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South Africa: The seven laws of payroll

South Africa: The seven laws of payroll

Managing payroll in South Africa is as unique, diverse, and complicated as the country itself!

Each of the seven laws governing the employment relationship in South Africa affects payroll management uniquely. This complexity is deepened by the industry’s employment and union agreement conditions.

These 7 points are essential for effectively running your payroll in South Africa.

  1. Register for deductions

Your company should be registered for the following when starting up in South Africa:

  • PAYE (tax deducted from employees)
  • the skills development levy (SDL) to be paid to the sectoral education training authority
  • UIF (Unemployment insurance fund)

We’ll also state the obvious: Registering your company for tax and VAT is non-negotiable. Once registered, BDCS supports your company to continue to adhere to these requirements by keeping you up to date with any changes to laws and regulations. We dive deep into the nitty-gritty, so you don’t have to! Navigating this highly regulated sector is our expertise.


  1. Bargaining council requirements

Bargaining councils are a big thing in South Africa. According to Fincor, more than 40 bargaining councils operate nationwide. According to them: “A bargaining council is a body that is established by one or more employers’ organisations and one or more trade unions. It must be registered under the Labour Relations Act for a particular industry.”

Agreements reached by these bargaining councils will decide on a minimum wage for employees, dictate overtime rates, work hours, and every aspect of the employment relationship. Failing to comply will result in a warning and might include a fine.

BDCS makes sure to pay your employees the exact amount owed to them after calculating all other pay factors.


  1. Contracts of employment

According to the employment act, the company must provide each employee with the employment act as well as an employment contract. There are mandatory conditions present in the employee’s contract as mentioned in the Act. These include annual leave, pay rates, and notice period, to name just a few. Inspectors regularly check these requirements from the department of labour.


  1. Normal Pay and Leave Pay are calculated at a different rate

The hourly rate is multiplied by the number of hours worked with standard pay. Holiday pay, overtime, and any commission should be calculated as an average rate taken over the previous three months.

BDCS has processes in place to accurately calculate Normal and Leave pay. Our BDCS ESS App makes it much easier to calculate Leave Pay as you can apply for leave from the app, giving us the information we need to calculate instantly and accurately.


  1. Save all records and give employers access

The period for employee records to be kept is five years, which remains the employer’s responsibility. Timesheets, employment contracts, and payslips should be maintained for this period without exception. Electronic copies are acceptable. Documents on revenue should be kept indefinitely. At BDCS we store all employee documents on our ESS App for you. Once it’s scanned in and uploaded the App makes it easy to access anytime and anywhere.


  1. Employment Equity

Reporting and implementation of employment equity are taken very seriously. Every six months, a report detailing the progress on employment equity planning and status needs to be sent to the Department of Labour by large companies.


  1. Available banking system

The South African banking systems are professional and are equal to some international electronic transfer standards. You can pay each employee individually or across to pension and medical insurance companies as third-party creditors.


As you can see, South Africa is unique yet complex when it comes to payroll regulations. BDCS is intimately acquainted with this sector, and we pride ourselves on staying on top of our game.