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Employment contracts in South Africa
In South Africa, employment contracts should be written in a local language, most commonly in English, and clearly state the terms and conditions of employment, including the employee’s compensation, benefits, and termination requirements. An employment contract in South Africa should also state the salary and any compensation amounts in South African Rand (ZAR) rather than a different currency.
The general rule in South Africa is that employment contracts are enforced for an indefinite duration. South African labor law prohibits the use of fixed-term contracts for tasks that are permanent in nature. If applicable, both parties must mutually agree and clearly specify the duration of the fixed-term contract.
Working hours in South Africa
The standard workweek in South Africa consists of up to 45 hours per week. If employees work 5 days a week or less, then 9-hour days are permissible. If employees work more than 5 days a week, then the typical workday consists of 8 hours.
Employees are entitled to a lunch break of 60 minutes if they work more than 5 hours.
Please note that the above does not apply to employees in senior management, sales employees who travel and regulate their own working hours, or employees who work less than 24 hours in a month. Additionally, although an employee can work up to 45 hours per week, it is customary for an employee to work Monday-Friday, 9 a.m. to 5 p.m.
Overtime must not exceed more than 10 hours per week and employees must not work overtime hours unless agreed upon. Other regulations include:
- Employees cannot work more than 12 hours on any given day.
- Employers must compensate overtime hours at a rate of 1.5 times the worker’s normal hourly wage, or alternatively, employees may agree to receive paid time off in lieu of overtime pay or a combination of both.
- Employees who do not typically work on a Sunday are entitled to double the normal hourly wage if they work on this day.
- If an employee typically works on a Sunday, then they are entitled to 1.5 times the normal hourly wage.
Holidays in South Africa
South Africa celebrates 12 public holidays for which employees are given the day off, including:
- New Year’s Day
- Human Rights Day
- Good Friday
- Family Day
- Freedom Day
- Workers’ Day
- Youth Day
- National Women’s Day
- Heritage Day
- Day of Reconciliation
- Christmas Day
- Day of Goodwill
The Public Holidays Act determines that whenever any public holiday falls on a Sunday, employees are entitled to the following Monday off.
Vacation days in South Africa
Employees in South Africa are entitled to a minimum of 15 business days off per year, in addition to the public holidays.
If employees have worked for their employer for more than 4 months, they also receive 3 days of Family Responsibility Leave for each 12-month period from the start of employment under the following circumstances:
- Sick child
- Death of a family member, including a spouse or partner, parent or adoptive parent, grandparent, child or adopted children, grandchild, or sibling.
Family Responsibility Leave expires at the end of each annual cycle and cannot be carried over into the following cycle. Employers typically do not provide more than the minimum leave entitlements.
South Africa sick leave
The sick leave cycle is a period of 36-months of continuous employment with the same employer, commencing from the employee’s hire date or the conclusion of their previous sick leave cycle.
- During the first 6 months of employment, employees are only entitled to 1 day of paid sick leave for every 26 days worked.
- After 6 months, the balance of 30 days (based on a 5-day workweek) or 36 days (based on a 6-day workweek) will be available, minus any sick days taken during the first 6 months of employment.
- At the end of the sick leave cycle, any unused time will be forfeited.
If an employee is unable to work due to a work-related accident or occupational illness for 4 or more days but less than 3 months, the employer must pay the injured employee at a rate of at least 75%, starting the first day of injury until the employee returns to work. If the employee is unable to work for a period longer than 3 months, the employee must claim compensation from the Compensation Fund.
Parental leave in South Africa
Pregnant employees are entitled to at least 4 consecutive months of maternity leave. Employees can start their leave up to 1 month prior to their due date, but this timeframe may vary depending on health reasons. Employees may not go back to work within the first 6 weeks of giving birth unless a doctor confirms it’s safe.
The Unemployment Insurance Act covers maternity benefits, but it is capped. It’s customary for employers to provide part or full payment for maternity leave (although this is discretionary).
Partners, adopting parents, and parents using a surrogate are entitled to 10 days of leave after the birth of the child. Employers are not required to pay, but employees on parental leave can apply for Unemployment Insurance Fund benefits.
Health insurance in South Africa
There is a public health system in South Africa; however, many employers assist employees with private health insurance as a common supplementary benefit. Employers can either provide a group plan or an allowance for employees to purchase a plan. Currently, there are 2 types of insurance in South Africa — medical aid schemes and private health insurance.
South Africa supplementary benefits
In addition to health insurance, personal accident coverage and retirement benefits are also typically covered through private policies in South Africa.
Bonuses
The 13th-month bonus in South Africa is considered a gratuity and is not required by local law. However, most local employees expect it, so it’s commonly incorporated as a condition of employment.
A performance bonus is also a common practice and is typically based on a percentage of the employee’s salary.
Probation periods in South Africa
Employers can set a probationary period in the employment contract. Although local labor laws do not specify the maximum probationary period, it must be reasonable given the circumstances of the job.
Termination and severance
Employers must have a fair reason for terminating the employment relationship and follow a just process before doing so. Grounds for termination include misconduct, poor performance, incapacity due to poor health/injury, or operational requirements. Either party can terminate a contract by serving notice or paying in lieu thereof. The statutory notice periods are as follows:
- 1 week of notice if the employee has been employed for less than 6 months
- 2 weeks’ notice if the employee has been employed between 6 months and 12 months
- 4 weeks’ notice if the employee has been employed 12+ months
An employee who is dismissed for reasons based on operational requirements (retrenchment), or whose contract of employment is terminated on account of insolvency, is entitled to severance pay at a rate of 1 week of pay for each year of service completed. No severance pay is required in cases of resignation, retirement, death, expiration of an employment contract, dismissal for misconduct, poor performance, illness, or other reasons.
Paying taxes in South Africa
South Africa does not have a state-sponsored social security system other than the Unemployment Insurance Fund (UIF). The UIF provides short-term relief to unemployed employees. The UIF also provides relief to employees that are unable to work because of illness or require parental leave. A monthly contribution of 1% is required, calculated based on the employee’s remuneration, while the employer’s social cost typically amounts to 8.5% of gross remuneration.
Income tax, also known as pay-as-you-earn (PAYE), is based on a sliding scale depending on individual earnings. Tax percentages can range from 18% to 45%, depending on earnings.
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