SOUTH AFRICA

Compliant HR, Payroll, Tax & Employer of Record Africa

OVERVIEW

South Africa’s peaceful political transition during 1994 is known as one of the most remarkable political feats of the past century. Since 1994 The African National Congress (ANC) has been driving the policy agenda. In August 2016 the country held the most competitive local government election since 1994 in which the ANC-lost majority support in four of the metropolitan cities. Political parties negotiated coalition deals that saw the ANC unseated in the cities of Johannesburg, Pretoria and Nelson Mandela Bay. The next general elections will be held on May 8, 2019.

GENERAL INFORMATION

country capital

CAPITAL CITY

Pretoria, Cape Town, Bloemfontein

language

OFFICIAL LANGUAGE

English, IsiZulu, IsiXhosa, IsiNdebele, Afrikaans, Siswati, Sepedi, Sesotho, Setswana, Tshivenda, Xitsonga

currency

CURRENCY

ZAR

dial code

DIALLING CODE

+27

tax calculator

TAX AUTHORITY

The South African Revenue Service (SARS)
https://www.sars.gov.za/

tax dates

TAX YEAR

1 March to end of February

time zones

TIME ZONE

CAT (GMT + 2)

GENERAL INFORMATION

country capital

CAPITAL CITY
Pretoria, Cape Town, Bloemfontein

language

OFFICIAL LANGUAGE
English, IsiZulu, IsiXhosa, IsiNdebele, Afrikaans, Siswati, Sepedi, Sesotho, Setswana, Tshivenda, Xitsonga

currency

CURRENCY
ZAR

dial code

DIALLING CODE
+27

tax calculator

TAX AUTHORITY
The South African Revenue Service (SARS)
https://www.sars.gov.za/

tax dates

TAX YEAR
1 March to end of February

time zones

TIME ZONE
CAT (GMT + 2)

South Africa has managed to tap into international bond Markets with reasonable sovereign risks spreads due to consistent and sound budgetary policies, South Africa has been able to tap into international bond markets with reasonable sovereign risk spreads. South Africa has been committed to fiscal sustainability ranking amongst Africa’s top countries in spite of low growth, weak revenue collections, and expenditure pressures have been keeping fiscal deficits higher than forecasted. South Africa has been under major pressure due to Credit ratings and over indebted

Marked by several distinct ecosystems, South Africa is a country on the southernmost tip of the African continent which is bordered by northern neighbours Namibia, Botswana, Zimbabwe and Mozambique. South Africa hosts a spectacular range of biodiversity encompasses the independent mountain kingdoms of Lesotho and Swaziland and is flanked by the Atlantic Ocean on the west and the warm Indian Ocean on the east.

South Africa is one of the most diverse and interesting countries in the world hence the rainbow nation illuminating the countries diversity. South Africans have been referred to as a rainbow nation illuminating the country’s cultural diversity. Wildlife, sunshine, and natural beauty is what attracts tourists. South Africa supports a rich diversity of animals, birds, and plant life on its varied terrain and offers an incomparable range of experiences.

There are 11 officially recognised languages.

Even though the progress is now slowing South Africa has made considerable strides toward improving the wellbeing of its citizens since its transition to democracy in the mid-1990s. Based on the international poverty line of US$1.90 per day, (2011 Purchasing Power Parity (PPP), exchange rates), 18.8% of South Africans were poor in 2015, following a decline from 33.8% in 1996. Factors driving this progress include, among others, real income growth, expansion of social safety nets, access to basic services including subsidized housing credit. Yet progress towards poverty reduction has slowed in recent years, with the US$1.90 per day poverty rate increasing from 16.8% to 18.8% between 2011 and 2015. Structural challenges and weak growth since the global financial crisis of 2008, resulted in increased labour market developments that demand skills that the country’s poor currently lack. Unemployment remains a key challenge, standing at 27.1% in the fourth quarter of 2018. The unemployment rate is even higher among youths, at around 54.7%.

As one of the highest inequality rates in the world, South Africa remains a dual economy with one of, with a consumption expenditure Gini coefficient of 0.63 in 2015. The continuation and persistence of inequality has increased from 0.61 in 1996. Sufficient jobs are not generated due to the high inequality perpetuated by a legacy of exclusion and the nature of economic growth, which is not pro-poor. Inequality in wealth is even higher: the richest 10 percent of the population held around 71% of net wealth in 2015, while the bottom 60 percent held 7% of the net wealth. Furthermore, intergenerational mobility is low meaning inequalities are passed down from generation to generation with little change in inequality over time. South Africa lags on the inclusiveness of consumption growth as well as on level of inequality and poverty, it lags on the inclusiveness of consumption growth compared to its peers.

South Africans have been referred to as a rainbow nation

Should you wish to immigrate to South Africa a Visa application is required. The Department of Home Affairs issues these visas and permits are for immigrants seeking Immigration to South Africa.

The type of immigration permit or visa, that immigrants should apply for depends on the activity they wish to undertake when they relocate to South Africa.

The types of visa and permit options for immigration to South Africa

Below are introductions to the main different types of permits and visas that can be applied for when seeking Immigration.

Work Visas

A work permit is required for applying for a work permit as a means of immigration to South Africa. In essence the main motivation behind the Department of Home Affairs regulations concerning the issuance of such permits and visas, is that it meets (1) any skill shortcake that exists in South Africa or (2) A company’s requirements to relocate certain skilled staff on a temporary basis to their South African operations.

Background to Work Visa for South African Immigration

South Africa offers a few options for those who are seeking a Work Visa for the purposes of South African immigration.

Main areas of which the Work Visa legislation focuses on:

  1. The protection of employment opportunities for South Africans
  2. The ability to recruit skilled foreign workers into skill shortage areas or fulfil corporate requirements.

Types of Work Visa

Two types of Work Visa

  1. An applicant who does not have a job offer
  2. An applicant who has a job offer

An applicant who requires a work visa and does not have a job offer:

  1. Critical skills work visa – This visa is based on a well-researched list of occupations that are badly needed in South Africa. You don’t need a job offer to apply for the visa, and the visa enables you to enter and stay in South Africa for 12 months to secure a position

An applicant who requires a work visa and has a job offer

There are three options for applying for immigration to South Africa via a work visa where the applicant has a job offer:

  1. An Intra company transfer – Where the individual is being transferred from a branch of the company, based outside of South Africa, to a branch of the company within South Africa. Individuals who are employees of sister companies or companies with a shared interest can apply for this work visa. This visa allows the employee to relocate to South Africa and undertake employment for a certain period of time and only for the specified employer.
  2. Corporate work visas – These can be applied for by organisations that have a need to recruit a number of foreign staff over a set period of time. Organisations are hugely benefited by obtaining a corporate work visa. Not only does it reduce costs, but also speeds up the work visa application process. The individuals who are applying ‘under’ the corporate visa do not have to provide for many of the requirements normally associated with a work visa.
  3. General work visa – Where an individual does not meet the criteria of any of the above work visas an application would have to made under the General Work Visa category. The South African Immigration Act states that the applicant for a General Work visa has to provide a conditional offer of employment from a South African based employer. Documentation should confirm that the employer has fully endeavoured to employ South African citizens or residents.

The requirements for general work visa applications include:

  1.  A duly completed application form as per the submitting embassy, consulate or Department of Home Affairs office.
  2. SAQA Application (The South African Qualifications Authority)- The requirements for a general work visa whereby SAQA evaluates all foreign qualifications and converts them to a South African education equivalent.
  3. Police Clearance Certificates (for all applicants older than 18 years of age).This requirement for a general work visa is a document issued by the police or security authority in each country you have resided more than one year and confirms the existence or non-existence of any prosecutions or convictions that may be registered against you.
  4. Proof of Advertisement. Proof that a local candidate (South African Citizen or permanent resident) has tried to be recruited to the role must be displayed. These requirements for a general work visa need to meet specific requirements in terms of where placed, size of advert etc.
  5. Employer documentation that includes your contract of employment and a letter of under taking for the repatriation deposit.
  6. Medical well-being – part of the requirements for a general work visa application include proof that the applicant is in good health. Applicants will also have to submit a radiological report.
  7. Certain professions in South Africa require foreigners to be registered with the professional organisation which have a presence in South Africa. E.G. Engineers are required to register with the ECSA – “Engineering Council of South Africa”.
  8. Personal information – this includes such items as your CV, proof or birth, marriage, divorce and passport.

South African Payroll and Tax Compliance

Tax in South Africa

A challenging aspect of working in South Africa is compliance and their tax system. Regardless of being a contractor or a permanent employee, you have to pay tax on all of your earnings whilst you are working in South Africa. In addition to paying tax in South Africa, you may still be eligible to pay tax in your home country. The challenge is to understand the legislation behind this. Does your home country have a double taxation agreement with South Africa?  Understanding the basics of income tax in South Africa and your options helps you work out the best way to organise your affairs.

Income Tax Act

Where an employer pays remuneration, or becomes liable to pay remuneration to an employee, an obligation exists to deduct employees’ tax (PAYE) from the remuneration and pay it to SARS. Employers need to deduct PAYE if they provide employees with certain non-cash benefits. Employers must issue employees with tax certificates (IRP5/IT3(a)) at the end of the tax year. Compliance summary. If the PAYE is not paid to SARS on or before the 7th of the next month, then penalties and interest will be levied. An EMP201 return is completed to indicate the PAYE liability. An employer must be familiar with the tax legislation and the application thereof, especially to know whether a non-cash benefit is taxable or not.

Employment Tax Incentive Act (ETI)

The ETI is a temporary tax incentive that may be claimed by eligible employers and is aimed at encouraging such employers to employ young employees between the ages of 18 to 29, and employees of any age in special economic zones and in any industry identified by the Minister by notice in the Government Gazette. Payment of the incentive is affected by eligible employers being able to reduce the employees’ tax due by them by the amount of the ETI that they may claim – as long as they meet the requirements of the ETI Act. The ETI is administered by SARS through the employees’ tax system that is deducted and withheld and accounted for to SARS (usually monthly) via the Pay-As-You-Earn (PAYE) system. The ETI amount is calculated as follows: Monthly Remuneration First 12 Incentive Months Next 12Incentive MonthsR0 – R1 99950% of MonthlyRemuneration25% of MonthlyRemunerationR2 000 – R3 999R 1 000R 500R4 000 – R5 999Formula:R1 000 – (0.5 x (Monthly Remuneration – R4 000))Formula:R500 – (0.25 x (Monthly Remuneration – R4 000) Before claiming ETI, employers need to familiarize themselves with the Act to make sure they do not claim ETI in instances where they are not supposed to .E.g. if an employer is not tax compliant in a specific month, then no ETI is allowed to be claimed. In some instances, the employer will be able to claim the ETI once they become tax compliant again. Employers are not at liberty to displace older employers and replace them with younger employees just for the purpose of claiming ETI – in this case, penalties will be levied in terms of the Act.

Unemployment Insurance Contributions and Unemployment Insurance Act

Short term relief is offered to workers are available when they become unemployed or are unable to work because of illness, maternity or adoption leave and also to provide relief to the dependants of a deceased contributor are provided in terms of the Unemployment Insurance Fund (UIF). The types of benefits provided by the UIF are

  • Unemployment benefits;
  • Illness benefits;
  • Maternity benefits;
  • Adoption benefits and
  • Dependants’ benefits

Only employers/and employees who contribute to the fund will qualify for these benefits. The employee must contribute 1% and the employer must contribute 1%. These contributions are compulsory unless the employees are exempt in terms of the Act. Contributions are payable by the employer before the 7th of every month either to SARS or the UIF depending on whether they need to pay employees’ tax or not. A threshold determined by the Minister of Finance is in place when calculating the contribution amounts – by notice in the Gazette (currently R14 872 per month). A penalty of 10 % will be charged for any contribution which remains unpaid after the last day of payment. A UIF declaration must be submitted to UIF which indicates the actual contribution amounts and employee detail. This can be done electronically.

Skills Development and Skills Development Levies Act

The Department of Higher Education and Training administers the concepts of SETAs, monthly levies and various grants to incentivise employer participation. The Skills Development Levies Act is administered by SARS, and deals only with the calculation and payment of the monthly levy by employers. The levy was introduced effective 1 April 2000 at a rate of 0.5% and increased to 1% from 1 April 2001. Employers not exempted from paying the levy must pay 1% of the leviable amount to SARS. All employers who are registered for employee’s tax purposes must register with SARS for the skills development levy, irrespective if they are exempted. Among others, employers whose total annual remuneration for the next 12 months is not expected to exceed R500 000, does not have to contribute. Employers may claim grants which is a specific percentage of the levies paid, from their respective SETAs (Sector Education and Training Authorities). To claim these grants, they need to submit a workplace skill plan as well as a training report.

Rates of Tax for Individuals

2020 tax year (1 March 2019 – 29 February 2010) – No changes from the previous year

Taxable Income (R)Rate of Tax (%)
1 – 195 85018% of taxable income
1 95 851 – 305 85035 253 + 26% of taxable income above 195 850
305 851- 423 30063 853 + 31% of taxable income above 305 850
423 301 – 555600100 263 + 36% of taxable income above 423 300
555601 – 708 310147891 + 39% of taxable income above 555600
708311-  1 500 000207 448 + 41% of taxableincome above 708 310
1 500 001 and above532 041 + 45% of taxable income above 1 500 000

Paying Income Tax in South Africa through Your Employer

If you’re working in South Africa under a permanent contract, many employers will handle your tax under the PAYE (Pay-As-You-Earn) system. This means that they calculate and process your taxes in South Africa for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in South Africa, but contractors may not be offered this service because of their short stay with each employer.

Working Out Income Tax in South Africa Yourself 

Anybody who cannot pay their tax in South Africa through the PAYE system is left with the prospect of filing a tax return. This can be an onerous task, if you do not have the understanding of the system. Does South Africa have a tax treaty with your home country? You will need to find out or find someone who can provide assurance, whist this takes time and effort.

Using Employ Africa for Income Tax in South Africa

Contractors and Companies in South Africa are faced with masses of paperwork and numerous wasted hours filing returns unless they find an alternative option. Employ Africa can act as your employer during your stay in the country whilst still allowing you the freedom to work. The only difference is that you submit your timesheets to Employ Africa; calculate and pay your taxes as you earn, and then you receive a net wage (as well as compliant documentation for your records). Employ Africa are experts in South Africa taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the South African tax office or tax department directly.

We assist in a wide range of sectors Petrochemical, Mining, Power Generation, Water Technology Oil and Gas, software developers, IT Project Managers, testers, business analysts and telecommunications for whom we get tax efficient payments and sponsorship for their South Africa work permit. Our advice is 100 percent free, and it comes with no obligations. You will be paying taxes in South Africa but without the overhead of directly dealing with the South African tax authorities. Get in touch with us today for some reliable advice on tax in South Africa!

Basic Conditions of Employment Act (BCEA)

The purpose of the BCEA is to give effect to and regulate the right to fair labour practices by establishing and enforcing basic conditions of employment; and by regulating the variation of basic conditions of employment. The Basic Conditions of Employment focuses on aspects such as leave entitlements, hours of work, resting periods, payments on termination etc. Other legislations determine the minimum wages which should be paid according to the different industries should also be adhered to.

The earning threshold of R205 433.30 per annum. Certain BCEA chapters will exclude employees earning above this threshold.

The onus lies upon each employee/employer to keep abreast of all BCEA changes.

An employment contract stipulating less favourable conditions is null and void but the employer can however have an employment contract, which is more beneficial to the employee.  Common mistakes which put employers at risk such as misclassifying employees as exempt from overtime payments, paying annual leave instead of granting it, as well as violations for off-the-clock work.

Notice period in terms of termination of employment

As per the Basic Conditions of Employment Act; should any party wish to end an employment contract one must give to the other notice of termination as follows:

  • If an employee has been employed for six months or less, one weeks’ notice must be given;
  • If an employee has been employed for more than six months but not more than one year two weeks, notice must be given;
  • If an employee has been employed for more than one year then four weeks’ notice must be given;
  • Should a collective agreement be in place the notice period of four weeks’ can be reviewed but to no less than two weeks;
  • Notice must be given unless it is given by an illiterate employee

Termination of employment

Whilst the contact of employment makes provision for the termination of employment, it must be understood that the services of an employee may not be terminated unless a valid and fair reason exists and fair procedure is followed.  Should an employee be dismissed without a valid reason or without a fair procedure the employee may approach the CCMA for assistance. Pro- rata leave and severance pay might be payable to the employee.

Should an employee not be able to return for work due to disability the employer must investigate the nature of the disability and ascertain whether or not it is permanent or temporary.  The employer should try to accommodate the employee as far as possible for example, amending or adopting their duties to suit the disability.  Should it not be possible for the employer to adapt the workers duties and/or to find alternatives then such employer may terminate the services of the worker. The Labour Relations Acct 66 of 1995 sets out the procedures to be followed at the termination of services in the Code for Good Practice, in Schedule 8.

Working hours

Normal hours (excluding overtime)

An employee may not be made to:

  • Work more than 45 hours a week;
  • work more than 9 hours per day for a five-day work week;
  • work more than 8 hours a day for a six-day work week; and

Overtime

An Employee may not work more than three hours off overtime per day or 10 hours per week.  Overtime should be paid at 1.5 times the employer’s normal wage or an employee may agree to receive paid time off. Daily and weekly rest periods.

A weekly rest period of 36 consecutive hours and a daily rest period of 12 consecutive hours, which should include Sunday, unless otherwise agreed, must be allowed.

Should there be an agreement the daily rest period may  be extended to 60 consecutive hours two weeks or be reduced to eight hours in any week if the rest period in the following week is extended equivalently.

Meal intervals

An employee should 5 hours work be entitled to a one-hour break for a meal. Meal intervals may be reduced to 30 minutes, by agreement between the parties.  Should an employee be required to work during their lunch break, remuneration must be paid.

Sunday work

Sunday work is voluntary and an employee can therefore not be forced to work on a Sunday.

Should an employee work on a Sunday, he/she shall be paid double the daily wage.

Should an employee ordinarily work on a Sunday, he/she shall be paid one and one-half time the wage for every hour worked.  Should there be an agreement in place paid time off in return can be granted in lieu of payment.

Public holidays 

An employee may not be forced to work on a public holiday as is entirely voluntary, unless where there is an operational emergency.

Working on public holidays can be exchanged for any other day by agreement. Should an employee work on a public holiday, he/she shall be paid double the normal day’s wage.

Annual Leave

Employees are entitled to no less than 21 consecutive days for full time workers or by agreement, and one day for every 17 days worked or one hour for every 17 hours worked.

Leave entitlements must be granted not later than 6 months after the completion of the period of 12 consecutive months of employment.  Leave may not be granted with any period of sick leave, nor with a period of notice of termination of the contract of employment.

Sick leave

A sick leave cycle of 36 months entitlement of paid sick leave equal to the number of days the employee would normally work during a period of six weeks.

An employee is entitled to 1 days paid sick leave for every 26 days worked during the first six months of employment.

A 8 week rule applies where an employer is not required to pay an employee in the event of an employee been absent from work for more than 2 occasions for 2 or more consecutive days during an eight week period without producing a medical certificate stating that the employee was unable to work for the duration of the employee’s absence on account of sickness or injury.

Maternity leave

The employee is entitled to at least four consecutive month’s maternity leave. The employer is not required to pay the employee for the period for which she is off work due to her pregnancy. However, the parties may agree that employee may receive part of or her entire salary/wage for the time that she is off due to pregnancy.

Family responsibility leave

3 days paid family responsibility is granted to an employee who is employed for longer than four months and for at least four days a week are entitled to take leave during each leave cycle when the employee’s child is born, or when the employee’s child under 21 is sick or in the event of death of the employee’s immediate family .(spouse or life partner or parent, adoptive parent, grandparent, child, adopted child, grandchild or sibling).

Fixed-term contracts:

On 17 August 2014, the president of the Republic of South Africa signed into law the Labour Relations Amendment Act, 2004 (Act No. 6 of 2014) in terms of section 84(2)(a) of the constitution.

The act secures that labour legislation gives effect to fundamental constitutional rights, including the right to fair labour practices, to engage in collective bargaining and the right to equality and protection from unfair discrimination.

It also seeks to respond to the increased informalisation of labour to ensure that vulnerable groups are protected adequately and are employed in conditions of decent work.

The first observation under this section is that, for the first time, the act defines what a fixed term contract is. This definition is:

“A fixed term contract means a contract of employment which terminates on the occurrence of a specified event, the completion of a specified task or project, or on a fixed date other than an employee’s normal or agreed-upon retirement age.”

Section 198B provides that employees employed on FTC become permanent after 3 months except in the following instances:

  • Employees earning more than R205 433-30 (this amount will change according to the Basic Conditions of Employment Act (75/1997) Earnings Threshold Determination as gazetted by the minister of labour each year).
  • Employees employed in terms of fixed-term contracts which is permitted by any statute, sectoral determination or collective agreement.
  • Employers who employ fewer less than ten employees.

With the new act, fixed-term contracts can now generally only be for a maximum period of three months. Employees can be employed on fixed-term contract or successive fixed-term contracts for longer than three months only if the nature of the work of which the employee is employed for is for a limited or definite duration, or if the employer can demonstrate any other justifiable reason for fixing the term of the contract.

The conclusion of fixed-term contracts will be justified if the employee:

  • Is a replacement for another employee who is temporarily absent from work.
  • Is employed on account of a temporary increase in the volume of work which is not expected to endure beyond twelve months.
  • Is a student or recent graduate employed for the purpose of being trained or gaining work experience to enter a job or profession.
  • Is employed to work exclusively on a specific project which has a limited or defined duration.
  • Is a foreigner who has been granted a work permit for a defined period.
  • Is employed to perform seasonal work.
  • Is employed for the purposes of an official public works scheme or similar public job creation scheme.
  • Is filling in a position funded by an external source for a limited period.
  • Has reached the normal or agreed-upon retirement age applicable in the employer’s business.

Labour Relations Act (LRA)

The LRA regulates fair labour practices, collective bargaining and strikes and gives effect to obligations incurred as a member state of the International Labour Organisation. Employees earning below R205 433.33 per annum are protected by the recent amendments to the LRA.

Three categories of non-standard employment are granted protection.

  • Labour broker employees,
  • fixed term contract employees
  • part-time employees.

After three months of employment, a labour broker employee is deemed to be the employee of the client unless the employee is definitely temporary, for example if an employer replaces an employee going on maternity leave or other for a specific period with another employee until the employee returns from maternity leave or other approved leave. An employee on a fixed term contract may be regarded as permanent after three months unless there is a legitimate reason for a fixed term contract as specified in the Act. Employers need to ensure that they are aware of which individuals are seen as their permanent employees and provide them with the applicable benefits and ensureequal treatment.

Compensation for Occupational Injuries and Diseases Act

The Act makes provision for compensation to employees who have been injured or contracted a disease, as a result of their employment. The Act makes provision for a “no fault” system of compensation whereby employees are entitled to compensation irrespective of who caused the problem. Employees are therefore prohibited from instituting damages claims against their employer and certain categories of fellow employees.

The categories of claimants to whom benefits become payable are:

  • employees who suffer a temporary disability
  • employees who suffer a permanent disability
  • employees dependents who die as a result of occupational injuries or diseases.

Employers must complete and submit the annual COID Report 8 and submitted by 31 March each year, after which they need to pay the assessment tariff. All accidents must be reported within 7 days by the Employer after receiving notice of this accident.

Protection of Personal Information Act

The Act makes provision for safeguarding of personal information, to regulate the manner in which personal information may be processed (collected, stored, received, organized etc.). The eight pillars of the Act which should all be complied with, are the following:

  • Accountability
  • Processing: Processing must be lawful and reasonable
  • Purpose specification: Purpose for collecting personal information must be, defined and lawful.
  • Further processing limitation: Processing must be in accordance with or compatible for the purpose it was collected for
  • Information quality: A responsible part must take steps to ensure the information is accurate, complete and not misleading
  • Openness: The employee (The data subject) must be aware of the information being collected, or if information is not collected from the data subject, the source where it is collected from, the purpose for the collection etc. unless the data subject consents to the non-compliance
  • Security safeguards: The integrity and confidentiality of the information in its possession must be ensured by the responsible party.

Employees consent must always be obtained by employers must for personal information to be collected and used. Employees must be informed should of third parties (or other individuals) who might have access to it. Employers must ensure that safeguards are in place as responsible parties in place to protect the data against being used for other purposes. Employer to protect the data against being used for other purposes. Employees who are obtaining personal information of other employees should have a clause in their employment contracts with regards to confidentiality compliance. Consent must be obtained from the employee with regard to further processing taking place and it is not compatible with the reason it was collected for.

Employment Equity Act

The act makes provision for achievement of equity in the workplace by:

  • Firstly, promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination; and
  • Ensuring that affirmative action measures are implemented in order to redress the disadvantages in employment experienced by designated groups, in order to ensure their equitable representation in all occupational levels in the workforce.

However, the Act does not apply to members of the National Defence Force, the National Intelligence Agency, the South African Secret Service or the South African National Academy of Intelligence or to the directors and staff of Comsec.

Preparation and implementation of a employment equity plan is the responsibility of the designated employer in order to achieve reasonable progress towards employment equity in that employer’s workforce. (EEA2, EEA4)

The designated employer who chooses to manually submit a report to the Department of Labour must do so every year on the first working day of October. If the report is submitted online then the deadline is 15 January of the following year.

A designated employer is:

  • An employer who employs 50 + employees,
  • Employers employing fewer than 50 employees but whose annual turnover exceeds a specific amount
  • A municipality
  • An organ of state
  • A designated employer appointed and bound by a collective agreement

1.2 Application of the Act: Section 4

  1. Chapter 2 (sections 5 – 11) applicable to all employers and employees.
  2. Chapter 3 (sections 12 – 27) applicable to designated employers.
  3. Designated employers are employers, who employ 50 or more employees or has a total annual turnover as per schedule 4 of the Act. Employers can also volunteer to become designated employers.
  4. Black people, women, or people with disabilities are referred to as designated groups.
  5. The following are excluded from this Act – The South African National Defence Force, National Intelligence Agency.
  1. Chapter two – Prohibition of Unfair Discrimination

2.1 No person may  directory or indirectly unfairly discriminate, against an employee in any employment policy or practice, on one or more grounds such as an employee’s  race, gender, pregnancy, ethnic or social origin, colour, sexual orientation, marital status, family responsibility, ethnic or social, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language, and birth.

2.2 Promoting affirmative action consistently in accordance with the act or to prefer or exclude any person on the basis of an inherent job requirement is not unfair discrimination

2.3 Medical Testing: Section 7

  1. When legislation requires testing or when this is justifiable for various reasons Medical testing of an employee is permissible.
  2. The labour court determines the justification of HIV testing otherwise prohibited.

2.4 Psychological Testing: Section 8

Unless the test is scientifically valid and reliable and can be applied fairly to all employees, and is not biased against any employee or group Psychological testing and similar assessments are prohibited,

2.5 Disputes concerning this Chapter: Section 10

  1. Disputes concerning alleged unfair discrimination (or Medical/Psychological testing) may be referred by the employee or applicant to the CCMA for conciliation within 6 months of the alleged discrimination (or testing).
  2. Should a dispute not be resolved at conciliation; a party may refer it to the Labour Court for adjudication. The dispute may also be referred to arbitration if the parties to a dispute agree.
  3. Where unfair discrimination is alleged during unfair dismissal disputes must be dealt with in terms of the Labour Relations Act and be referred to the CCMA within 30 days.
  1. Chapter 3 – Affirmative Action

3.1 Duties of a Designated Employer: Section 13

  1. Affirmative action measures for designated groups to achieve employment equity must be implemented by a designated employer.
  2. A designated employer must, in order to implement affirmative action measures:
  • consultation with employees;
  • conducting an analysis;
  • preparation of an employment equity plan; and
  • reporting to the Director-General on progress made in the implementation of the plan.

3.2 Affirmative Action measures: Section 15

  1. Employees from designated groups who are Suitable and qualified have equal employment opportunities and are equally represented in all occupational categories and levels of the workforce are Affirmative action measures intended to ensure that
  2. measures must include:
  • barriers with an adverse impact on designated groups are identification and eliminated
  • measures to promote diversity;
  • Ensuring reasonable accommodation for people from designated groups;
  • Inclusive of skills development, retention, development and training of designated groups and:
  • preferential treatment and numerical goals ensuring equitable representation., excluding of quotas.
  1. Decisions should not be taken by designated employers about an employment policy or practice that would establish an absolute barrier to prospective or continued employment or advancement of people not from designated groups.

3.3 Consultation: Sections 16 and 17

Reasonable steps for consultation with representatives representing the diverse interests of the workforce on the conducting of an analysis, preparation and implementation of a plan and reporting to the Director-General, should be taken by a designated employer.

3.4 Disclosure of Information: Section 18

The employer must disclose relevant information to the consulting parties, subject to section 16 of the Labour Relations Act 66 of 1995 to ensure meaningful consultation,

3.5 Analysis: Section 19

Employment policies, practices, procedures, and working environment should be analysed in order to identify employment barriers that adversely affect members of designated groups by a designated employer. The development of a workforce profile to determine to what extent designated groups are under-represented in the workplace analysis must also include:

3.6 Employment Equity Plan: Section 20

  1. Implementation of a plan in order to achieve employment equity must be prepared by a designated employer as follows:
  • It should reflect objectives for each year of the plan;
  • It should include affirmative action measures;
  • It should reflect numerical goals for achieving equitable representation;
  • It should reflect a timetable for each year;
  • It should reflect internal monitoring and evaluation procedures, including internal dispute resolution mechanisms; and
  • It should identify persons, including senior managers, to monitor and implement the plan.


3.7 Report: Section 21

  1. Submission of a first report to the Director-General within 12 months after the commencement of the Act, and thereafter every 2 years on the first working day of October by an employer who employs fewer than 150 employees.
  2. submission of a first report 6 months after the commencement of the Act, and thereafter every year on the first working day of October by the employer who employers 150 or more employees.

3.8 Assigning of a Manager by the Designated employer: Section 24

Implementation and monitoring of the employment equity plan and must make available necessary resources for this purpose by the designated employer who assigns one or more senior managers to ensure

3.9 Income Differentials: Section 27

The designated Employer must submit a statement of remuneration and benefits received in each occupational category and level of the workforce to the Employment Conditions Commission (ECC). A designated employer must take measures to reduce disproportionate income differentials progressively. Measures such as compliance with sectoral determinations (Section 51 of the BCEA) collective bargaining, the application of norms and benchmarks recommended by the ECC, are relevant measures contained in skills development legislation, and any other appropriate steps.

  1. Chapter V – Legal Proceedings, Monitoring and Enforcement

4.1 Monitoring: Section 34

contraventions of the Act and report to relevant bodies can be monitored by an Employee or trade union representatives.

4.2 Powers of the Labour Inspector: Section 35

Sections 65 and 66 of the Basic Conditions of Employment Act stipulates that Labour Inspectors are authorised to conduct an inspection.

4.3 Undertaking to Comply: Section 36

The inspector will obtain a written undertaking to comply within a specified period should he have reasonable grounds to believe that a designated employer has failed to comply with the Act.

4.4 Compliance Order: Section 37

The inspector will issue an order to comply, should the designated employer refuses to comply with the written undertaking.

4.5 Review by Director-General: Section 43

The Director-General could conduct a review to determine compliance with the Act.

On completion of the review, the Director-General could create recommendations for

compliance within certain time frames.

4.6 Powers of the Labour Court: Section 50

The Labour Court has the powers award compensation, make any appropriate orders, or impose fines.

4.7 Protection of Employee Rights: Section 51

Employees who exercise their rights and obligations are protected under the Act against victimisation, obstruction and undue influence.

  1. Chapter VI – General Provisions

5.1 State contracts: Section 53

Compliance with Chapters 2 and 3 of the Act refers to designated employers and employers who voluntarily comply with Chapter 3 who seek to do business with any organ of state, will have to apply for a certificate from the Minister confirming Chapter 2 refers to Non-designated employers’ compliance certificates.

5.2 Liability of Employers: Section 60

The employer will be liable unless the employer can prove that it did everything in its power to prevent the undesired act should employees contravene any provision of this Act, while performing their duties.

Codes of Good Practice

Employer of Record for South Africa

Although an Employer of Record often works with a staffing agency, the two are separate business entities. Each has specific roles and responsibilities in their symbiotic relationship. We Handle Employer of Record and Payroll throughout Africa.

1 January – New Year’s Day

21 March – Human Rights Day

19 April – Good Friday

22 April – Family Day

27 April – Freedom Day

1 May – Workers Day

8 May – National and Provincial Government Elections

17 June – Youth Day

9 August – National Women’s Day

24 September – Heritage Day

16 December – Day of Reconciliation

25 December – Christmas Day

26 December – Boxing Day