Employee Benefits in South Africa come under the Labour Relations Act (LRA), the Basic Conditions of Employment Act (BCEA), the Employment Equity Act (EEA) and supplementary Codes of Good Practice. Other Acts also apply to minimum wages and occupational health and safety. Foreign companies must comply with every aspect of legislation as it applies to their employees once they have opened a subsidiary in the country, usually in the form of a private company.

Once the staff have been onboarded, employers must comply with the strictly-applied legislation that provides safeguards and minimum guarantees for employees. This emphasizes that foreign companies’ responsibilities go beyond simply complying with South African tax and payroll regulations – although these still present a heavy workload.

Employers must have a firm grasp of what is guaranteed for their employees to ensure a successful working relationship. Stepping out of line with specific compensation and benefits rules runs the risk of cumulative fines and further sanctions. This is where Bradford Jacobs points you in the right direction, drawing on over 20 years of experience as a Professional Employer Organisation (PEO) and Employer of Record (EOR). We deal with the complexities while your staff focus on work.

What are the Compensation Laws in South Africa?

The main pillars of employment legislation in South Africa establishing compensation laws for employees are the Labour Relations Act (LRA), the Basic Conditions of Employment Act (BCEA) and the Employment Equity Act (EEA). The BCEA deals with most categories of employment law, supplemented by specific statutes and Codes of Good Practice. At the same time, the LRA is more concerned with unfair dismissal, contracts and workplace regulations. Not all BCEA regulations apply to employees earning above certain thresholds or those working less than 24 hours a month.

Maternity Leave and Benefit:  Maternity leave is four months, which can begin four weeks before the due date, or earlier if medically required and certified by a doctor. A minimum of six weeks must be taken after the birth. The employer is not legally required to pay benefits, but the employee can claim from the Maternity Benefit Fund element of the Unemployment Insurance Fund (UIF). The benefit is a maximum of 60% of the salary, depending on the income level, for a maximum of 121 days. Fathers are entitled to 10 days of paternity leave, paid by the UIF. Under the BCEA, employees who have worked for at least four months are entitled to three days of delivered family responsibility leave every 12 months, including the birth of a child, among other family events. This applies to one of the parents.

Sick Leave and Benefit:  During an ‘ill leave cycle of 36 months, an employee in the private sector is entitled to 30 days of paid leave. During the first year’s employment, the employee is entitled to one day’s paid leave for every 26 days of work. The employer does not have to pay if the employee fails to produce a medical certificate after two days from work or if they could not do so on two occasions during eight weeks.

National Minimum Wage: The Department of Employment and Labor increased the recommended national minimum in the private sector for the tax year March 1 2022, to February 28 2023, to ZAR 23.19 (EUR 1.40, USD 1.43) an hour, equating to ZAR 3,710 (EUR 223, USD 230) per month. Some sectors set rates above the national minimum, while collective or union agreements can also charge higher minimums.

Paid Vacations: The BCEA allows employees 21 days of paid vacation after completing one year’s service or one day’s leave for every 17 days worked. Employees receive an additional day if a public holiday falls during their vacation. The employer awards annual vacation pay equal to the amount the employee would have earned during that period, either at the start of leave or, by agreement, on the usual payment schedule. Employees working fewer than 24 hours a month have no entitlement.

Working Hours: Article 9 of the BCEA stipulates a maximum of 45 hours a week and nine hours a day (excluding lunch break) in working weeks of five days or less; and eight hours a day (excluding lunch break) in working weeks of more than five days. After five hours’ work, employees must have one hour’s break, which is unpaid. Hours can be extended by agreement, particularly in the service industry.

Overtime:  The BCEA restricts overtime to 10 hours per week or three hours per day at a minimum 50% premium over their regular hourly pay. There must be an agreement regarding overtime. Also, employers can pay the employee their standard wage for overtime but award at least 30 minutes off on full pay for each hour’s overtime OR mention at least 90 minutes of paid time out for each overtime.

Probation Periods: Trial periods are usually between three and six months, with the term confirmed in the contract or agreement of an open-ended contract

Notice Periods: Notice must be given in writing for periods between one and four weeks, depending on contractual arrangements or collective agreements. Notice cannot be issued during any period of leave.

Termination / Severance / Redundancies:  All employees are protected from unfair dismissal, which can only be due to misconduct, incapacity to work or operational requirements. Severance pay applies only for layoffs due to functional requirements, with a mandatory minimum of one week’s salary per year of service. At the same time, any additional payments are part of the compulsory consultation process. The Labor Relations Act applies strict consultation procedures where companies employing more than 50 plan mass redundancies or ‘retrenchment’ and will also consider any redundancies or dismissals over the previous 12 months. The Commission for Conciliation, Mediation and Arbitration will be involved in the process.

Discrimination: The Promotion of Equality and Prevention of Unfair Discrimination Act from 2000 prohibits discrimination by the government, private institutions and individuals. The Employment Equity Act adds to this and denies discrimination in employment on grounds including gender, sexual orientation, pregnancy, marital and family status; ethnic or social origin; religious or political beliefs; language.

Guarantees and Restrictions on Employee Benefits in South Africa

Guaranteed Benefits:

Employment contracts and Collective Bargaining Agreements (CBAs) can enhance statutory minimums but cannot reduce them to the detriment of employees. Employees in South Africa can rely on benefits and entitlements guaranteed by a combination of the Labour Relations Act (LRA) and the Basic Conditions of Employment Act (BCEA). 

Maternity / Paternity Leave: Maternity leave of 16 weeks is guaranteed, usually starting four weeks before the due date unless medically advised to start earlier. A minimum of six weeks is taken after the birth. Employees can claim from the Maternity Benefit Fund element of the Unemployment Insurance Fund (UIF) a maximum of 60% of their salary, depending on their income level, for up to 121 days.

Working Hours and breaks: Article 9 of the BCEA sets a maximum of 45 hours a week and nine hours a day in working weeks of five days or less; and eight hours a day in working weeks of more than five days, excluding lunch breaks. After five hours’ work, employees must have one hour’s break, which is unpaid.

Paid Vacations:  The BCEA sets 21 days of paid vacation as the minimum for employees who have worked an entire year or one day’s leave for every 17 days worked. Employees receive annual vacation pay equal to the salary they would have received during the holiday.

Maternity Benefit:  Employees must have contributed to the Unemployment Insurance Fund (UIF) to receive benefits from its Maternity Benefits Fund, and they must receive less than their regular salary from their employer.

Unemployment Benefit:  Individuals must apply to the Department of Labor within six months of losing their job, provide their last six pay slips, supply a confirmation letter from their former employer and be registered as a job seeker to qualify for benefits of up to 34 weeks from the UIF.

Social Security in South Africa

South Africa does not have a comprehensive social insurance program. In the formal economy, employees are registered for the Unemployment Insurance Fund (UIF) and the Compensation for Occupational Injuries and Diseases (COIDA) Act fund. Employers and employees each contribute 1% of payroll and salary to the UIF.

Currently, a significant proportion of healthcare budgets go towards the private sector. There are government plans to introduce a National Health Insurance Fund, before which state funding is aimed at helping citizens on the lowest incomes, with others taking out private healthcare insurance, regulated by the Medical Schemes Act, to access higher quality medical care. 


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