Budget roughly 3–4% on top of gross salary for statutory employer costs before you even talk PAYE. UIF is 1% from you and 1% from the employee (capped). SDL (Skills Development Levy) is another 1% of payroll. COIDA (compensation for occupational injuries) varies by industry — typically 0.25% to 3% depending on risk class. Get your COIDA registration and rate card from the Compensation Commissioner; missing it can block payroll and expose you to back-assessments.
Payroll and tax
PAYE runs on sliding brackets. As of the current tax year, the first R237,100 is taxed at 18%; it scales up to 45% on taxable income above R1,817,000. Medical aid tax credits and retirement fund contributions reduce taxable income. Payslips must show gross, deductions (PAYE, UIF, pension if applicable), and net. Monthly PAYE and UIF returns go to SARS; SDL is paid to the SETAs. Late filing attracts penalties — keep to the monthly deadlines.
Many employers pay a 13th cheque (December bonus). It’s not legally required but is widespread. If you offer it, include it in the contract and treat it as ordinary remuneration for PAYE and UIF. Overtime is regulated: the Basic Conditions of Employment Act (BCEA) caps ordinary hours and defines premium rates; non-compliance is common ground for CCMA disputes.
Employment law and contracts
The BCEA sets the floor: written contracts for workers earning below the threshold (currently around R241,110.59 per year), maximum 45 hours per week (or 40 in some sectors), 21 consecutive days of annual leave, 3 days paid family responsibility leave, and sick leave based on the cycle. Above the threshold, you can contract out of certain provisions but not from core rights like leave and termination process.
Fixed-term contracts are allowed but repeated renewals can be deemed indefinite. If someone has been on fixed-term for more than 24 months or has been renewed more than twice, the Labour Relations Act may treat them as permanent — with full dismissal protections.
Termination and CCMA
You cannot fire at will. Dismissal must be for a fair reason (conduct, capacity, or operational requirements) and follow a fair process. Poor performance requires counselling and a chance to improve; misconduct needs a disciplinary hearing. Retrenchments require consultation, selection criteria, and often severance (one week per completed year of service minimum).
Disputes go to the CCMA (Commission for Conciliation, Mediation and Arbitration). Unfair dismissal claims are frequent; reinstatement or compensation (up to 12 months’ pay) is the norm. Notice periods: one week if employed under 6 months, two weeks from 6 months to one year, four weeks after one year — unless the contract specifies more. Pay in lieu is acceptable if the contract allows it. Get the paperwork and process right; CCMA awards are enforceable and can include back pay and interest.
EOR considerations
Using an EOR in South Africa shifts payroll, UIF, SDL, COIDA, and contract compliance to the provider. Confirm they are registered for PAYE, UIF, SDL, and COIDA and that they run proper BCEA-compliant contracts and handle CCMA exposure. Check who carries liability for historical underpayments or misclassification if you later bring the employee in-house. South African labour law is claimant-friendly; your EOR should have local legal backup and clear indemnities.
Frequently Asked Questions
What does an employer pay on top of salary in South Africa? UIF 1%, SDL 1%, and COIDA (industry-dependent, often 0.25–3%). Total employer statutory add-on is typically 3–5% before benefits.
Are 13th cheques mandatory? No. They are a common custom. If you promise one, put it in the contract and deduct PAYE and UIF from it.
Can we terminate an employee without cause? No. Dismissal must be for a fair reason (conduct, capacity, or operational requirements) and follow a fair process. Otherwise you risk CCMA claims and compensation or reinstatement.
What notice period applies? One week under 6 months, two weeks from 6–12 months, four weeks after one year — unless the contract specifies more.
Who handles CCMA disputes when using an EOR? The EOR is the employer of record, so they should run the process and carry the risk. Ensure your contract specifies that they handle CCMA matters and have appropriate insurance and legal support.