Global employers finding their space in South Africa: understanding the employment landscape

Global companies are expanding into the South African market, quicker than we may realise it. The reality is that entering the South African market requires an understanding of the labour-intensive, rights-driven employment framework.

For multinational corporations considering South Africa as a business destination, success in South Africa is not only about offering innovative services – you need to contribute to equitable economic participation, fairness within the workplace, and employment equity.

Key Employment Considerations for Global Employers

1. Statutory registrations

A company must register as an employer with the following bodies in South Africa:

• South African Revenue Service (“SARS”) to withhold statutory taxes such as such as Pay-As-You-Earn (“PAYE”) from the employees’ remuneration;
• Unemployment Insurance Fund to make contributions of 2% each month (1% of the employee and 1% of the employer); and
• Compensation Fund and pay annual assessments in terms of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 ("COIDA").

2. Basic Conditions of Employment

All employees are afforded minimum statutory terms and conditions of employment in terms of the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) which include, but are not limited to, annual, sick, parental and family responsibility leave, notice pay, severance pay and the right to written particulars of employment.  Employees earning below the earnings threshold (currently being R261,748.45 per annum) are entitled to additional protections such as maximum working hours, payment for overtime and work on Saturday, Sunday and/or public holidays. These prescribed minimum statutory terms and conditions of employment could be enhanced, by agreement, in terms of a collective agreement with an applicable trade union/s.  Sectoral determinations and collective agreements may also impose different statutory minimums.

3. National Minimum Wage

All employees are entitled to, at a minimum, the national minimum wage in terms of the National Minimum Wage Act 9 of 2018, currently being R28,79 per hour. Those employed on a learnership however are subject to different minimum rates.

4. Employment litigation

An aggrieved employee may approach the Commission for Conciliation, Mediation and Arbitration (“CCMA”), an applicable Bargaining Council and/or the Labour Court, depending on the nature of the dispute.  The CCMA has jurisdiction to hear, amongst other things, unfair labour practice, unfair dismissal and unfair discrimination disputes.

5. Diversity, Equity and Inclusion – Employment Equity

The Employment Equity Act 55 of 1998 ("EEA") places a positive (active) obligation on all employers to promote equal opportunities and to eliminate unfair discrimination in the workplace.  The EEA prohibits unfair discrimination based on any listed and/or arbitrary ground which includes, but is not limited to, race, gender, sex, pregnancy, marital status, religion, and culture.  Employers must treat employees fairly in terms of remuneration, benefits, and working conditions.

6. Harassment

In terms of the EEA and the Code of Good Practice on the Prevention and Elimination of Harassment (“Harassment Code”) an employer must adopt a sexual harassment policy.  The objective of the sexual harassment policy is to inform employees to refrain from such conduct which may constitute “harassment,” including but not limited to sexual harassment and to provide for a procedure to raise complaints relating to alleged harassment.

7. Fair labour practices and fair dismissal

The Labour Relations Act 66 of 1997 (“LRA”) promotes fairness and therefore prohibits unfair labour practices and unfair dismissals. Unfair labour practices include unfair conduct relating to promotion, demotion, suspension and/or the provision of benefits.  Dismissals based on a listed ground of unfair discrimination are automatically unfair and considered the most egregious form of dismissal. Discrimination based on an inherent requirement of the job or affirmative action is not, however, unfair.

8. Restrictive covenants – non-competes, confidentiality and non-solicitation

Restrictive covenants are lawful in South Africa.  A restrictive covenant in the form of a non-compete clause, commonly known as a restraint of trade in South Africa, may be included in an employee’s contract of employment.  The enforceability of a non-compete clause will be dependent on, inter alia, the position the employee holds or held, whether the employer has a protectable interest, and whether the scope, jurisdiction, and period of the restriction are reasonable.

9. Occupational Health and Safety

In terms of the Occupational Health and Safety Act 85 of 1993, all employers have a duty to create a safe working environment under South African occupational health and safety law. This is achieved through the implementation of health and safety policies and conducting regular risk assessments to identify workplace hazards and risks inherent in employees’ roles and workplaces.

10. Organisational Rights, Collective Bargaining and Strikes

Employees have the constitutional right to form and/or join a trade union of their choice in South Africa.  This right is protected by the LRA and the Constitution of the Republic of South Africa, 1996.  

In terms of the LRA, employees also have the right to embark on strike action in relation to matters of mutual interest.  During a strike, the principle of “no work, no pay” applies.  During a strike, the employer must engage with the trade union(s) in order to seek resolution to the demands.  There is no statutory limitation on how long a protected strike may persist.  In respect of strikes which are unprotected, employers may seek an interdict against the trade union and its members to end the strike.

Conclusion

Employment contracts and workplace policies must be drafted in line with statutory requirements while allowing for adjustments for the operational and commercial needs of a business. Therefore, it may be insufficient to "recycle" global templates in an employment landscape such as South Africa.

Global employers who pause to understand South Africa’s employment landscape will mitigate compliance risks and also build a sustainable business.

More information about notice periods, severance pay, summary dismissals, grounds for termination and more can be found here in our Expert Guide on Dismissals in South Africa.