An Employer of Record in South Africa lets a foreign company put someone on payroll there without registering a local entity: the EOR signs the contract of employment, runs payroll, remits UIF and the Skills Development Levy, and carries the notice and severance obligations set by the Basic Conditions of Employment Act, while your company directs the person's actual work. South Africa is unusual in how explicitly its labour law treats triangular arrangements like this: the Labour Relations Act has a specific deeming provision aimed at temporary employment services, what South Africans call labour brokers, and any EOR structure has to sit clearly on the right side of it.
Notice and severance under the BCEA
Section 37 of the Basic Conditions of Employment Act sets minimum notice for ending an employment contract: one week if the employee has worked four weeks or less, two weeks if employed for more than four weeks but not more than a year, and four weeks once the employee has worked a year or more, also four weeks for farm and domestic workers employed more than four weeks. Where a dismissal is for the employer's operational requirements, Section 41 requires severance pay of at least one week's remuneration for every completed year of continuous service. An EOR provider is the contracting employer that owes these notice and severance obligations, and it should be able to show the notice period it uses matches the employee's actual length of service, not a flat default.
UIF and the Skills Development Levy
The Unemployment Insurance Fund is funded by a combined 2% of monthly pay: 1% deducted from the employee and 1% contributed by the employer, both remitted to the UIF or SARS, and it provides short-term income support during unemployment, illness or maternity leave. Separately, the Skills Development Levy is an employer-only cost of 1% of the total monthly payroll, paid to SARS through the monthly EMP201 declaration; employers whose total payroll will not exceed ZAR 500,000 over the next 12 months are exempt and do not need to register. Both are obligations of the registered employer, so an EOR provider carries them rather than the client company.
The LRA's deeming provision for labour brokers
Section 198A of the Labour Relations Act, which the CCMA's own guidance summarizes, deems an employee of a temporary employment service, or TES, commonly called a labour broker, to become the employee of the client instead once that employee has worked for the client for more than three months on anything other than a genuine temporary basis, provided the employee earns below the earnings threshold set under Section 6(3) of the BCEA. The provision exists to stop labour brokers being used to strip workers of permanent-employee protections through indefinite rolling placements. An EOR is structured differently from the TES arrangement Section 198A targets: it is meant to be, and to remain, the sole and continuing employer of the worker rather than a temporary placement pending reclassification to the client.
What to check in a provider
Given how specifically South African law regulates triangular employment, the questions worth asking a provider are concrete: is it registered and remitting UIF and, where applicable, the Skills Development Levy under its own employer registration; does its standard notice period actually track the BCEA's length-of-service bands rather than a flat figure; and can it explain, in writing, why its structure is a genuine ongoing employer-of-record relationship rather than the kind of temporary placement Section 198A of the LRA was written to catch. A provider that cannot answer the third question clearly is not the safer choice just because it is cheaper.
Questions people ask about employer of record south africa
What notice period does an employer have to give in South Africa?
Under Section 37 of the BCEA: one week if employed four weeks or less, two weeks if employed for more than four weeks but under a year, and four weeks once the employee has worked a year or more.
Who pays UIF in South Africa, the employer or the employee?
Both. UIF is a combined 2% of monthly pay, split 1% deducted from the employee and 1% contributed by the employer, both paid over to the UIF or SARS.
Does an Employer of Record have to pay the Skills Development Levy?
Yes, if its total payroll exceeds ZAR 500,000 over a 12-month period. SDL is an employer-only cost of 1% of total monthly payroll, paid to SARS.
Is an Employer of Record the same as a labour broker under South African law?
No. A labour broker is a temporary employment service governed by Section 198A of the Labour Relations Act, which deems the client to become the employer after three months of non-temporary placement. An EOR is structured to be the sole, continuing employer of the worker rather than a temporary placement.