Hiring staff in South Africa is increasingly attractive for global companies seeking skilled, English-speaking talent and access to new markets. But before you dive in and start hiring, it’s essential to understand the local employment and tax landscape. Whether you’re setting up a local office or hiring remote workers, here are the top 10 things foreign employers need to consider:
1. You May Need a Legal Entity or Local Employer of Record (EOR)
If you want to hire directly, you typically need to register a South African company or set up a branch. Alternatively, using an Employer of Record (EOR) allows you to legally employ staff without creating a legal entity in SA.
2. Employment Laws Are Employee-Friendly
South Africa has strong labour laws that protect employees. These cover:
- Minimum wages
- Working hours
- Leave entitlements (sick leave, annual leave, maternity leave, etc.)
- Termination procedures
Failure to comply can lead to legal disputes or CCMA (Commission for Conciliation, Mediation and Arbitration) referrals.
3. Employment Contracts Are Mandatory
Every employee must have a written contract. This should clearly outline:
- Job title and duties
- Salary and benefits
- Leave
- Termination terms
Contracts should align with the Basic Conditions of Employment Act (BCEA).
4. You Must Register for Payroll Taxes
If you’re operating through a local entity, you’ll need to register with SARS for:
- PAYE (Pay-As-You-Earn)
- UIF (Unemployment Insurance Fund)
- SDL (Skills Development Levy)
You’ll also need to deduct and submit these monthly on behalf of your employees.
5. UIF & Pension Contributions Are Standard
UIF contributions (1% from employer, 1% from employee) are mandatory. Retirement fund or pension contributions may also apply depending on the employment package or sector.
6. Consider Exchange Control Regulations
If you’re paying staff from overseas, be mindful of SA’s exchange control laws. Local salary payments generally need to go through South African bank accounts.
7. Remote Working Is Legal But Needs Structure
If your employees will work remotely in South Africa, they’re still subject to SA tax laws and labour protections. Define working hours, responsibilities, and reporting lines clearly.
8. Tax Residency Can Be Triggered
Depending on how much time you (as the employer) spend in South Africa, or how your operations are structured, you could create a “permanent establishment” — which can trigger local tax obligations.
9. B-BBEE Compliance May Be Relevant
If you plan to scale or work with government or large local clients, consider your Broad-Based Black Economic Empowerment (B-BBEE) strategy early on. Hiring local talent can help improve your score.
10. Get Local HR and Payroll Support
Don’t try to manage SA payroll and compliance from abroad. Work with a local HR/payroll provider or accountant who understands:
- SARS eFiling
- Leave tracking
- Compliance filings
It’ll save you time, stress, and money in the long run.
11. Register with Compensation Fund
COIDA return needs to be submitted annually to the Workmans Compensation Fund according to Compensation for Occupational Injuries and Diseases Act (COIDA) previously known as the Workmen’s Compensation Act (WCA)
Final Word
South Africa is full of opportunity, but local hiring comes with local rules. Whether you’re building a team of two or two hundred, it pays to get the legal and compliance framework right from day one.
Need help navigating hiring staff in South Africa? EOACC supports international businesses with local employment, payroll, tax representation, and compliance support.
Let’s build your team the right way.