Hiring in South Africa: costs, rules and the best EOR providers

Not in every case. The rule covers workers earning at or below the legal earnings threshold who are placed through a temporary employment service.

If the placement no longer counts as temporary under section 198A, the client is treated as the employer under the Labour Relations Act. The three-month rule has exceptions, so both earnings and the type of placement matter.

Where the arrangement meets section 198, the provider is a temporary employment service: it supplies a worker to a client for payment and pays the worker.

The Labour Relations Act treats the TES as employer, subject to the additional section 198A protections for qualifying workers. The client can still have joint liability for specified employment-law breaches. The EOR label does not remove either party’s statutory duties.

The employer deducts PAYE using the applicable employee tax calculation and normally deducts 1% employee UIF, capped at R177.12 monthly. It adds its own matching UIF contribution.

SDL is an employer cost, not an employee deduction: generally 1% of leviable payroll, with an exemption where the employer’s expected twelve-month payroll does not exceed R500,000. Apply that test to the employing organisation, not just your one hire.

Yes, a covered employer must register for occupational-injury compensation and meet its return and assessment obligations. The Compensation Fund expressly includes workers supplied and paid by labour brokers within its framework.

Registration is normally due within seven days of the first employee. Confirm the actual employer’s registration and good standing, plus the workplace’s safety arrangements; an EOR service fee does not replace COIDA coverage.

On an assumed R600,000 annual developer salary, this Cape Town planning model totals R671,125.44 before optional benefits and provider extras. It includes employer UIF, SDL, an illustrative COIDA allowance and an assumed R5,000 monthly EOR fee.

The salary, fee and COIDA allowance are inputs, not a market quote. Replace the assessment allowance with the employer’s actual tariff and add any pension, medical cover, equipment or FX costs.

Covered employees receive twenty-one consecutive days of paid annual leave per twelve-month cycle, normally fifteen working days on a five-day week. Sick leave is six normal working weeks per thirty-six-month cycle, with a separate accrual rule in the first six months.

EOR employment does not reduce these BCEA rights. Parental leave must also reflect the Constitutional Court’s 2025 ruling, rather than an outdated maternity-versus-paternity policy.

The employer needs a fair reason and fair procedure; an overseas client’s instruction alone does not establish either. Apply the current dismissal code and the correct misconduct, capacity or operational-requirements process.

Employees can normally refer an unfair-dismissal dispute to the relevant bargaining council or CCMA within thirty days. Preserve the reasons, consultation and response records, and budget for employment notice and any applicable severance separately from the provider’s cancellation fee.

For employment covered by the BCEA, monetary remuneration must be paid in South African currency. Funding the EOR’s invoice in GBP or USD is a separate commercial arrangement.

A foreign-currency reference in the package needs clear conversion terms and rand payroll treatment; it does not switch off local employment or tax rules. Agree the conversion date, rate, fees and who bears exchange-rate changes before the offer is signed.

Yes, B-BBEE can affect procurement and commercial eligibility when selecting a South African EOR. The provider’s status belongs to that measured entity; it does not become the overseas client’s rating.

If you claim procurement recognition, use the correct supplier evidence and treatment of third-party spend. Do not assume the entire payroll invoice receives the same recognition as the provider’s own service fee.