Budget 4–6% on top of gross salary for South African statutory employer costs alone. Add pension and medical aid and you’re typically at 15–25% above base. If your EOR quote doesn’t spell that out, ask for a total cost-of-employment breakdown before you sign.
PAYE (Pay As You Earn). This is income tax withheld at source. Rates are progressive — 18% up to 45% on taxable income. The 2025/26 tax year has an annual threshold of R95,750 for under-65s; above that, tax applies in brackets. The EOR (as employer) calculates and withholds PAYE from each pay run and remits to SARS. You don’t pay PAYE as an extra employer cost; it comes out of the employee’s gross. What you must ensure: the EOR is registered as an employer with SARS and files monthly EMP201 returns and annual reconciliation. Late or incorrect submissions attract penalties and interest.
UIF (Unemployment Insurance Fund). 1% from the employer, 1% from the employee — 2% total. Contributions are capped. From January 2026 the monthly remuneration ceiling for UIF is R17,712 (R212,544 per year). Above that, each side pays a maximum of R177.12 per month. So the maximum combined UIF per employee per month is R354.24. Your EOR should be deducting the employee portion and adding the employer portion, then paying both to the Fund. Declarations and payments are due via uFiling; enforcement and penalties for non-compliance have tightened.
SDL (Skills Development Levy). 1% of total leviable payroll, employer-only. No employee deduction. SDL applies only if your total annual payroll exceeds R500,000. Below that, you’re exempt. The levy funds sector training; the EOR remits it to the relevant authority. If you’re hiring one or two people, you might still be under the threshold — but once you cross it, the full 1% on payroll kicks in. Confirm whether your EOR includes SDL in the cost quote and from which month they start applying it.
COIDA (Compensation for Occupational Injuries and Diseases). Employer-only. The rate varies by industry risk: over 100 subclasses, each with its own tariff. Assessment is (total workers’ pay ÷ 100) × tariff. From 1 March 2025, minimum assessment for most employers is R1,621 per year; maximum assessable earnings per employee is R633,168. Low-risk sectors (e.g. office-based) pay less; mining, construction, or heavy industry pay more. Your EOR should register with the Compensation Fund and include the correct tariff for your sector. Wrong classification can mean underpayment and audit risk, or overpayment — both worth avoiding.
Pension and provident fund. Not legally mandatory. In practice, professional and white-collar roles expect an employer contribution. Typical employer contribution is in the 7.5%–15% range of pensionable salary; employee contributions are often matched or partially matched. If you don’t offer a fund, you’ll struggle to hire in competitive segments. EORs either run a designated fund or facilitate membership in an external one. Clarify: Is it in the base package? What’s the employer percentage and cap? Who is the fund administrator?
Medical aid. Not mandatory. Market norm for senior and specialist roles. Many employers contribute a portion of the premium (e.g. 50% of a chosen plan or a fixed rand amount). Your EOR can usually add medical aid as an optional benefit; confirm whether it’s at cost or marked up and how it appears on the payslip and in the contract.
13th cheque. Not statutory. Widespread in South Africa — often one extra month’s salary paid in December or at year-end. If you don’t clarify up front, employees may assume it’s included. Your EOR should state in the contract and in the cost quote whether a 13th cheque is part of the package. If it is, budget 8.33% of annual base (one-twelfth) on top of monthly payroll.
What to verify with your EOR. (1) Total monthly cost per employee: EOR fee + gross salary + employer UIF + SDL + COIDA + pension (and medical if applicable), with FX and any minimums stated. (2) That PAYE, UIF, and SDL are remitted on time and that you get proof (e.g. EMP201, uFiling confirmations). (3) That COIDA is registered and the tariff matches your industry. (4) Whether a 13th cheque is included and how bonuses are treated for tax and UIF. (5) Who is the formal employer of record — owned entity or partner — and what happens to liabilities if the relationship ends.
Who handles South Africa well. Deel and Remote operate owned entities in South Africa; payroll and statutory (PAYE, UIF, SDL, COIDA) are in scope and they control the employment relationship. Multiplier and several others use partner entities — compliance can be solid, but you depend on the partner’s registration and remittance discipline. For high headcount or sensitive sectors, owned-entity setups reduce the number of parties in the chain. For a handful of hires, a reputable partner model is workable if you’ve done the verification above.
None of this is legal or tax advice. Get a country-specific cost schedule and contract wording from your EOR and, for complex structures, from local counsel.