Expanding your business into South Africa but don’t have a local entity? You’re not alone. Many global companies face this challenge when trying to tap into South Africa’s skilled workforce. The good news? You don’t need a local entity to legally employ staff here!
How Does It Work?
When hiring in South Africa without a local entity, an Employer of Record (EoR) becomes the legal employer while your company retains full operational control over the employees’ tasks and performance. This setup ensures full compliance with South African labour laws while allowing you to focus on growing your business.
Here’s how an EOR handles the complexities for you:
Employment Contracts
South Africa has strict labour laws that protect employees. The EOR company ensures that all employment contracts are legally compliant with the Labour Relations Act and the Basic Conditions of Employment Act and outline terms of employment, working hours, notice periods, and termination clauses to safeguard both employer and employee.
Payroll & Tax Compliance
South African payroll regulations require accurate deductions and payments to ensure legal compliance.
The EOR company will manage:
- PAYE (Pay As You Earn) tax deductions and submissions to the South African Revenue Service (SARS).
- UIF (Unemployment Insurance Fund) contributions, ensuring employee protection in case of job loss or maternity leave.
- SDL (Skills Development Levy) compliance, contributing to workforce training and development.
- Third-party payments (e.g., pension funds, medical aid, or garnishee orders) as required.
- End-of-year tax certificates (IRP5s) and reporting, ensuring your employees meet tax obligations effortlessly.
Leave & Benefits Management
Managing leave in South Africa requires adherence to strict regulations.
- The EOR company will ensure that employees receive:
Annual leave (minimum 15 working days per year, depending on the contract). - Sick leave (calculated over a 36-month cycle as per the BCEA).
- Maternity and parental leave (as per South African labor laws).
- Pension, medical aid, or other benefits if required by your company.
HR & Legal Support
South African labour laws favour employee rights, making compliance crucial.
A reputable EOR company will:
- Assign a designated HR business practitioner to your company to assist with any employment questions, like legal benefits, mock payslips for new joiner etc.
- Handle employee grievances professionally as the legal employer, ensuring compliance with CCMA (Commission for Conciliation, Mediation, and Arbitration) guidelines.
- Provide Performance management guidance and become proactively involved to handle as the legal employer the termination process effectively.
- Seamless termination processes, ensuring lawful and compliant employee exits.
