Global PEO Services (GPS) helps companies hire employees in South Africa without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in South Africa, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with South African labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in South Africa. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
South Africa offers excellent opportunities for foreign investors. The major sectors of the country’s diversified economy include agriculture, fisheries, mining, food processing, vehicle manufacturing, energy, telecommunication, and textiles. The combined value of South Africa’s imports and exports is equal to 58.2% of GDP, which shows the importance of foreign trade in the economic landscape.
Currency: South African Rand
Principal Languages: English, Afrikaans, Zulu, Xhosa, Southern Sotho, Tswana
Government: Parliamentary Democracy
Capital City: Cape Town
Major Cities: Pretoria, Durban, Johannesburg, Bloemfontein
While most of the medium-size and large-scale enterprises incorporate written employment contracts for their employees, these contracts are not legally mandatory. However, the Basic Conditions of Employment Act requires employers to provide employees with specific written information after their hiring. An employer must maintain this information for 3 years.
Fixed-term contracts are possible between employers and employees and can extend according to the needs of workers and the employer. Employers can demand new workers to serve probationary periods, which is typically 3 months. The Labour Relations Act stipulates that employers should not use probationary periods to deny permanent status to workers, for example, by regularly firing workers after the probation period is over and hiring new workers.
Employers can use part-time workers freely unless a collective bargaining agreement prevents them from doing so. Employees whose total work hours are less than 24 hours per month do not qualify for protection by statutes mandating minimum working conditions.
Even after including overtime, an employee's workday cannot be more than 12 hours.
Employees usually need to get 12 hours off from the end of one shift to the beginning of the next. Between shifts over a weekend that includes a Sunday, employees need to get 36 consecutive hours off, unless the agreement between an employer and an employee specifies otherwise. If determined by a collective agreement, the hours of work and overtime may be averaged over a duration of up to 4 months.
The regular workweek may vary for different employers and workers, though the maximum is 45 hours. For employees whose regular workweek is 5 or fewer days, the regular workday cannot be more than 9 hours. For those who work more than 5 days a week, the regular workday cannot exceed 8 hours. Even with overtime, an employee's workday cannot exceed 12 hours.
Employees who work between 11 p.m. and 6 a.m. regularly must know from their employer about health and safety hazards related to night work and that they have the right to get medical examinations related to those hazards at the employer's expense.
The decision to work overtime must be through an agreement between an employee and employer. Employees usually cannot work more than 3 hours as overtime per day or 10 hours per week, but a collective or bargaining council agreement can increase overtime to 15 hours per week for up to 2 months in any 12-month period.
The overtime pay rate is 1.5 times the standard wages. Employees receive double their normal wage rate if they work on Sundays unless the day is part of their regular workweek. The overtime laws do not apply to senior managers, traveling sales staff, and employees who work fewer than 24 hours a month.
The Public Holidays Act declares 12 paid holidays. They are:
- January 1: New Year's Day
- March 21: Human Rights Day
- Good Friday: The Friday before Easter Sunday
- Family Day: The day after Easter Sunday
- April 27: Freedom Day
- May 1: Workers' Day
- June 16: Youth Day
- August 9: National Women's Day
- September 24: Heritage Day
- December 16: Day of Reconciliation
- December 25: Christmas
- December 26: Day of Goodwill
If a holiday falls on a Sunday, the following Monday is considered a public holiday.
Employees are entitled to 21 consecutive days of paid annual leave for every 12-month period of work with one employer. Based on the agreement, employees can accrue one day of leave for every 17 days worked or one hour of leave for every 17 hours worked. An employee usually has to complete the 12-month leave cycle before taking leave, although employers have the discretion to change this.
Working fathers are entitled to 10 days of parental leave upon the birth of their child.
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 would work during a 6-week period. So, during the 3-year cycle, an employee who works a 5-day week is eligible for 30 days of sick leave. Workers in the civil engineering sector, however, receive 36 days of sick leave. Sick leave terms are open to negotiation through an employment contract or a collective agreement.
Women employees are eligible for 4 consecutive months of maternity leave, with benefits paid by the Unemployment Insurance Fund. Employees are entitled to commence their leave within 4 weeks of the due date, although earlier or later dates are allowed by agreement between an employer and an employee or in cases of medical emergency.
Women are not permitted to work for 6 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 6 weeks' leave after the loss, regardless of whether maternity leave has already begun or not.
Employees can also receive paid maternity benefits based on a collective agreement or employment contract in which the employer agrees to pay over and above its contribution to the Unemployment Insurance Fund.
Family Responsibility Leave
Employees who have been working with the same employer for more than 4 months and who work at least 4 days a week are generally entitled to 3 days of paid family responsibility leave during each 12-month period after starting the job (the annual leave cycle). The leave can be taken for the birth of a child, a child's illness, or the death of a family member, who can be a spouse, life partner, biological or adoptive parent, grandparent, child (including adopted), grandchild, or sibling. Family responsibility leave time may vary based on a collective agreement.
There is no statutory retirement age in South Africa. Retirement funding in South Africa is private and voluntary. 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. South Africa has been exploring reform of the government-provided pension system, which may 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 years old to be eligible for a state pension.
Health insurance plans are often provided by bargaining councils and by most employers that are not covered by a bargaining council plan. Employers and employees contribute equally to such plans.
Workers who have lost their jobs and are unemployed for more than 14 days even though they are willing and able to work, are entitled to benefits from the Unemployment Insurance Fund. The fund aims to provide unemployment benefits to people who are temporarily unemployed, including those who are on maternity leave or in the process of adopting a child. The duration of benefits depends on the person's contributions to the fund.
Employers and employees need to make monthly contributions to the Unemployment Insurance Fund. Workers contribute 1% of their pay to the fund, and their employers match up this contribution. These mandatory contributions have an upper ceiling of 14,872 rand per month.
Survivor Pension Fund
If an employee dies due to accident or illness in a workplace, the worker's spouse is entitled to a lump sum payment equal to 2 times the monthly pension that the deceased employee would have been entitled if 100% disabled. Also, a monthly pension equivalent to 40% of the pension to be paid that 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. A surviving child's monthly pension ceases at age 18, or at death or marriage before age 18.
Work Injury Insurance
Under the Compensation for Occupational Injuries and Diseases Act, 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 7 days of learning about them and must report occupational diseases within 14 days. Those who are temporarily disabled receive 75% of their salary up to a maximum benefit of 14,872 rand per month.
Employees who are 30% or less permanently disabled receive a lump sum payment equal to 15 times their regular monthly earnings, and up to a maximum of 125,400 rand. Those who are severely disabled receive a monthly pension for the rest of their lives equal to 75% of their regular monthly salary, to a maximum 14,872 rand.
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into South Africa and hire their employees without having to establish a branch office or subsidiary in South Africa.
- Your candidate is hired via our South Africa PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with South Africa laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 150+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
- We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.
Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.