How to Hire Employees in South Africa as a Foreign Company (2026)

A foreign company has three ways to hire an employee in South Africa: employ the person through a South African company it registers, pay an employer of record (EOR) whose South African company employs the person on its behalf, or engage the person as an independent contractor under a service agreement. The route decides who registers with SARS, who carries the employer duties, and what the hire costs on top of salary.

The duties themselves are set by law. An employer in South Africa withholds PAYE from pay, contributes 1% of pay to the Unemployment Insurance Fund (UIF) and deducts another 1% from the employee, pays the 1% Skills Development Levy (SDL) once payroll passes R500,000 a year, covers the employee with the Compensation Fund, and follows the Basic Conditions of Employment Act (BCEA) on hours, leave, notice and severance. Every figure below was checked against its source on 13 November 2026.

The three routes side by side

One option is missing from the table on purpose: signing an employment contract directly with your foreign company and paying the person from abroad. It looks like the simplest route. In South Africa it is not.

Why employing from your foreign company is not a shortcut

The Companies Act settles this first. Under section 23 of the Companies Act 71 of 2008, a foreign company is regarded as conducting business in South Africa if it is "a party to one or more employment contracts within the Republic". It must then register with the Companies and Intellectual Property Commission (CIPC) as an external company within 20 business days after it first begins to conduct business. If it does not, the CIPC can issue a compliance notice that gives it 20 business days to register or stop its activities in South Africa.

So the first South African employee your foreign company signs puts it into the registration system. Tax follows the same logic.

Paragraph 2(1) of the Fourth Schedule to the Income Tax Act lists who must withhold PAYE: resident employers, representative employers and, since the Tax Administration Laws Amendment Act of 2023 took effect on 22 December 2023, an employer "that is not a resident and conducts business through a permanent establishment in the Republic". A bill before Parliament since October 2026 (B33 of 2026) would narrow the permanent establishment rule so that it applies only when the South African permanent establishment bears the employee's pay. On 13 November 2026 it was still a bill.

If no employer withholds PAYE, the tax does not go away. SARS treats a person who earns remuneration from an employer that is not registered for employees' tax as a provisional taxpayer, who pays twice a year: by 31 August and by the last business day of February. UIF and SDL are a separate question. KPMG's May 2024 reading of the legislation was that foreign employers must contribute to both for employees working in South Africa, whether or not they have a permanent establishment. Complying with those duties means registering locally anyway, which is Route 1.

Route 1: employ through your own South African company

There are two structures. You can register a private company, (Pty) Ltd, as a subsidiary through CIPC, or register your foreign company itself as an external company, which works like a branch. Either way, the registrations that follow are the same:

1. SARS employer registration within 21 business days after you become an employer, on form EMP101e or through eFiling, unless none of your employees is liable for normal tax. An employer that registers with SARS for PAYE or SDL must also register there for UIF contributions.
2. A monthly EMP201 declaration, with PAYE, UIF and SDL paid to SARS within seven days after the end of the month.
3. Two EMP501 reconciliations a year. For the 2027 tax year, the interim reconciliation covering 1 March to 31 August 2026 was due between 21 September and 31 October 2026. The annual reconciliation and employee tax certificates follow after the tax year closes on 28 February 2027.
4. Registration with the Compensation Fund under the Compensation for Occupational Injuries and Diseases Act (COIDA), an annual Return of Earnings and an annual assessment. For 2026/27 the Fund counts earnings up to R668,000 per employee, and the rate depends on the risk class of your business.
5. Corporate income tax returns for the South African company, at the company rate of 27%.

The statutory payroll costs are small, as the worked example below shows. The real cost of this route is running a company: a local bank account, an accountant or payroll provider, annual financial statements and returns. It pays off when you employ several people or need a lasting presence, for example a sales team that signs contracts with South African customers.

Route 2: hire through an employer of record

An EOR is a company that already has a South African entity and payroll. It becomes the legal employer, signs a BCEA-compliant contract with your hire, runs PAYE, UIF and SDL, and covers the Compensation Fund. You direct the daily work and pay a monthly fee plus the employment costs. HireSava's glossary has a short definition of an employer of record.

Because the EOR's company signs the employment contract, your company is not "a party to" it, which removes the Companies Act trigger described above. The six-month course of conduct test in the same section still looks at your other activities in South Africa.

Price is the main trade-off. Deel lists EOR from $599 per employee per month, and Remote lists EOR from $599 per employee per month on annual contracts. Both were checked on 13 November 2026; actual quotes vary by country and contract length.

Two points to check before you sign with an EOR:

1. Staff earning below the BCEA earnings threshold. The threshold is R269,600.90 a year from 1 May 2026, about R22,467 a month. The Labour Relations Act defines a temporary employment service as anyone who, for reward, provides a client with people who work for the client and are paid by the service. An EOR arrangement meets both parts of that definition. Under section 198A, an employee below the threshold who is not doing a "temporary service" (work of three months or less, cover for an absent employee, or a category set by a collective agreement, sectoral determination or the Minister) is deemed to be the client's employee, employed indefinitely, for the purposes of that Act. For a long-term hire below the threshold, plan on the law treating you as the employer if a dismissal dispute arises.
2. Permanent establishment. An EOR changes who employs the person, not what the person does. If your hire will negotiate or sign contracts for your company in South Africa, ask a tax adviser whether that creates a permanent establishment, which would bring South African company tax and the PAYE rule above into play.

Route 3: engage an independent contractor

A genuine contractor is not an employee, so none of the payroll registrations above apply to you. The contractor invoices, you pay, and the contractor handles their own income tax as a provisional taxpayer. It is the simplest route for a first hire, and it holds up when the relationship is a real business-to-business one.

The label in the contract does not decide that. Section 83A of the BCEA and section 200A of the Labour Relations Act presume that a person who works for you is an employee, whatever the contract calls them, if any one of these is present, as the official BCEA summary lists them:

• their manner or hours of work are subject to your control or direction
• they form part of your organisation
• they have worked for you for at least 40 hours a month over the last three months
• they are economically dependent on you
• you provide their tools or work equipment
• they work only for you

The presumption applies to people earning below the earnings threshold, and it puts the burden on you to prove the person is not an employee. Above the threshold there is no presumption, but the CCMA and the courts still look at how the relationship works in practice rather than at the title of the contract.

That list is why a contractor arrangement needs deliverables, the contractor's own schedule and equipment, invoices rather than payslips, and freedom to take other clients. The contractor vs employee checker scores a planned role against these tests, the contract generator drafts the agreement, and the guide on how to pay a South African contractor covers payment methods and paperwork.

HireSava does not sit between you and your hire. You post the role, interview and hire South African professionals directly, with no agency in the middle, and you choose which of the three routes fits. Employers remain responsible for payroll, HR, and compliance for the people they hire, which is why these rules matter before the first offer. The employer walkthrough shows the hiring steps.

What one hire costs on each route

Take one person on R30,000 a month (R360,000 a year) in the 2027 tax year, which runs from 1 March 2026 to 28 February 2027. The EOR column assumes the EOR passes UIF and SDL through to you at cost on top of its fee; confirm that in any quote.

The UIF line uses the SARS ceiling of R17,712 a month, which has applied since 1 June 2021, so the employer share never exceeds R177.12. The SDL line follows the SARS rule that an employer whose total salaries will not exceed R500,000 over the next 12 months does not pay the levy. A second employee on the same salary takes your payroll to R720,000 a year, and SDL of R300 a month then applies to each of them. The exchange rate is rounded from about R16.92 to the US dollar on 13 November 2026.

At this salary the EOR fee adds about a third to the cost of employment. On a R60,000 salary the same fee adds about 17%, so an EOR costs proportionally less for senior hires than for junior ones.

An employer also withholds tax and UIF from the employee's pay. Using the 2027 SARS tax tables, R360,000 a year is taxed at R44,118 plus 26% of the amount above R245,100, which comes to R73,992. Less the R17,820 primary rebate, the employee owes R56,172 a year, or R4,681 a month in PAYE. With employee UIF of R177.12, take-home pay is R25,141.88 before any retirement fund or medical aid deductions. A contractor on the same R30,000 receives the full invoice and pays their own tax, which is one reason contractors usually quote more than an employee's salary for the same work: they also carry their own leave, equipment and tax administration.

Three common costs are missing from the table because the BCEA does not require them: a 13th cheque, retirement fund contributions and medical aid. Many South African offers include one or more of them, so decide before you make an offer. The 13th cheque calculator works out a pro rata year-end bonus if you choose to pay one.

The BCEA minimums for employees

These apply on Routes 1 and 2. The working time, leave and termination chapters do not apply to employees who work fewer than 24 hours a month for you, and the working time chapter also excludes senior managerial employees. The Act itself and the official summary that every employer must keep set them out.

Working time

• Ordinary hours: at most 45 a week, and at most 9 a day for someone who works five days or fewer a week.
• Overtime: only by agreement, at most 10 hours a week, paid at 1.5 times the normal wage or taken as paid time off by agreement.
• Sundays: double pay for occasional Sunday work, and 1.5 times the normal wage for employees who ordinarily work on Sundays.
• Public holidays: work only by agreement, at double pay. The public holiday planner lists the 2026 dates.

For employees earning above R269,600.90 a year, sections 9, 10, 11, 12, 14, 15, 16, 17(2) and 18(3) do not apply, so the hours, overtime, Sunday pay and public holiday pay rules above do not bind you for them. The leave and termination rules apply at every salary.

Leave

• Annual leave: 21 consecutive days per annual leave cycle, which is 15 working days for a five-day week, or by agreement one day for every 17 days worked. You may pay out leave instead of granting it only when employment ends. The leave entitlement calculator does the pro rata arithmetic.
• Sick leave: six weeks of paid sick leave in each 36-month cycle, which is 30 days for a five-day week. In the first six months, one day for every 26 days worked.
• Family responsibility leave: three paid days in each annual leave cycle, when the employee's child is sick or a close family member dies, once the employee has worked for you for longer than four months and works at least four days a week. The birth of a child now falls under parental leave.
• Parental leave: since the Constitutional Court's judgment in Van Wyk v Minister of Employment and Labour on 3 October 2025, parents share four months and ten days between them, split as they agree or as equally as possible if they cannot, and a single parent takes the full period. The Court suspended its order for 36 months so Parliament can amend the BCEA, and this interim rule applies in the meantime. The BCEA does not require the employer to pay salary during this leave. The UIF pays benefits to employees who qualify, and Parliament still has to bring the UIF rules in line with the judgment.

Pay and paperwork

• National minimum wage: R30.23 for each ordinary hour from 1 March 2026, up from R28.79. That is about R5,895 a month for a full 45-hour week, using the BCEA rule that a month is four and one-third weeks.
• Written particulars on the first day (section 29), covering pay, hours, leave, deductions and the notice period.
• A written pay statement each pay day (section 33), showing the period, gross pay, each deduction and the amount paid.
• No deductions from pay without the employee's written consent or a legal basis such as PAYE (section 34).

Ending employment

• Notice (section 37): at least one week in the first six months, two weeks from six months to one year, and four weeks after one year, given in writing.
• Severance (section 41): at least one week's pay for each completed year of continuous service when you dismiss for operational requirements.
• Fairness: giving notice does not stop the employee challenging the dismissal under the Labour Relations Act, and those disputes go to the CCMA.

Which route fits your first hire?

• One person with a defined scope who runs their own business and can take other clients: a contractor. It is the fastest and cheapest route, provided the working arrangement passes the presumption tests above.
• One to three people who will work as staff under your direction, starting within weeks: an EOR. Budget the fee per head, and check the section 198A point for anyone below the earnings threshold.
• A team, or anyone who will sell or sign contracts for you in South Africa: your own company. Setup takes longer and the company costs money to run, but the cost per head falls as the team grows.

You can start with contractors or an EOR and move to your own company once the team is large enough to justify an accountant and a monthly payroll run.

When the route and the role are clear, create an employer account and post the job. The pricing page lists the employer plans.

Before you send an offer

1. Pick the route and confirm which company signs the contract.
2. For an employee: written particulars that meet section 29, hours and overtime terms (or a note that the employee earns above the threshold), leave terms, the notice period, and PAYE, UIF and SDL in place before the first pay day.
3. For a contractor: a scope built around deliverables, the contractor's own hours and equipment, monthly invoices, and no clause that stops them working for other clients.
4. Decide on a 13th cheque, retirement fund and medical aid before the offer, not after it.
5. Add South African public holidays and leave cycles to the team calendar.

Sources and notes

This is general information for employers, not legal or tax advice. Thresholds and rates change every year, so confirm the route with a South African labour lawyer or registered tax practitioner before you sign. Sources were checked on 13 November 2026:

• Companies Act 71 of 2008, section 23 (Acts Online): external company registration, the employment contract trigger, the 20 business day deadline and the compliance notice.
• Income Tax Act, Fourth Schedule, paragraph 2(1) (Acts Online): who must withhold PAYE, as substituted by section 13(a) of the Tax Administration Laws Amendment Act, 2023 (Government Gazette 49947, 22 December 2023).
• KPMG flash alert 2024-110: the effective date of the permanent establishment rule and the position on UIF and SDL for foreign employers. This is a secondary source; SARS has not published a plain statement on the UIF and SDL point.
• Tax Administration Laws Amendment Bill, B33 of 2026 (Parliament): the proposed proviso limiting the rule to pay borne by the permanent establishment.
• SARS: the employer guide for the 2027 tax year, rates of tax for individuals, PAYE registration, UIF, SDL, provisional tax, the 2026 interim filing season notice and company tax rates.
• Basic Conditions of Employment Act 75 of 1997 (gov.za) and the official summary, form BCEA 1A: hours, overtime, leave, pay statements, notice, severance and the section 83A presumption. The summary predates the 2018 amendments, so family responsibility leave follows the amended section 27 (Acts Online) and parental leave follows the Van Wyk judgment.
• RSM South Africa: the earnings threshold of R269,600.90 from 1 May 2026 and the sections it switches off. Secondary source, used because the gazette is published as a scanned image.
• SAnews, the government news service: the national minimum wage of R30.23 an hour from 1 March 2026.
• PaySpace: the Compensation Fund earnings ceiling of R668,000 for 2026/27, published in Government Gazette 54577. Secondary source.
• Constitutional Court, Van Wyk v Minister of Employment and Labour [2025] ZACC 20, with the CMS summary: the interim parental leave rule.
• Labour Relations Act, sections 198 and 198A (Acts Online): the temporary employment service definition and the deeming rule below the threshold.
• Deel and Remote pricing pages: EOR list prices.
• Trading Economics: the rand to US dollar rate on 13 November 2026. Secondary source.

The worked example uses the published 2027 tax tables and assumes no other income, no retirement fund or medical aid deductions, and an employee under 65.

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