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Employer of record South Africa (EOR)
Directly employing employees in South Africa involves setting up a local subsidiary. It is time-consuming, expensive and highly complex. An Employer of Record (EOR) can help you avoid these issues.
If you want to hire in South Africa, you need to make sure you do so in a way that complies with all local regulations. To do that you need to partner with a company with local insights. Having an Employer of Record means giving you access to an expert company that will take on all the legal and administrative responsibilities of handling employment in South Africa.
Future Teams will ensure you remain legally compliant without having to establish a legal entity.
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Outsourcing to South Africa made easy
Outsourcing to South Africa is a great way to access high-quality, cost-effective talent. We make it easy to hire remote staff in a vast range of roles from customer services to financial services, IT support, digital marketing, and much more.
Quick Facts
South Africa offers a host of compelling reasons for companies looking to hire employees
The most obvious and most common reason why companies outsource is due to the cost incentives. South African salaries are 50-60% less than their UK equivalents.
South Africa is only one or two hours ahead of the UK (depending on the time of year), which means you can outsource all sorts of operations with little disruption. Communication can happen during work hours and people can be on call whenever they are needed.
Another compelling draw for South Africa is the clear cultural similarities with the UK. South Africa’s society is highly educated, multicultural and hard-working. Many of the most listened to and watched television programs, films and music closely align to the UK. Working with people in South Africa is an easy cultural fit and can foster good project results and easy collaboration.
South Africa’s workforce is highly trained with an above-average number of people in further education and a growing number of graduates. Most importantly there is a good supply of workers in a range of disciplines from customer services, to marketing, IT, accounts, and software development. The range and depth of the skills on offer make South Africa an attractive destination for complex and demanding jobs.
The rise of digital technology is breaking down borders around the world. Thanks to video conferencing software and other remote collaboration tools it is now possible to engage with talent around the world. Today businesses may be routinely working on projects with a multi-disciplinary team of people working in many different parts of the world.
South Africa represents a vibrant market, and is often referred to as a gateway to Africa. Outsourcing operations may not only support your work in the UK, but it can also be the first step to expanding your work into the new and exciting markets on offer around Africa.
What is an Employer of Record (EOR)?
An Employer of Record helps foreign companies manage employees based in South Africa. An EOR will enable you to ensure compliance with all employment regulations without establishing a legal entity.
It’s a fast and easy way to manage South Africa-based employees. As an Employer of Record Future Teams will become the official employer of your workers and as such will assume all legal liabilities for them.
We handle all legal responsibilities including managing payroll, annual leave, and taxes. We will ensure compliance with regulations and keep you updated on any changes to the law as and when they occur.
Why use an employer of record?
An Employer of Record is a fast and effective way to hire people in South Africa. Because you do not need to have an established legal entity in the country you can get started right away without the need to set up a subsidiary.
We are therefore a great option for someone who is:
- Moving into the country and wanting to test the waters before committing fully.
- Only has a small number of employees in South Africa.
- A small company with limited resources that wants the benefit of a fully functioning HR department.
- Wants support from an expert company with a full understanding of South African employment law.
- Wants to avoid compliance issues through a lack of regulatory knowledge.
Working with an EOR offers a flexible way for companies to hire and onboard employees without having to set up a legal entity or incorporate a company. With a dedicated Employer of Record on your side, you can move forward confident in the knowledge that an expert company is handling all the administrative and legal issues for your employees.
Salaries in South Africa
In general, salaries in South Africa are around 50%-60 lower than in the UK. We can provide guidance on salaries for those businesses looking to appoint us as their Employer of Record.
Staff entitlements in South Africa
Full-time employees are entitled to:
Annual leave: Employees will be entitled to 15 annual leave days, plus South African Public holidays. (We can request that they take UK bank holidays off if this works better for you).
Maternity leave: Maternity leave starts four weeks before the due date and employees are entitled to four consecutive months of leave. All this leave is unpaid but employees can make claims to the unemployment insurance fund. Employees will not be able to start work again within six weeks of the birth without special clearance from a medical professional.
Parental leave: 10 consecutive days of unpaid leave.
Sick leave: Employees are entitled to 30 days of sick leave at full pay over three years. This only kicks into effect after the first six months of work. During that initial time, an employee gets a day’s sick leave for every 2 months worked.
Employer of Record Vs Outsourcing
When using us as Employer of Record you will handle recruitment and salary negotiations yourself. Although we will be the employee’s legal employer, our contract with you means you must allow us to meet our obligations as an employer in South Africa. Staff are employed as permanent members of staff, which means all of the rules around permanent employees in South Africa, such as grievance procedures, unfair dismissal, and redundancy regulations must be followed.
When outsourcing with Future Teams we will handle the recruitment and salary negotiations for you. You will have an outsourcing agreement with us whereby the employee’s wages and our fees are combined into one single invoice. Due to the nature of the agreement between us, we can employ employees in a manner whereby 30 days’ notice can be served to terminate their contract at any time, without the need to follow a grievance procedure or risk falling under redundancy regulations.
What is an Employer of Record (EOR)?
An Employer of Record helps foreign companies manage employees based in South Africa. An EOR will enable you to ensure compliance with all employment regulations without establishing a legal entity.
It’s a fast and easy way to manage South Africa-based employees. As an Employer of Record Future Teams will become the official employer of your workers and as such will assume all legal liabilities for them.
We handle all legal responsibilities including managing payroll, annual leave, and taxes. We will ensure compliance with regulations and keep you updated on any changes to the law as and when they occur.
Why use an employer of record?
An Employer of Record is a fast and effective way to hire people in South Africa. Because you do not need to have an established legal entity in the country you can get started right away without the need to set up a subsidiary.
We are therefore a great option for someone who is:
- Moving into the country and wanting to test the waters before committing fully.
- Only has a small number of employees in South Africa.
- A small company with limited resources that wants the benefit of a fully functioning HR department.
- Wants support from an expert company with a full understanding of South African employment law.
- Wants to avoid compliance issues through a lack of regulatory knowledge.
Working with an EOR offers a flexible way for companies to hire and onboard employees without having to set up a legal entity or incorporate a company. With a dedicated Employer of Record on your side, you can move forward confident in the knowledge that an expert company is handling all the administrative and legal issues for your employees.
Salaries in South Africa
In general, salaries in South Africa are around 50%-60 lower than in the UK. We can provide guidance on salaries for those businesses looking to appoint us as their Employer of Record.
Staff entitlements in South Africa
Full-time employees are entitled to:
Annual leave: Employees will be entitled to 15 annual leave days, plus South African Public holidays. (We can request that they take UK bank holidays off if this works better for you).
Maternity leave: Maternity leave starts four weeks before the due date and employees are entitled to four consecutive months of leave. All this leave is unpaid but employees can make claims to the unemployment insurance fund. Employees will not be able to start work again within six weeks of the birth without special clearance from a medical professional.
Parental leave: 10 consecutive days of unpaid leave.
Sick leave: Employees are entitled to 30 days of sick leave at full pay over three years. This only kicks into effect after the first six months of work. During that initial time, an employee gets a day’s sick leave for every 2 months worked.
Employer of Record Vs Outsourcing
When using us as Employer of Record you will handle recruitment and salary negotiations yourself. Although we will be the employee’s legal employer, our contract with you means you must allow us to meet our obligations as an employer in South Africa. Staff are employed as permanent members of staff, which means all of the rules around permanent employees in South Africa, such as grievance procedures, unfair dismissal, and redundancy regulations must be followed.
When outsourcing with Future Teams we will handle the recruitment and salary negotiations for you. You will have an outsourcing agreement with us whereby the employee’s wages and our fees are combined into one single invoice. Due to the nature of the agreement between us, we can employ employees in a manner whereby 30 days’ notice can be served to terminate their contract at any time, without the need to follow a grievance procedure or risk falling under redundancy regulations.
Pricing
Find out how much we can save your business on recruitment and wage costs
Employer of Record
for clients who already have candidates ready to go
- Onboarding to include contracts & payroll
- Ongoing HR
- Remote worker productivity software + £15 p/month
- Pre-employment screening to include employer referencing, identity & qualification checks + £95 one off fee
- Full grievance procedure required to manage performance or terminate employment
- 2-month salary deposit required
Outsourcing
for clients looking for recruitment + a more flexible way of hiring
Custom
- Recruitment
- Onboarding to include contracts & payroll
- Ongoing HR
- Remote worker productivity software
- Pre-employment screening to include employer referencing, identity & qualification checks
- Cancel at anytime with 30 days notice (no grievance procedure required)
- No salary deposit required
from
£
800
per month
Inc. wages & fees
Plan your outsourcing strategy
South Africa’s outsourcing market is ripe with opportunity. Few other locations offer the same combination of low labor costs with a highly skilled, diverse, skillset.
To help plan your South African outsourcing strategy, download our PDF today.
Book a free consultation
A quick intro call to find out more about Future Teams and how we work
Frequently Asked Questions (FAQ's)
An employer of record helps overseas businesses handle their South African-based employees and comply with all legal requirements. The EOR serves as the legal employer in the country and will, therefore have legal responsibility for handling all PAYE, tax, and compliance requirements about that employment.
There is no need to set up a legal entity – you simply pay the EOR an agreed fee based on the number of employees, and they will pay the employee and handle all admin requirements. You can work with the employee in much the same way as you would normally.
An EOR is a simple and affordable way to manage employees in South Africa. You won’t need to shoulder the expense of setting up a legal entity – you simply manage all employment through the EOR.
They will handle all the administrative details regarding the employee and make sure all regulatory requirements are fully met. You simply have to handle the day to day working relationship with that employee.
Crucially, because the EOR is the legal employer, they will have liability for any compliance issues which protects you against any risks.
As the legal employer, the EOR ensures the employment is fully compliant with all labor laws. Taxes will be paid, all documentation processed correctly, and employee rights respected. If there are any problems with the employment, the EOR will make sure disputes and potential employment termination is handled in accordance with the laws.
An EOR uses trained experts who have a deep understanding of the latest labor laws to avoid any unintended noncompliance. However, if there is a problem, they will have legal liability, which means you’re fully protected.
Key benefits include:
Affordability: You don’t have to hire a local team or set up a legal entity to support your South African employees, the EOR does that for you.
Compliance: As a foreign company, you may easily run into unintentional compliance challenges. The EOR has local experts who can keep up to date with the latest labor laws and make sure all requirements are met.
Local knowledge: The EOR has good local knowledge of the South African market, which helps with compliance and recruitment.
Focus: When you use an EOR, you effectively outsource all your HR functions to that company, freeing you up to focus on your company’s strategic objectives.
Yes. That is their main purpose. They are the legal employer, which means they handle all payroll, tax, and employee benefits. You simply focus on the working relationship.
EORs are suitable for all industries, including customer service, finance, legal, marketing, PR, IT, and many others. They can help you outsource certain operations, such as your call centres, or serve as the starting point for an overseas expansion, allowing you to build your local team and test the strength of the local market.
EORs are also generally better suited for those companies employing full-time employees to avoid any worker classification issues. For example, early in the process, you may start out using freelancers. However, as the relationship evolves, you may have to class them as employees to ensure you comply with tax laws. An EOR helps to ensure everyone you work with is classified correctly.
Not long at all. Indeed, an EOR relationship can be as quick as you like. While you may take time to set up an overseas branch of a foreign subsidiary, working with an EOR can be as quick as engaging with any company.
Some EORs will have their own employees that can be made available, especially if the EOR specialises in a certain industry, such as customer service. In that instance, they would simply assign a customer service agent to your company.
In all cases, the longest delay will be building the skills and educating your South African employees in your company and what you want to achieve.
As with anything, costs can vary. Most companies will have several contract options and tiered services. For example, a basic option charges on the basis of how many employees you have, while more advanced options may include specialist recruitment software or help with recruitment.
Using an EOR is the simplest and least risky way to hire in South Africa. Without it, you will have to manage the expenses and work involved with setting up a foreign subsidiary. You’ll have to pay for all the support staff to manage your employees and manage all the administrative functions yourself.
As a foreign company, it can be difficult to stay up to date with the latest employment law changes, which can lead to compliance issues. Common risks include inaccurate filing or reports or worker classification mistakes. Fines for companies that fail to comply with South Africa’s labour laws can be quite high.
An EOR provides dedicated expertise to help you avoid those risks while also assuming legal liability for the employees. So, if something does go wrong, you will be protected.
An EOR handles all employee onboarding and offboarding processes. They will ensure all documentation is processed correctly and that you meet all your legal requirements. In the event of any problems with an employee, they can handle all dispute and disciplinary procedures and, if necessary, oversea a legal and equitable termination of employment.
EORs and PEOs work in a very similar way. Indeed, the two terms are often used interchangeably. However, the main difference will be the type of employment. An EOR is the legal employer for tax purposes, while a PEO will share employment responsibilities with you as the client company.
Employer of record South Africa blogs
Get the latest news and insights in to using an Employer of Record in South Africa
