Expand your business into South Africa, even without an entity
South Africa, with its diversified economy, the second-largest in Africa, almost 60 million people, and a relatively stable political environment make it a popular site for foreign investment and business expansion.
However, expanding a business in South Africa can be a difficult process. The country still has lengthy bureaucratic procedures, cultural differences, and unique regulations that can cause delays, so expansion projects can often take weeks or months to get off the ground.
At Horizons, we offer an extensive set of outsourcing services to help organizations expand into South Africa quickly and effectively. Our professional employer organization (PEO), payroll, and employ of record (EOR) services give you the ability to outsource all the complex administration and legal compliance work so you can focus your efforts on a rapid and successful expansion.
We have an in-house recruitment team, so we can source, recruit, and onboard your new staff members. Additionally, you can use our South African subsidiary to act as employer of record for your new hires, so you don’t even need to register an entity in the country but will have total autonomy over your employees.
Our outsourcing solutions could save you thousands in expansion costs and can help you expand in a compliant, flexible, and scalable way.
How Horizons outsourcing can help you expand into South Africa
Horizons enables your business to expand its operations into South Africa, even without setting up a legal subsidiary.
Hiring in South Africa - Employment Law Overview
📝 South Africa employment contracts
Formal employment contracts are legally required in South Africa, so you should always provide one in writing for your employees. Every contract should include the details of employment, such as salary/wage, working hours, benefits, and so on, should be written in one of South Africa’s official languages, and should use the South African rand as currency.
⏰ Working hours in South Africa
The standard working week in South Africa is 45 hours spread over five work days. Beyond this, overtime rates should be paid. Overtime is limited to ten hours per week and must be paid at 1.5 to 2 times the normal pay rate, depending on when the work is done.
📅 National holidays in South Africa
🏖 Vacation in South Africa
Employees in South Africa are entitled to 15 days of paid vacation leave every year. They can also take up to three days of family leave for special circumstances such as caring for a sick child or the death of a family member.
😷 Sick leave in South Africa
Sick leave works on a 36-month cycle in South Africa, with employees entitled to 30 days of paid sick leave every cycle. For the first six months with a company, employees are only entitled to one day of sick leave for every 26 days of work.
If an employee is absent through work-related sickness or injury, for more than four days, the employer must pay at least 75% of normal pay for the first three months. Beyond this, the state covers compensation.
👶 Maternity and paternity leave in South Africa
Female employees in South Africa can take a minimum of four months of paid maternity leave. The leave can start one month before the birth and must stay off work for at least six weeks after, in most cases. The employee’s compensation is paid by the state.
There is no legal requirement to provide paternity leave.
💰 Employee severance 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.
🏦 Tax laws 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.
🏥 Health insurance in South Africa
South Africa has both public and private healthcare, so it is not necessary for employers to offer private insurance but many choose to.
💳 South Africa compensation & benefits
Compensation laws in South Africa
As of March 2020, the minimum wage for most workers in South Africa is R20.76 per hour.
Benefit management in South Africa
Setting up your South African benefits system as a foreign employer can be difficult. The laws are complicated, bureaucratic procedures can be slow, and legislation can change regularly, all of which can make it a very time-consuming process.
Outsourcing your benefit management process can save you time and money, and ensure you are fully compliant with the relevant laws. Horizons can simplify your South African benefits management, with our South Africa experts setting up and managing everything for you to help you focus on a successful expansion operation.