Disclaimer: I am not a Labour or Tax Law expert, and compliance may vary depending on your industry or business sector. I have listed a few of the key regulatory and legislative requirements that you need to be aware of as your team grows.

Getting your ducks in a row….

For new employers it can feel daunting to complete yet additional registrations, paperwork and part with more cash. As an employer, myself for almost 20 years now, I can wholeheartedly say this is for the greater good. You provide structure and some form of security and certainty for employees, when they know that they are protected by an employment contract, unemployment insurance and compensation for injuries. It also gives you as the employer peace of mind, that the financial burden of inevitabilities does not lie squarely on your already overburdened shoulders.

Covid-19 is a relevant example, where registered companies were able to claim a percentage of employee income, thus sharing the financial burden. I also believe that it is important to get all this paperwork out of the way, upfront so that you can focus on other aspects of relationship building with your team.

 1. Basic Conditions of Employment Act (BCEA) – 1997

It is important for both yourself as an employer and for the benefit of your employee/s to cement your professional relationship with an employment contract. This contract should be developed within the framework of the Basic Conditions of Employment Act (BCEA). A copy of the summary of this act needs to be displayed at the workplace.

Included in this act are the conditions of employment, including but not limited to the following:

  • Earnings Threshold
  • Hours of Work and Overtime
  • Public Holidays
  • Sick Leave
  • Family Responsibility Leave
  • Maternity Leave
  • Paternity Leave
  • Annual Leave
  • Termination and Resignations

Other key compliance for you as an employer includes:

2. Employees’ tax (PAY-AS-YOU-EARN) or PAYE

This tax is collected by employers on behalf of SARS from eligible employees and paid over to SARS by the 7th of every month. This payment is also made via the Employer Declaration (EMP201).

How much?

This depends on how much you earn, and on the Minister of Finance, who proposes your fate in the annual Budget Speech, before parliament passes the figures each year. Death and taxes, there is no escape, no, really, you pay less as you age, but you still pay. So, if you earn around R83 100 per annum and you are younger than 65 years, you are liable  for PAYE.

Find a detailed printable version of the Tax Rates for Individuals here:

https://www.sars.gov.za/Tax-Rates/IncomeTax/Pages/Rates%20of%20Tax%20for%20Individuals.aspx

3. Unemployment Insurance Act (UIF) – 2001

This fund was established to gives short-term which is paid over to South African Revenue Service (SARS) or the Unemployment Insurance Fund (UIF) by the employer, before the 7th of every month.

 How much?

Employers contribute 1% and employees contribute 1% of their salary excluding commission.

 4. Skills Development Levy

All registered employers are required to contribute to the Skills Development Levy (SDL). The aim of this levy is to encourage learning and development in South African organisations. However, not all employers are liable, unless you expect your total salary bill to be more than R500 000 over the next 12 months, then yes, you will need to register for SDL.

How much?

1% of the total amount paid in salaries and this includes: overtime, leave pay, bonuses and commissions). This levy is paid on a monthly basis to SARS, by completing the Monthly Employer Declaration (EMP201)

5. Employment Tax Incentive (ETI)

With a high youth unemployment rate, millions of young South Africans are excluded from economic activity. In order to incentivise employers to boost employment amongst our youth, ETI was implemented in 2014 where you as an employer can claim for every eligible youth (18 -29 years) that you employ.

 How much?

This cost-sharing benefit can be claimed on a monthly basis, on the EMP201 declaration and is calculated for qualifying employees according to their period of employment and their monthly remuneration.

Find a detailed printable version of the ETI Calculations here:

https://www.sars.gov.za/TaxTypes/PAYE/ETI/Pages/How-does-the-Employment-Tax-Incentive-(ETI)-work.aspx

6. Employment Equity Act (EEA) – 1998

Another ACT, worth a mention here, is the EEA established to ensure equity in the workplace and protect employees from unfair treatment and discrimination at work.

You become a designated employer, when your team has grown to 50 employees and more, or if you employ less than 50 employees but your annual turnover meets the threshold(Section 4 of the EEA). A collective agreement within your sector can also determine you as a designated employer.

Compliance here means that you need to submit an annual Employment Equity Plan, based on the Code of Good Practice.

 Find a detailed pdf on the EEA with your Turnover Thresholds (pg.54) here:

http://www.labour.gov.za/DocumentCenter/Acts/Employment%20Equity/Act%20-%20Employment%20Equity%201998.pdf

7. Compensation for Occupational Injuries and Diseases Act (COIDA) – 1993

Although we all try our best to ensure a safe and hazard-free workplace, accidents happen, believe me. Anyone who employs one or more full time or part-time workers must register and pay the annual assessment fees.

How much?

The annual fee is based on the employee/s earnings and the type of risk associated with your industry.

Find details on how to register with the fund here:

http://www.labour.gov.za/coid_how_to_register_with_the_compensation_fund

Let us summarise

As an eligible employer, you need to submit the following to:

  • The South African Revenue Service : UIF, PAYE, SDL and ETI on a monthly basis
  • The Compensation Commissioner: COIDA Annual Fees
  • Department of Labour: Employment Equity Report on annual basis

That’s all folks! Well most of it.

Resources

The South African Labour Guide (https://www.labourguide.co.za)

SARS Contact Centre on 0800 00 SARS (7277)

EMP201 Declaration – www.sars.gov.za