to capital gains tax and shares sold after being held as trading stock are subject to income tax.
Employees taking part in a broad-based employee share plan, or a plan in which at least 80% of employees in a company are able participate, are subject to capital gains tax on the disposal of the share if the share is held at least five years. If held less than five years, the sale of stock will be subject to income taxes. Under this plan, market value of shares acquired during the current year and prior four years cannot exceed R50,000.
Recordkeeping: Employers must keep records for each employee of remuneration paid, employees’ tax withheld, and income tax reference number (if any). Such records must be kept for at least five years after the date of the last entry.
Penalties: An employer that fails to deduct the full amount of employees’ tax is personally liable for the amounts that were not deducted.
In addition, a 10% penalty is imposed on late payments, plus interest on the unpaid amount. Where the employer intentionally fails to pay the correct amount due, an additional penalty may be imposed of up to twice the amount the employer failed to pay.
Employers that fail to disclose information subject to a reportable arrangement are liable to a penalty ranging between R50,000 and R100,000.
Employers that understate or underpay tax are subject to an understatement penalty ranging between 5% and 150% of outstanding taxes.
For other non-compliance, employers may be subject to a penalty ranging between R250 and R16,000.
Employers also may be found guilty of an offense and fined or sentenced to imprisonment for up to one year for acts such as:
• failing to deduct employees’ tax or to pay over such deductions to SARS;
• issuing a false or altered IRP5/IT3 certificate or failing to deliver an IRP5/IT3 certificate to employees;
• failing without just cause to comply with an income tax directive from the Commissioner;
• failing to maintain records for the requisite five year period;
• failing to apply for registration as an employer, or to notify the Commissioner of a change of address or cessation of operations as an employer; and
• failing to submit a required return.
Social Taxes
Employers are required to pay taxes and withhold additional amounts from employee pay for the Unemployment Insurance Fund and the skills development levy.
Unemployment Insurance Fund: This is a compulsory contribution to fund employment benefits. The Unemployment Insurance Fund (UIF) contributions are collected by SARS and paid over to the UIF, which is managed by the UIF Commissioner.
Coverage: All private employers and employees generally are required to contribute to the Unemployment Insurance Fund (UIF). However, employers or employees employed for less than 24 hours a month are exempt of UIF contributions.
Rates and Thresholds: The UIF contribution rate for employees is 1% of their salary and the UIF contribution for employers is 1% of payroll.
The maximum amount of employment income paid to an employee upon which contributions for the UIF may be assessed on the employee and the employer is known as the maximum earnings ceiling, also known as the maximum contribution limit.
Effective starting March 1, 2021, the maximum earnings ceiling for contributions to the UIF is R17,712 per month or R212,544 per year. Effective until Feb. 28, 2021, the maximum earnings ceiling for contributions to the UIF was R14,872 per month or R178,464 per year.
Registration: Employers must register with SARS by completing Form EMP101e. Employers that are not required to register at SARS for income tax purposes may register directly with the Unemployment Insurance Commissioner for the payment of contributions.
Taxable Amounts: Taxable income refers to the total amount of employees’ remuneration before the deduction of any allowable deductions.
Returns and Remittance: Employers are required to withhold employees UIF contributions and make employer-mandated contributions to SARS on a monthly basis. The EMP201 return also must be filed with SARS monthly, within seven days after the end of the month during which the funds were deducted. The total UIF contributions must be reported under code 4141 of employees’ income tax certificate (form IRP5/IT 3(a)), which the employer must annually issue to employees. The due date for this certificate to be delivered to employees ranges from 60 days after the end of the year of assessment for existing employees.
Recordkeeping: Employers must keep records for each employee of remuneration paid and UIF contributions. Such records must be kept for at least five years after the date of the last entry.
Penalties: Employers that fail to deduct the full amount of employees’ UIF contributions are personally liable for the amounts that were not deducted.
Employers are subject to a penalty of 10% for late payments or underpayments of UIF contributions, plus interest on the unpaid amount. Where an employer fails to pay the relevant amount with intent to evade payment obligations, the employer may be liable to a penalty up to twice the amount of UIF contributions which the employer failed to pay.
Skills Development Levy: This is a compulsory levy scheme for the purpose of funding education and training of South Africans.
Coverage: All private employers generally are required to pay the Skills Development Levy (SDL). However, employers paying annual remuneration of less than R500,000 are exempt from SDL payments.
Rates and Thresholds: Employers must pay the SDL at a rate of 1% of the employment income they paid to employees.
Registration: All employers must register with SARS by completing Form EMP101e and indicate the jurisdiction of the Sector Education and Training Authority within which the employer must be classified.
Taxable Amounts: Taxable income refers to the total amount of employees’ monthly remuneration, after the deduction of allowable deductions. Allowable deductions include retirement fund contributions, donations, income protection policy premiums, and pension fund contributions.
Returns and Remittance: Employers are required to contribute SDL to SARS on a monthly basis in connection with the employer’s monthly EMP201 return. The EMP201 return must be filed with SARS monthly, within seven days after the end of the month during which the funds were deducted. The SDL amount must be reported under code 4142 of employees’ income tax certificate (form IRP5/IT 3(a)), which the employer must annually issue to employees.
Recordkeeping: Employers must keep records for each employee of remuneration paid and SDL contributions. Such records must be kept for at least five years after the date of the last entry.
Penalties: Employers are subject to a 10% penalty for late payments or underpayments of SDL, plus interest on the unpaid amount.
Where an employer fails to pay the relevant amount with intent to evade payment obligations, the employer may be liable to a penalty up to twice the amount of SDL which the employer failed to pay.
Other Taxes
Employers are required to make contributions towards the Compensation Fund under the Compensation for Occupational Injuries and Diseases Act. Contributions are assessed annually by the Director-General of the Department of Labour according to a tariff of assessment calculated on the basis of a percentage of the annual earnings of all employees. Employers must register with the Compensation Commissioner, keep records of employees’ earnings, and file a return of earnings not later than March 31 every year.
State/Jurisdiction Taxes
Taxes on employment income are not assessed by any of South Africa’s regions or local jurisdictions.
COMPENSATION AND BENEFITS
Compensation and benefits for employees in South Africa are governed by the Basic Conditions of Employment Act. The Act applies to all employers and employees, except members of the National Defence Force, the National Intelligence Agency, and the South African Secret Service; unpaid volunteers working for an organization serving a charitable purpose; and, subject to certain exceptions, persons working on vessels at sea.
Wage and hour requirements cover minimum wages for certain economic sectors, overtime provisions, limits on hours worked, holiday pay, leave, wage payment, bonuses, and workers’ compensation.
Retirement plan funding in South Africa is private and voluntary.
Minimum Wage
South Africa enacted its first national minimum wage Nov. 26, 2018, and a national minimum wage took effect Jan. 1, 2019.
Effective since March 1, 2021, the national minimum wage is R21.69 per hour. Effective since March 1, 2020, the national minimum wage was R20.76 per hour.
Bargaining council agreements, collective agreements, and private contracts also frequently set minimum wages.
The country’s labor department enforces minimum wages for some industry sectors. The sectors covered this way vary with regard to applicable minimum wages. For some of the sectors, minimum wages are further varied based on differences in job responsibilities, geographic areas where work is performed, the number of workers employed by an employer, permissible working hours during a period, or number of years of experience. If a worker covered by a sector-specific minimum wage would be paid less than the national minimum wage, the worker must be paid at least the national minimum wage instead. The sector-specific minimum wages are as follows:
• agricultural and farm work – effective since March 1, 2021, the hourly minimum is R21.69, and effective from March 1, 2020, to Feb. 28, 2021, the hourly minimum was R18.68;
• contract cleaning – effective since March 1, 2021, the hourly minimum wages range from R21.77 to R23.87, and effective from March 1, 2020, to Feb. 28, 2021, the hourly minimum wages ranged from R20.83 to R23.04;
• civil engineering – effective since Sept. 1, 2014, the hourly minimum wages range from R25.18 to R51.28;
• domestic work – effective since March 1, 2021, the hourly minimum wage is R19.09, and effective from March 1, 2020, to Feb. 28, 2021, the hourly minimum wage was R15.57;
• expanded public works programs – effective since March 1, 2021, the hourly minimum wage is R11.93, and effective from March 1, 2020, to Feb. 28, 2021, the hourly minimum wage was R11.42;
• forestry – effective since March 1, 2017, the hourly minimum wage is R15.39;
• hospitality – effective since July 1, 2018, the hourly minimum wages range from R17.34 to R19.35;
• private security – effective since Sept. 1, 2017, the monthly minimum wages range from R2,356 to R7,014;
• taxi driving – effective since Aug. 1, 2016, the hourly minimum wages range from R10.78 to R15.47; and
• wholesale and retail – effective since March 1, 2021, the hourly minimum wages range from R21.69 to R58, and effective from March 1, 2020, to Feb. 28, 2021, the hourly minimum wages ranged from R20.76 to R55.50.
Overtime
The decision to work overtime must be by agreement between employee and employer, and even with such an agreement, overtime is limited to 10 hours per week. A collective or bargaining council agreement can also increase overtime to 15 hours per week for up to two months in any 12-month period.
The overtime pay rate is 1.5 times the normal wage. An employer and an employee can also come to an agreement in which the worker is paid regular wages and given 30 minutes’ compensatory time off per hour of overtime worked, or simply granted 90 minutes of compensatory time for every hour of overtime worked.
Employees receive double their normal wage rate if they work on Sundays, unless the day is part of their regular workweek, in which case they receive wages at 1.5 times their normal salary. Employers and employees also can agree to the option of paid time off if an employee works on a Sunday, but it must be at the enhanced rate for Sunday work.
The overtime laws do not apply to senior managers, traveling sales staff, and employees who work fewer than 24 hours a month.
An employer that fails to pay accrued overtime is liable for interest on the unpaid amount, plus penalties ranging from 25% to 200% of the amount due, depending on the extent of any previous failures to comply.
Hours of Work
The regular workweek may vary for different employers and workers, but the maximum is 45 hours. For employees whose regular workweek is five or fewer days, the regular workday cannot exceed nine hours. For those who work more than five days a week, the regular workday cannot exceed eight hours. Even with overtime, an employee’s workday cannot exceed 12 hours.
Night work is considered any work done between 6 p.m. and 6 a.m. for most workers, 8 p.m. to 4 a.m. for farmworkers and 7 p.m. to 7 a.m. for workers in the wholesale and retail sector. Employees cannot be required to work at night. If they agree to night work, employees are entitled to extra pay or a reduction in working hours and the employer must provide transportation between home and workplace at the beginning and end of the shift.
An employee who works continuously for more than five hours is entitled to an unpaid meal break of at least one hour. An employee must be compensated for a meal break during which the employee is required to work or to be available for work. The employer and employee may agree in writing to reduce the meal break to not less than 30 minutes, or to eliminate the meal break if the employee works fewer than six hours per day.
An employee is entitled to a daily rest period of at least 12 consecutive hours between shifts and a weekly rest period of at least 36 consecutive hours, which, unless otherwise agreed, must include Sunday.
Holidays
There are 12 paid holidays under the Public Holidays Act. Employees who work on a public holiday are paid double their normal wage. A public holiday can be exchanged for another day off if the employer and the employee agree.
South Africa’s public holidays are:
• New Year’s Day (Jan. 1);
• Human Rights Day (March 21);
• Good Friday (the Friday before Easter Sunday);
• Family Day (the day after Easter Sunday);
• Freedom Day (April 27);
• Workers’ Day (May 1);
• Youth Day (June 16);
• National Women’s Day (Aug. 9);
• Heritage Day (Sept. 24);
• Day of Reconciliation (Dec. 16);
• Christmas Day (Dec. 25); and
• Day of Goodwill (Dec. 26).
Whenever a holiday falls on a Sunday, the following Monday is considered a public holiday. During election years, a 13th annual paid public holiday is usually declared to allow workers to vote in local government elections.
Leave
Workers are entitled to 21 consecutive days of paid annual leave during every 12-month period they are with the same employer. If the employee and the employer agree, the worker can accrue one day of leave for every 17 days worked or one hour of leave for every 17 hours worked.
An employee must generally complete the 12-month leave cycle before taking the leave, although employers have the discretion to change this. Employers must grant the leave within six months of the end of the annual 12-month leave cycle.
• Sick leave. Paid sick leave is granted in 36-month cycles—commencing from an employee’s start date with an employer—and is equal to the number of days the employee normally would work during a six-week period. So during the three-year cycle, an employee who works a five-day week is eligible for 30 days of sick leave. Workers in the civil engineering sector, however, receive 36 days. During the first six months with an employer, workers cannot take more than one sick day for every 26 days worked.
Sick leave terms can vary if they are negotiated differently in an employment contract or in a collective agreement.
If an employee is absent for more than two consecutive days or on more than two occasions during an eight-week period and does not respond to a request to provide a medical certificate that explains the absences, the employer is not required to pay the employee for the sick leave.
• Maternity leave. Pregnant employees are eligible for four consecutive months of maternity leave, with benefits paid by the Unemployment Insurance Fund. Employees are entitled to start the leave within four weeks of the due date, although earlier or later start dates are allowed by agreement between an employer and an employee or in cases of medical necessity. Women are not permitted to work for six weeks after giving birth unless certified by a doctor or midwife to do so.
An employee who suffers a miscarriage during the third trimester of pregnancy or who gives birth to a stillborn child receives six weeks’ leave after the loss, regardless of whether maternity leave had begun.
The benefit from the Unemployment Insurance Fund is determined on a sliding scale, from 38% of regular salary for the highest-income workers to 58% of regular salary for the lowest-income workers with a monthly salary ceiling of R14,872.
Employees also can receive paid maternity benefits based on a collective agreement or employment contract in which the employer agrees to provide payment above its contribution to the Unemployment Insurance Fund.
Employers cannot require or allow pregnant or nursing employees to perform work that is hazardous to their health or that of their children. During pregnancy and for six months after birth, an employer must provide alternative work, where practicable, to pregnant employees or nursing mothers if their regular job involves night work or would pose a health threat to them or to their children.
Maternity protection guidelines appear in the nonbinding Code of Good Practice on the Protection of Employees During Pregnancy and After the Birth of a Child. Employers are expected to inform workers about hazards to pregnant or breastfeeding employees and the importance of notifying employers if they are pregnant. According to the code, employers should keep a record of every notification of pregnancy and should evaluate whether the employee’s job might create a potential risk to the worker or the fetus. The code notes that for the first six months after the birth of a child, employees who are breastfeeding should have two 30-minute breaks each workday to breastfeed or express milk. While such codes are nonbinding, courts and tribunals consider them in labor law disputes.
• Family responsibility leave. Employees who have been with the same employer for more than four months and who work at least four days a week for the employer are generally entitled to three days of paid family responsibility leave during each 12-month period after starting the job (the annual leave cycle). Under the Basic Conditions of Employment Act, the leave can be taken for the birth of a child, a child’s illness, or the death of a family member. Employers may require proof of the need for the leave.
“Family member” is defined as a spouse, life partner, biological or adoptive parent, grandparent, child (including adopted), grandchild, or sibling. Family responsibility leave time might differ in a collective agreement.
• Paternity leave. There is no leave specifically referred to as paternity leave, but family responsibility leave is available to parents for the birth of a child.
Wage Payment
An employer must pay wages in South African currency in cash, by check, or by direct deposit into an account designated by the employee. Wages must be paid daily, weekly, fortnightly, or monthly no later than seven days after completion of the wage period. If wages are paid in cash or by check, they must be paid at the workplace, or another location agreed to by the employee, during or within 15 minutes before or after the employee’s working hours, and must be provided in a sealed envelope that becomes the property of the employee.
On each payday, the employer must provide the employee with the following information in writing: the employer’s name and address, the employee’s name and occupation, the period for which payment is made, the amount of wages earned, the amount and purpose of any deduction from wages, the actual amount paid to the employee, and certain information relevant to the calculation of the employee’s pay.
Bonuses and Special Benefits
South Africa does not mandate employers to provide bonus payments to employments but it does require other types of benefits. It also is customary for a 13th month bonus or “cheque” to be paid around Christmas or at the year-end.
Health Insurance: Health insurance plans often are provided by bargaining councils and by most employers that are not covered by a bargaining council plan. The employer and the employee contribute in equal amounts to such plans.
The South African government has been developing proposals for a national health insurance system in recent years.
Retirement Plans: Retirement funding in South Africa is private and voluntary, with many employers providing plans and many South Africans setting up their own savings plans. For the most part, employers and employees contribute equal amounts to private pension plans or schemes, although this is not mandatory.
Employers do not contribute to the social security old-age pension system; contributions come from general revenues and benefits are means tested. South Africa has been exploring reform of the government-provided pension system, however, which could require employer and employee contributions and widen the distribution of benefits. The country has no formal retirement age, but workers must be at least 60 to become eligible for a state pension.
Workers’ Compensation
Under the Compensation for Occupational Injuries and Diseases Act, workers are compensated for workplace injuries or diseases without having to prove employer negligence. Employers make contributions to the Compensation Fund based on the size of their payroll and the type of business they operate.
Employers must report occupational injuries to the compensation commissioner’s office or the mutual association that administers workers’ compensation benefits within seven days of learning of them and must report occupational diseases within 14 days. Employees receive compensation only if an injury or illness requires them to miss more than three days of work. Employers are required to make payments to injured or sick workers for the first three months of a temporary disability and are later reimbursed for these payments.
Benefits go to temporarily disabled workers, permanently disabled workers and families of individuals who die in work accidents or because of work-related illnesses. A worker is considered to have a temporary disability for up to two years, after which it is considered a permanent disability. Those who are temporarily disabled receive 75% of their salary up to a maximum benefit of R14,872 per month. Those who are determined to be 30% or less permanently disabled receive a lump sum payment equal to 15 times their regular monthly earnings times the degree of disability, up to maximum total benefit of R125,400. Those who are more severely disabled receive a monthly pension for the rest of their lives equal to 75% of their regular monthly salary—to a maximum R14,872—times their degree of disability.
If an employee dies as a result of a workplace accident or illness, the worker’s spouse is entitled to a lump sum payment equal to two times the monthly pension to which the employee would have been entitled if 100% disabled, plus a monthly pension equivalent to 40% of the pension to which the employee would have been entitled if 100% disabled. The monthly pension continues until remarriage or death of the surviving spouse. Each child under 18 years of age is entitled to a monthly pension equal to 20% of the pension that would have been payable to the employee for 100% disability, provided that the total pension payable to the surviving spouse and children does not exceed the amount that would have been payable to the employee if 100% disabled. A surviving child’s monthly pension ceases at age 18, or at death or marriage prior to age 18.
Recordkeeping
Every employer must keep a record containing the following information and any other prescribed information, for at least three years from the date of the last entry in the record:
• each employee’s name and occupation;
• the time worked by each employee;
• the remuneration paid to each employee; and
• the date of birth of any employee under 18 years of age.
FOREIGN WORKERS
A foreign worker who wishes to work in South Africa must obtain a temporary residence work permit, which generally is issued only if a qualified South African citizen is not available for the job.
An application for a work permit may be submitted to the South African embassy, mission, consulate, or to any regional office of the South African Department of Home Affairs. Where a work permit is of a type that may be extended, a request for extension must be submitted no later than 30 days prior to expiration of the permit. A foreigner who has been working in South Africa for at least five years on a temporary residence work permit may apply for a direct residency permit, which is a type of permanent residency.
Visas: There are four types of temporary residence work permits:
Quota work permit: Once a year, under the authority of the Immigration Act of 2002, the South African government identifies areas of scarce, critical, and special skills required by the South African economy and creates a list of professional categories and occupational classes for which work permits are made available to foreigners with at least five years practical experience. A quota work permit is valid for as long as the foreign worker is employed within the area of expertise for which the permit was issued.
The holder of a quota work permit must submit to the Director-General of the Department of Home Affairs, within 90 days of admission to South Africa, proof that the worker has secured employment in the category or class for which the permit was issued and must submit confirmation of continued employment in that area every 12 months thereafter.
General work permit: A general work permit requires a signed contract with a particular employer for a job that was advertised in national printed media and is valid for the duration of the employment contract. A general work permit will lapse if the employee fails to submit proof to the Director-General, within 6 months of issuance of the permit and every year thereafter, that the employee is still employed, including proof of the terms and conditions of the job and the job description.
Exceptional skills permit: An exceptional skills permit requires a letter from a foreign or South African organ of State or from an established South African academic, cultural, or business body; confirming the applicant’s exceptional skills or qualifications, testimonials from previous employers and a comprehensive resume, plus other proof to substantiate the exceptional skills, such as publications; and a letter of motivation showing that the applicant’s exceptional skills will benefit the South African environment in which the applicant intends to work. An exceptional skills permit is valid for a maximum period of five years.
Intracompany transfer permit: If a multinational company wishes to transfer an existing employee from a foreign branch to a branch in South Africa, the employee must obtain an intracompany transfer work permit, which is valid for a maximum period of four years and cannot be renewed or extended. An intracompany transfer permit does not require proof that the company was unable to hire a South African citizen or permanent resident.
Taxes: A foreigner working in South Africa is subject to normal tax on any income earned from work in South Africa. By contrast, a South African resident is taxed on worldwide income. The foreign worker is taxed at the same rate as a resident and generally is entitled to the same deductions as a resident.
Capital gains tax, which is part of income tax, applies to all assets of a South African resident, but applies only to the following assets of a nonresident: (a) immovable property, or any interest or right in such property, situated in South Africa, and (b) any asset attributable to a permanent establishment in South Africa.
Taxation of a foreign worker may be affected by any double taxation agreement between the foreigner’s home country and South Africa.
Where a foreign worker is employed in South Africa by a foreign employer that does not have an agent with authority to pay remuneration in South Africa, the employee must pay provisional tax, which is an advance payment on estimated income tax, and register as a taxpayer. The first provisional payment is due at the end of August. The second is due at the end of February.
Before a foreign employee may depart South Africa after ending employment there, the employee must show compliance with South African tax laws, including payment of any outstanding tax. Once compliance is shown, the foreign employee will be provided with a tax clearance certificate to allow departure from South Africa.
Wages/Payments: There are no special requirements for payment of foreigners employed in South Africa.
WORKING IN THE UNITED STATES
Foreign workers from South Africa must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S. are included in the separate
South African workers are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.
U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC).
For tax purposes, South African citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes. South Africa has a tax treaty but not a totalization agreement with the U.S.
State and local taxation of South African workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.
The U.S. labor laws apply to all workers employed and providing services in the country.
Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.
Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the
Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.
Income Taxes:Generally, nonresidents in the U.S. who are from South Africa and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.
A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from South Africa and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.
Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the
Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.
An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the
Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.
Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.
Tax treaties: South Africa and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the Tax Treaty Exemption Comparison Chart. To claim the treaty benefit, the nonresident must file Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with the employer.
Students, apprentices and business trainees in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on payments received from sources outside the other country for maintenance, training, or education if they are residents of the other treaty country before arrival in the host country.
This statement affirms that the student, apprentice, or trainee is temporarily in the U.S. for purposes of studying or has accepted an invitation by the U.S. government (or by a political subdivision or local authority) for the purpose of engaging in research or training by a university or other recognized educational institution in the U.S. It also must affirm that the individual will receive compensation for services performed in the U.S. Apprentices and business trainees are entitled to this exemption for a maximum of one year. No limit is placed on the apprentice or trainee compensation for any foreign resident.
Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.
Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.
Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.
Totalization Agreements: South Africa does not have a totalization agreement with the U.S.
Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.
There are no particular requirements that employees be paid in U.S. dollars.
TREATY ARRANGEMENTS
South Africa has entered into more than 70 income tax treaties, including an income tax treaty with the United States. South Africa does not have a totalization agreement with the United States for social tax coverage purposes.
The countries with which South Africa has a bilateral income tax treaty in effect are Algeria, Australia, Austria, Belarus, Belgium, Botswana, Brazil, Bulgaria, Cameroon, Canada, Chile, China, Croatia, Cyprus, Czech Republic, Democratic Republic of Congo, Denmark, Egypt, Eswatini (Swaziland), Ethiopia, Finland, France, Germany, Ghana, Greece, Grenada, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Kenya, Kuwait, Lesotho, Luxembourg, Malawi, Malaysia, Malta, Mauritius, Mexico, Mozambique, Namibia, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Poland, Portugal, Qatar, Romania, Russia, Rwanda, Saudi Arabia, Seychelles, Sierra Leone, Singapore, Slovakia, South Korea, Spain, Sweden, Switzerland, Tanzania, Thailand, Tunisia, Turkey, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Zambia, and Zimbabwe.
South Africa additionally has an income tax treaty in effect with Taiwan (the Republic of China).
South Africa also has an income tax treaty in effect with the special administrative region of Hong Kong.
South Africa has a totalization agreement in effect with the Netherlands.
RESOURCES
General:
U.S. State Department:
• U.S. Relations With South Africa
• International Travel Information: South Africa
U.S. Central Intelligence Agency:
• The World Factbook: South Africa
• The World Factbook: Languages
U.S. Department of Commerce:
• Export.gov: South Africa - Market Overview
• Export.gov: South Africa - Business Travel
U.S. Library of Congress:
• Guide to Law Online: South Africa
• Global Legal Monitor: South Africa
U.S. Peace Corps: Peace Corps South Africa - An Introduction to Zulu Language
South Africa Department of Arts and Culture: Multilingual Life Orientation Intermediate Phrase Terminology List
Currency Details
International Organization for Standardization: Currency Codes - ISO 4217
Unicode Consortium: Currency Symbols
United Nations: United Nations Terminology Database: South Africa
Taxes
Income Tax Act 58 of 1962
South African Revenue Service
South African Revenue Service: Taxation in South Africa
Unemployment Insurance Contributions Act No. 4 of 2002
South African Revenue Service: Guide for Employers in Respect of Employees’ Tax (2020 Tax Year)
South African Revenue Service: Tax Guide for Share Owners
South Africa Skills Development Act
South African Revenue Service: Foreign Employment Income Exemption
Compensation and Benefits
Basic Conditions of Employment Act
Amendment of Sectoral Determination 2: Civil Engineering Sector, South Africa
Code of Good Practice on the Protection of Employees During Pregnancy and After the Birth of a Child
Compensation for Occupational Injuries and Diseases Act
Mywage.co.za (minimum wages)
Unemployment Insurance Act
Foreign Workers
Department of Home Affairs, FAQs
Department of Home Affairs, Scarce Skills, and Work Permit Quotas
Department of Home Affairs, Types of Temporary Residence Permits (including work permits)
Working in the United States
U.S. Internal Revenue Service:
• IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
• IRS Publication 15, Circular E, Employer’s Tax Guide
• IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
• IRS Publication 519, U.S. Tax Guide for Aliens
• IRS Publication 901, U.S. Tax Treaties
U.S. Labor Department, Foreign Labor Certification
Hiring Foreign Workers
Treaty Arrangements
South African Revenue Service, International Treaties—Double Taxation Agreements
U.S.-South Africa Tax Treaty of 1998 (U.S. Internal Revenue Service)
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