Creating and running a South Africa payroll
South Africa’s stable and diverse economy makes the country an excellent place to expand your business.
One of the first steps in any South African expansion is likely to be setting up a payroll and hiring employees. However, the country’s unique labor laws and bureaucracy can make this a long and difficult process.
At Horizons, we offer payroll outsourcing services for organizations expanding into South Africa. We will set up and run your South Africa payroll, providing you with all the support you need to expand more efficiently, whether or not you have an established entity in South Africa.
Why choose the Horizons payroll solution?
If you have an entity
If you have already established an official entity in South Africa, we offer outsourced payroll support to help you set up and run your South Africa payroll. In addition, we can provide HR, contract, and legal compliance support meaning you won’t have to worry about any of the complex administration and can focus on your expansion efforts.
This service is the perfect solution for any organization that has already registered an entity in South Africa but could benefit from support navigating the unique South African employment system.
If you don’t have an entity
For organizations that do not yet have an entity and want to stay flexible, we can provide the use of our South Africa subsidiary to act as employer of record for your new employees. Additionally, we will handle the setup, management, and compliance work associated with your South Africa payroll, taking care of everything for you.
This is a low-risk and flexible way to start your expansion into South Africa market, helping you focus on a successful South African expansion.
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South Africa payroll guide
What are the withholdings and tax requirements in South Africa?
Employers and employees must pay toward social funds in South Africa. For the Unemployment Insurance Fund, employees pay 1% of salaries and employers pay roughly 8.5%.
For the workplace insurance fund (COIDA), employers must pay between 0.11% and 8.26%, depending on their industry and the perceived level of risk to employees.
Income tax in South Africa is progressive, and rates range from 18% to 45% depending on income level.
The corporate tax rate in South Africa is a flat 28% for most companies.
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Skills Development Levy (SDL)
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1.00%
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Unemployment Insurance
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1.00%
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Total Employment Cost
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2.00%
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Unemployment Insurance
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1%
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| Total Cost | 1% |
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Up to 205,900 Rand
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18%
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205,900 – 321,600 Rand
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37,062 + 26% taxable income above 195,850
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321,601 – 445,100 Rand
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67,144 + 31% taxable income above 305,850
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445,101- 584,200 Rand
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105,429 + 36% taxable income above 423,300
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584,201 – 744,800 Rand
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155,505+ 39% taxable income above 555,600
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744,801 – 1,577,300 Rand
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218,139 + 41% taxable income above 708,310
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Above 1,577,300 Rand
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559,464 + 45% taxable income above 1,500,000
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Entitlements and terminations in South Africa
There is no mandatory maximum for probation periods in South Africa, but they should be reasonable in length.
The notice periods required for terminations vary depending on the length of service. For up to six months of service, the notice period is one week. For between six and 12 months of service, the notice period is two weeks, and for beyond 12 months, the notice period is four weeks.
Some employees may be entitled to severance pay, for example when dismissed for economic reasons, at a rate of one week of pay for every year of service.
How to establish a South Africa payroll
Establishing a payroll in South Africa independently can be a time-consuming and frustrating process. You will generally need to register an entity in the country, open a bank account, and more. The whole process can take several weeks to complete, holding back your expansion and cutting into expected revenues.
Horizons offers an alternative to this by taking care of your entire payroll setup and management process, keeping you compliant and speeding up your entry into the South African marketplace. We can also offer the use of our South African subsidiary to work as employer of record for your staff, so you can benefit from our services even if you don’t have an established entity in South Africa.
Manage payroll in South Africa
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
