Companies extending their operations into South Africa need a complete grasp of South African employment contract laws. A successful business largely depends on its employees. By creating work contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created for your workforce.

Thanks to our Professional Employment Organisation (PEO) and Employer Of Record (EOR) services, we can provide compliant labour contracts for your employees in South Africa, including local benefits. Our team keeps track of South African laws and regulations daily to be duly aware of updates that can be implemented in working contracts and to ensure a smooth entry for your business into the South African economy.

The different types of South African Employment Contracts

The minimum requirement is for employees working more than 24 hours a month to be given a written list of the critical elements of their role from the first day of employment. There is no legal requirement for a formal written contract, although written agreements are generally in place. Contracts are covered by a combination of the Labour Relations Act (LRA) and the Basic Conditions of Employment Act (BCEA). Specifics in the agreements include full details of the parties; a description of the role; salary and payment schedule; basic conditions such as overtime, hours, and paid vacation.

Indefinite, permanent employment contracts: Remains in force until the employee’s retirement or resignation, or dismissal by the employer. Otherwise, no end date is specified.

Fixed-term employment contracts: Tied to a specific end date or project (also known as a Project Employment Contract) and includes Temporary Employment Contracts.

Collective Bargaining Agreements (CBAs): These apply at the company, factory or plant level in single-employer bargaining; at the sector level through bargaining councils under the Labour Relations Act in multi-employer bargaining.

South African Employment Contracts Requirements

When ‘decision time’ arrives, companies must make the right choices. Foreign companies entering the South African employment market and economy have to decide which business structure best suits their plans when it comes to hiring employees. The popular choice is to open a subsidiary as a private company, which offers protection against liability for shareholders and the parent entity. As with all domestic companies, the subsidiary is governed by South Africa’s Companies Act (2008) and by its own Memorandum of Incorporation (MOI) and complies with the regulations of the Companies and Intellectual Properties Commission (CIPC).

Opening a subsidiary is a legal requirement to hire staff and operate their payroll. In addition to registering the subsidiary, employers face other conditions when hiring. These include the following:

  • Contracts can generally be written or oral, but employees must at least receive a written agreement listing the essential aspects of their role.
  • If hiring on a fixed-term contract, these must be in writing for employees below a threshold set by the terms of the Basic Conditions of Employment Act (BCEA).
  • Fixed-term contracts must specify the length and the reason why they are necessary.
  • Part-time or temporary employees must also have a written contract.
  • Probation periods must be for a reasonable time to assess suitability for the role, generally between three and six months.
  • Employers are required to ensure that the terms of a written contract or agreement are in the language understood by the employee, or subsequent disciplinary matters may be considered unfair.


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