Employee Benefits in South Africa (2025 Overview)

Expanding your business overseas can be a great way to increase profits and grow your company in new directions. If the time is right to start doing business in South Africa, you’ll need to learn about common and mandatory employee benefits in South Africa so you can put together comprehensive benefits packages for your employees. This guide has you covered.

We'll walk through some of the most commonly used employee benefits in South Africa, to help you decide what works for your business. And while you’re planning your operation in South Africa, why not also check out BatchTransfer.

Table of contents
Mandatory Employee Benefits In South Africa Supplemental Employee Benefits In South Africa Considerations for Employee Benefits In South Africa Assessing the Cost of Employee Benefits

Who gets benefits in South Africa?

The benefits offered to people working in South Africa can vary depending on the employment status, as an employee or contractor, for example. Some benefits also vary according to the sector in question.

The main legislation which governs employment in South Africa is the Basic Conditions of Employment Act¹, which sets out details of things like annual leave, mandatory benefits and so on. If you’re unsure about the mandatory benefits which may apply to your South African employees, take some advice locally to make sure you stay on the right side of the law. Failing to properly comply with the law on employment benefits can mean the employee takes a case to the Commission for Conciliation Mediation and Arbitration (CCMA) which may result in penalties for the employer.

This guide is intended for information only. Managing employee benefits - particularly in a different country - can be complex, and can have financial and legal consequences if you get it wrong. Take professional advice if you're ever unsure about your obligations.

What’s considered an employee vs. independent contractor?

As in many countries, the benefits and entitlements afforded to people working in South Africa can depend a lot on your status as either an employee or an independent contractor. Generally, employees get far more benefits compared to independent contractors. However, describing someone as an independent contractor rather than an employee, simply to deny them of mandatory benefits is illegal and can be challenged by the individual through the courts.

Generally the employment status of an individual is set out in their contract. Provision of the Basic Conditions of Employment Act apply to employees only, rather than contractors. If you're unsure about whether someone working for you should rightly be considered an employee or a contractor under South African law, take legal advice.

Learn More: Hiring Independent Contractors in 8 Steps

Mandatory Employee Benefits In South Africa

To begin with, we’ll look at some of the most important mandatory employee benefits which apply in South Africa. Because many employers choose to go beyond what’s mandated in law, we’ll then explore some additional employee benefits which are commonly applied to make positions more attractive.

1. Paid Time Off (PTO)

Most employees in South Africa are entitled to a minimum of 21 consecutive days of paid time off annually². That means 15 working days if you’re working a 5 day week. Public holidays are offered as time off, in addition to these days of PTO in most cases. There are a few situations in which this law does not apply, including for senior managers and people earning a higher wage.

Generally you’ll need to set out the available PTO in an employee’s contract so there is no room for misunderstanding.

2. Sick Leave

Sick leave is covered under South African law, and offered on a 3 year cycle. During every 3 year period, employees may take up to 30 days of sick leave, which is paid at their usual rate of pay. You’re required to provide a medical certificate for sick leave of 2 days or more. If you don’t use all your 30 days of sick leave in a given 3 year period, the amount resets and is not accrued into the following 3 year cycle.

3. Family Responsibility Leave

Employees can take up to 3 paid days of leave a year to attend to specific family needs, such as the birth of a child or the death of a loved one. These days can also be used to look after your sick child if needed. Employees must provide evidence supporting the reason they need to use the time off, such as a health certificate or a birth certificate.

4. Overtime Pay

The maximum working week in South Africa is usually 45 hours, or 9 hours a day. If you’re asked to work for additional hours in excess of this, you’ll usually be entitled to overtime pay. Overtime pay is offered to employees earning below a fixed threshold, and paid at 1.5x for weekday work, and 2x normal pay rates for weekend work. The maximum number of hours of overtime you’re allowed to do a week is 10.

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5. Unemployment Insurance Fund (UIF)

Both the employer and the employee must pay contributions to the Unemployment Insurance Fund. Usually contributions are paid at 1% for each of the employer and employee. Caps apply to the maximum amount any individual will need to pay. This fund is used for short term support of workers who are made redundant, or who can not work due to maternity, paternity and similar leave requirements.

6. Compensation For Occupational Injuries And Diseases (COIDA)

COIDA legislation offers cover for South African workers who are injured or contract an illness due to their work³. This allows for compensation payments, and can also be used in the event of a death in the workplace.

7. Maternity Leave

Maternity leave in South Africa can start a month before the due date, and last for up to 4 months⁴. There’s no requirement for the employer to pay someone who is on maternity leave, but the employee may be able to make a claim from the UIF if they’re been paying into it. This pay runs at a lower rate than usual salary would, but employers may choose to offer more generous maternity support if they wish to.

8. Paternity Leave

Generally, paternity leave is covered by parental leave policies, and can allow for up to 10 days of unpaid absence.

9. Skills Development Levy

The employer must pay a 1% Skills Development Levy for all employees. This money is used to encourage workplace learning and development.

Supplemental Employee Benefits In South Africa

Aside from the mandatory employee benefits in South Africa, it’s very common for employers to offer a broad range of additional benefits to allow them to attract the very best talent available. Different supplementary benefits may be more suitable for different business types, allowing you to build up a compensation and benefits package which is tailored to the type of employee you want to attract. Here are a few ideas to consider.

1. Medical Aid & Medical Insurance

Health insurance and support is a common employee benefit in South Africa, and is likely to be expected by many professionals. Access to public healthcare may involve wait times and limitations, making this a valuable option when attracting new team members.

Different policy approaches are available, from comprehensive cover to less generous packages. Employees may also be able to add their family members and dependents onto their insurance to make sure everyone has the cover they need to access quality healthcare quickly and easily.

2. 13th Month Bonus

It’s quite common to pay a 13th month salary, usually towards the end of the year, to support employees with paying for the festive season. While making a 13th month payment may not be familiar, it’s a mechanic used in many countries and regions globally, and can be a great help to families managing their finances over Christmas.

3. Retirement

Individuals in South Africa generally need to plan for their own pensions and retirement, which is commonly managed through workplace schemes. There are plenty of different pension options available, so employers can choose which to offer their team members, and on what terms.

Generally employer pension schemes are set up as defined contribution funds which all employees would join into. Employees pay in a fixed amount monthly, which the employer may also contribute towards, and when it is time to retire, the fund can be used to buy an annuity. The amount received through the annuity will be dictated by the total value of the amount the employee has paid in, plus any employer contributions. Employer contributions may not be subject to tax.

Learn More:
Hiring Independent Contractors in 8 Steps
Best International Global Payroll Services: Top 4
How to Set Up Direct Deposit for Employees

4. Life & Disability Insurance

While COIDA legislation does offer some support in the event of a workplace injury, illness or death, many employers choose to supplement this with additional life and long term disability insurance. Life insurance would pay a fixed sum to dependents in the event that someone dies in service, while long term disability insurance might mean receiving compensation if you’re left unable to work due to illness or injury.

5. Flexible Hours

Aside from financial incentives, employees also value lifestyle benefits such as flexibility in working hours. Being able to manage your own time can improve employee morale and productivity, and may also help cutting down commuting time for example. If your business works with customers, suppliers and clients across a range of timezones, having people work varying hours can also help to provide a better level of service.

This benefit doesn’t need to cost the employer anything at all, but can be an effective tool to build an engaged team.

6. Remote Work Opportunities

Working remotely is another popular lifestyle benefit which has low or no employer costs - in fact, by allowing your team to work remotely some or all of the time, you might find your overheads fall. In many sectors, working remotely is common, and offers flexibility to the employee. If you have team members working fully or in part from home, you may choose to offer a monthly payment towards their home office costs, or you might want to pay to help the employee set up the hardware and equipment they need for home work.

7. Employee Wellness Programs

Employee wellness programs can offer things like health and nutrition advice, as well as activities like yoga, meditation, counselling or therapy. Pretty much anything which may improve your team members’ mental and physical health could fall into the scope of an employee wellness program, giving some room for creative ideas. Some businesses even offer home cleaning services for their employees, to lighten the burden of managing the home as well as work.

Programs can be provided through third parties which offer flexible service choices that can be tailored to your own business needs.

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Considerations for Employee Benefits In South Africa

So, what else is there to think about when you’re setting up your employee compensation and benefit packages in South Africa? We’ll walk through another few pointers now - so you can get on with deciding how to attract the very best talent there is to your South African venture.

Taxes on Employee Benefits

To encourage employers to offer some benefits such as pensions for team members, there are tax breaks which can bring down the costs of benefits to the employer. The options available to you will vary depending on the specific benefits you choose to offer, but it’s well worth taking tax advice early in the decision making process so you can access all the possible tax exemptions available to you.

Legal Considerations For Employee Benefits

As in most countries, failing to offer employees all of their mandatory benefits is against the law. If an employee is not treated in accordance with the law, they can take the case to the Commission for Conciliation Mediation and Arbitration (CCMA) and make a complaint⁵. This may result in penalties for the employer - so you’ll need to keep on top of South African legislation and ensure you’re fully compliant.

It’s also worth looking at the rules around reporting of workplace accidents so you know your obligations if someone in your team is unlucky enough to suffer an accident at work.

Assessing the Cost of Employee Benefits

Offering additional benefits to your employees is likely to involve some costs. The South African government estimates businesses usually spend about 14% of total spending on their employees⁶, which can include costs like salaries and wages, bonuses, medical aid, life insurance benefits, pension benefits, and so on.

It’s useful to note that because wages in South Africa are relatively low on a global scale, the costs of employing people there may still be manageable, giving you access to a talented local workforce. By adding in some additional benefits you can improve employee engagement and morale, and make sure your business stands out in a competitive employment market.

Depending on how you set up your benefits packages you might also find you get tax breaks on some payments. Plus, some benefits which cost little or nothing - such as offering flexible working or remote working - can be a big draw for talented professionals. Being creative with your benefits package can really help you recruit the people you need to let your business flourish.

Bringing your business to South Africa could be a great choice, with access to a new market and opportunities to attract top talent. Use this guide to start thinking about how to structure a compensation and benefits package which employees love.

Country Articles	Learn More About Employee Benefits
Australia	Employee Benefits in Australia: A Complete Guide
Singapore	Employee Benefits in Singapore: A Complete Guide
UK	Employee Benefits in UK: A Complete Guide
Brazil	Employee Benefits in Brazil: A Complete Guide
South Africa	Employee Benefits in South Africa: A Complete Guide
Spain	Employee Benefits in Spain: A Complete Guide

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Sources:

1. South African government - Basic Conditions of Employment Act
2. South African government - PTO
3. South African government - COIDA
4. South African government - maternity leave
5. South African government - CCMA
6. South African government - employee benefits stats