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Updated 16 Oct 2019


10 Employment Acts start-ups must know when hiring employees

Legislation can be complicated and challenging to navigate when your business is just starting out. Here is a breakdown of ten employment factors you need to be aware of when hiring employees. 


Nicole Crampton, 23 May 2017  Share  0 comments  Print


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Content in this guide

  1. Basic Conditions of Employment Act (BCEA)
  2. Legislated wages and salaries for specific sectors
  3. Income Tax Act
  4. Tax Administration Act
  5. Labour Act
  6. Employment Equity Act
  7. UIF contributions Act
  8. Skills Development Levy Act
  9. Pensions Act
  10. Medical Schemes Act

There is more to employing personnel than simply placing an advert for the job, hiring the right person and giving them training. 

There are several legal requirements that you need to take into account when compiling your team from the Basic Conditions Employment Act, to the Medical Schemes Act, to the Labour Act.

All of these are vital to consider when setting up your start-up, because you don’t want to find yourself on the wrong side of the law just as your business is starting out. You also need to be aware of each Act’s requirements and how these will impact your business’s trajectory.

Related: How to run your little business like a big behemoth 

Use this comprehensive guide to understand how these 10 South African employment Acts will impact your start-up when hiring employees:

1. Basic Conditions of Employment Act (BCEA)

Anytime you have an employee–employer relationship, you will need a contract of employment in place, according to the Basic Conditions of Employment Act. You need this document because it outlines what you expect from your employee and what they expect from you. Once this is on paper and signed, both you and your employee need to legally uphold the following:

  • Work hours
  • Remuneration
  • Time off work
  • Increases
  • Job description. 

The BCEA also dictates minimum conditions of employment, including:

  • Maximum hours of work
  • Limits on overtime
  • Overtime pay
  • Annual leave
  • Sick leave
  • Maternity leave
  • Responsibility leave
  • Notice periods
  • Records to be kept by you.

What you need to know about leave

If your employee works less than 24 hours a month, they are not entitled to leave. 

Annual leave

  • Each employee is entitled to 21 consecutive fully-paid days of leave for every year worked. However, this is negotiable as some companies offer fewer days. 

Sick Leave

  • Employees, who work five days a week, are entitled to 30 days fully-paid sick leave for every three years of work.
  • If your employee misses work for longer than two consecutive days, or on more than two occasions during an eight-week period, you can ask them for a doctor’s note booking them off for the days in question.

Maternity Leave

  • The BCEA states that your female employees are entitled to four consecutive months of maternity leave.
  • You can’t end her services and she must be paid according to a sliding scale of benefits as determined by the Unemployment Insurance Act 2001. According to this scale, the less an employee earns, the greater percentage of her wage must be paid during maternity leave.
  • Your female staff member must give you notice at least four weeks before she intends to take maternity leave.

Family responsibility leave 

  • Your staff are entitled to family responsibility leave – that’s if they have been working for you for longer than four months, and work at least four days per week. They can take a maximum of three fully-paid family responsibility leave days a year.

Family responsibility leave applies to:

  • When their child is born (father)
  • When their child is sick
  • When their spouse or life partner, parent, adoptive parent, grandparent, child, adopted child, grandchild, sister or brother dies.

What you need to know about working hours

The BCEA also regulates employees’ working hours and overtime. You’ll need to ensure you comply with this Act or you could find yourself facing legal action from employees. 

Working hours

  • The ideal working hours are a maximum of 40 hours a week. But, the Act also recognises that not every business can be successful with only 40 hours a week per employee.
  • If you intend for your team to work longer hours, you’ll need to manage their health and safety, family responsibility and collective agreements within your industry.
  • You can’t ask your team members to work more than 45 hours a week, though.

Related: Entrepreneurial powerhouse TBO Touch on how success is built from small acts 



2. Legislated wages and salaries for specific sectors

Sectoral determinations for specific sectors, allocates specific minimum and maximum values to elements including wages, and working hours. This protects the members of South Africa’s workforce. For example: 

The minimum hourly rate for contracted cleaning employees in most of South Africa is R17.66, this ensures that individuals working in this industry have a decent quality of life. What this means for you is, you need to comply with the minimum and maximum values for your industry.

There are 14 different sectors that have specific legal requirements, which you need to take into account when setting up your business.

Sectoral Determination 1: Contract Cleaning Sector

Minimum Wage 

Area A

Metropolitan Councils:

City of Cape Town, Greater

East Rand Metro, City of

Johannesburg, Tshwane and

Nelson Mandela.

Local Council:

Emfuleni, Merafong, Mogale

City, Metsimaholo,

Randfontein, Stellenbosch,

Westonaria

R19.38

Area C

The rest of RSA

R17.66

 

Sectoral Determination 2: Civil Engineering Sector

Minimum Wage

Skill Level

Minimum Wage per Hour

Task Grade 1

R25.18

Task Grade 2

R25.45

Task Grade 3

R26.16

Task Grade 4

R27.04

Task Grade 5

R31.12

Task Grade 6

R35.33

Task Grade 7

R40.47

Task Grade 8

R45.37

Task Grade 9

R51.28

 

Maximum working hours: 45

 

Sectoral Determination 4: Clothing and Knitting Sector

In the magisterial district of Hammarsdale, Camperdown, Umzinto, Paarl, Stellenbosch and Uitenhage

 

First 12 months

Second 12 months

Third 12 months&thereafter

 

Per week

Per week

Per week

0-6
months

R210.52

R225.21

R244.80

7-12
months

R230.65

R246.74

R268.20

13-18
months

R250.00

R267.44

R290.70

19-24
months

R275.15

R294.35

R319.95 

 

In all other areas

 

First 12 months

Second 12 months

Third 12 months & thereafter

 

Per week

Per week

Per week

0-6
months

R146.88

R161.56

R181.15

7-12
months

R160.92

R177.01

R198.46

13-18
months

R174.42

R191.86

R215.11

19-24
months

R191.97

R211.16

R236.76

 

Sectoral Determination 5: Learnership

Minimum Wage

Exit level of learnership

Credits already earned by learner

Percentage of qualified wage to be paid as allowance

Minimum allowance per week

NQF 1 or 2

0 – 120

35%

R120.00

 

121 – 240

69%

R240.00

NQF 3

0 – 120

17%

R120.00

 

121 – 240

40%

R226.00

 

241 – 360

53%

R370.00

NQF 4

0 – 120

13%

R120.00

 

121 – 240

25%

R240.00

 

241 – 360

53%

R370.00

 

361 – 480

56%

R540.00

NQF 5 to 8

0 – 120

8%

R120.00

 

120 – 240

18%

R260.00

 

240 – 360

27%

R389.00

 

361 – 480

38%

R548.00

 

481 – 600

49%

R700.00

 

Maximum working hours:45

 

Sectoral Determination 6: Private Security Sector

Minimum Wage 

Job Type

Region

Tenure

Minimum Wage per Hour

Minimum Wage per Month

Maximum permissible

working hours per

week

Artisans

Area A

 

 

R6 592.00

 

45

Area B

 

 

R6 001.00

Area C

 

 

R5 756.00

Clerical Assistant

Area A

0 < 1

 

R3 286.00

 

 

 

 

45

Area B

0 < 1

 

R3 013.00

Area C

0 < 1

 

R2 725.00

Area A

2 or more

 

R3 340.00

Area B

2 or more

 

R3 054.00

Area C

2 or more

 

R2 764.00

Area A

3 or more

 

R3 391.00

Area B

3 or more

 

R3 114.00

Area C

3 or more

 

R2 824.00

Driver of a light motor vehicle

Area A

 

 

R3 458.00

 

45

Area B

 

 

R3 202.00

Area C

 

 

R2 899.00

Driver of a medium motor vehicle

Area A

 

 

R3 706.00

 

45

Area B

 

 

R3 424.00

Area C

 

 

R3 123.00

Driver of a heavy motor vehicle

Area A

 

 

R3 868.00

 

45

Area B

 

 

R3 569.00

Area C

 

 

R3 268.00

General Workers

Area A

During first 6 months of service with same employer

 

R2 689.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

Area B

During first 6 months of service with same employer

 

R2 468.00

Area C

During first 6 months of service with same employer

 

R2 214.00

Area A

After 6 months of service with same employer

 

R2 778.00

Area B

After 6 months of service with same employer

 

R2 561.00

Area C

After 6 months of service with same employer

 

R2 301.00

Handy boy

Area A

 

 

R3 825.00

 

45

Area B

 

 

R3 544.00

Area C

 

 

R3 260.00

Security inspector / Safety inspector

Area A – Grade A

 

 

R4 896.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

48

Area B – Grade A

 

 

R4 477.00

Area C – Grade A

 

 

R4 063.00

Area A – Grade B

 

 

R4 387.00

Area B  – Grade B

 

 

R4 004.00

Area C  – Grade B

 

 

R3 697.00

Area A  – Grade C

 

 

R3 797.00

Area B – Grade C

 

 

R3 489.00

Area C – Grade C

 

 

R3 157.00

Area A – Grade D

 

 

R3 792.00

Area B – Grade D

 

 

R3 446.00

Area C – Grade D

 

 

R3 133.00

 

Sectoral Determination 7: Domestic Workers

Minimum Wage

Region

Minimum Wage per Hour

Minimum Wage per Week

Minimum Wage per Month

Area A

R12.42

R559.09

R2 422.54

Area B

R11.31

R508.93

R2 205.17

Area A (works less than 27 hours a week)

R14.54

R392.58

R1 701.06

Area B (works less than 27 hours a week)

R13.53

R360.54

R1 562.21 

 

Sectoral Determination 8: Farm Workers 

Minimum Wage

Job Type

Minimum Wage per Hour

Minimum Wage per Week

Minimum Wage per Month

Farm worker

R15.39

R692.62

R3 001.13

 

Sectoral Determination: 9: Wholesale and retail sector

Minimum Wage

Job Type

Region

Minimum Wage per Hour

Minimum Wage per Week

Minimum Wage per Month

Assistant Manager

Area A

R34.28

R1 542.95

R6 685.61

Area B

R29.43

R1 324.58

R5 739.41

Cashiers

Area A

R20.14

R906.41

R3 927.46

Area B

R17.41

R783.63

R3 395.47

Clerks

Area A

R23.70

R1 066.59

R4 621.56

Area B

R20.60

R927.31

R4 018.07

Displayer

Area A

R24.61

R1 107.74

R4 799.88

Area B

R19.91

R896.24

R3 883.44

Gross Vehicle Mass < 3500 kg

Area A

R18.29

R823.18

R3 566.88

Area B

R15.63

R703.74

R3 049.31

Gross Vehicle Mass 3501 < 9000 kg

Area A

R21.89

R985.33

R4 269.44

Area B

R18.68

R840.77

R3 643.08

Gross Vehicle Mass 9001 < 16000 kg

Area A

R23.83

R1 072.79

R4 648.41

Area B

R22.34

R1 005.53

R4 357.00

Gross Vehicle Mass 16000 kg >

Area A

R26.19

R1 178.78

R5 107.64

Artisans, Gross Vehicle Mass 16000 kg >

Area B

R24.55

R1 105.02

R4 788.08

Forklift Operator

Area A

R17.94

R807.29

R3 498.01

Area B

R15.20

R684.42

R2 965.62

General Assistant, Trolley Collector

Area A

R16.52

R743.83

R3 223.01

Area B

R15.14

R681.59

R2 953.36

Managers

Area A

R37.59

R1 691.77

R7 330.47

Area B

R31.91

R1 436.36

R6 223.79

Merchandiser

Area A

R18.98

R854.33

R3 701.82

Area B

R16.45

R740.35

R3 207.97

Security guard

Area A

R16.78

R755.32

R3 272.81

Area B

R16.78

R755.32

R3 272.81

Sales assistant, Sales person

Area A

R23.70

R1 066.59

R4 621.56

Area B

R20.60

R927.31

R4 018.07

Shop assistants

Area A

R18.98

R854.33

R3 701.82

Area B

R16.45

R740.35

R3 207.97

Supervisor

Area A

R29.15

R1 311.82

R5 684.12

Area B

R24.99

R1 124.83

R4 873.90

Trainee Manager

Area A

R31.49

R1 417.23

R6 140.88

Area B

R26.72

R1 202.30

R5 209.59 

 

Sectoral Determination 10: Children

It is possible to employee children under the age of 15 to perform advertising, artistic and cultural activities, but you will need to apply for a permit.

Maximum working hours:

  • Three hours a day for children younger than ten.
  • Four hours a day for a child over the age of ten.
  • Ten hours a day if the child is older than ten.

 

Sectoral Determination 11: Taxi Sector

Minimum Wages

Industry

Job Type

Minimum Wage per Hour

Minimum Wage per Week

Minimum Wage per Month

Taxi Sector

Drivers

R15.47

R742.80

R3 218.57

Admin worker

R15.47

R742.80

R3 218.57

Rank marshals

R12.32

R591.81

R2 564.33

Workers not elsewhere specified

R10.78

R517.83

R2 243.80 

 

Sectoral Determination 12: Forestry Sector

Minimum Wages

Industry

Minimum Wage per Hour

Minimum Wage per Week

Minimum Wage per Month

Forestry Sector

R15.39

R692.62

R3 001.13 

 

Sectoral Determination 13: Hospitality Sector

Minimum Wages 

Industry

Firm size

Minimum Wage per Hour

Minimum Wage per Week

Minimum Wage per Month

Hospitality Sector

Firm size 1-10 employees

R15.17

R682.97

R2 959.35

Firm size 11-50 employees

R16.91

R761.25

R3 298.52


Maximum working hours: 45

For more information on all of South Africa’s Sectoral Determination values please visit.

Related: The best start-up business advice I ever got

 


3. Income Tax Act

Income tax is tax collected from all income and profit received by a taxpayer. It is your responsibility to register your employees for income tax, even if they fall below the threshold. If some or all of your employees are earning less than R120 000 a year, they don’t have to submit an income tax return, provided they meet the following:

  • Salary is from a single employer
  • Salary is for a full year of assessment
  • No allowance was paid, from which PAYE was not deducted in full with regards to travel allowances.

SITE, PAYE and provisional tax explained

These three mechanisms collect tax from your employee’s incomes and offset it against the final income tax that is due at the end of the tax year. SITE and PAYE are paid from salaries, wages and bonuses to SARS monthly. You will need to issue your employees with tax certificates as a receipt if SITE or PAYE has been deducted.

SITE applies to individuals:

  • Whose net remuneration does not exceed R120 000 annually
  • Who don’t receive a traveling allowance
  • Who don’t receive any other income.

PAYE

Pay-As-You-Earn or PAYE offers employees the benefit of settling their tax liability over the year – instead of a lump sum.

Provisional tax

This allows your employees to provide for their final tax liability by paying two amounts in the course of the year.

 


4. Tax Administration Act

The Tax Administration Act was put into action to streamline and simplify the administration of all tax related activity. There were previously multiple Act’s covering various types of Tax that made the process of administering it challenging and potentially confusing. Now, there is just one Act that covers all the administration processes involved in all the various types of tax.

Single tax account

This Act allows you to open a single tax account with a single registration tax for all the various types of tax. This is intended to ease your administrative burden as you will only need to submit one form to register for any of the taxes. You will then also have just one account that reflects your entire tax liability. This system was developed to increase the ease of your experience with SARS and to create a single view of each taxpayer.

Record retention

You will need to keep the records, books of account or documents to:

  • Enable the employee to observe the requirements of a tax Act
  • Align with the requirement under a tax Act to keep all records
  • Enable SARS to be satisfied that the person has observed these requirements. 

Failure or neglect to keep records is a criminal offence, and can trigger an administrative non-compliance penalty for your start-up.

Requirements for record keeping 

The requirement to keep records for a tax period apply to a person who:

  • Has submitted a return for the tax period
  • Is required to submit a return for the tax period and has not submitted a return for the tax period
  • Is not required to submit a return but has done so during the tax period, received income, and has a capital gain or loss, or engaged in any other activity that is subject to tax or would be subject to tax, but for the application of a threshold or exemption. 

Storing requirements 

There is now a new requirement for how you store your records. This is to ensure that your records remain orderly and safe in the event that SARS needs to conduct an inspection or audit.

A person obliged to keep records must:

  • Keep the records in:
    • Its original form
    • The form generally prescribed by the Commissioner
    • The form authorised by a senior SARS official upon request by a specific taxpayer for the retention of information contained in records or documents by that taxpayer in a different but acceptable form.
    • In an orderly fashion
    • In a safe place
    • Open for inspection, audit or investigation by SARS.

SARS can perform unannounced inspections, so you’ll need to ensure all your records are up-to-date and that you keep them for the necessary amount of time. 

Period you’ll need to keep your records for: 

Person

Period

A person who has submitted a return.

From the date of the submission of the return until the last day for five years.

A person who is required to submit a return for the tax period, but hasn’t submitted a return.

Indefinite, until return is submitted, after which the five year period applies.

A person who isn’t required to submit a return but has, during the tax period, received income, as a capital gain or loss or engaged in any other activity that is subject to tax or would be subject to tax but for the application of a threshold or exemption.

Until the conclusion of the audit or the five year period has passed, whichever is the longest.

A person who is notified or is aware that records are subject to an audit or investigation.

  • If required to submit return: Date of submitting return
  • If not required to submit return but received income: End of the tax period
  • If failed to submit return: End of the tax period.

A person who has lodged an objection or appeal against an assessment or decision under this Act.

Until the disputed assessment or decision becomes final or the applicable five-year period has passed, whichever is the longest.


For further information on the Administrative Tax Act please see here.

Related: Show you can do it, then ask for the work



5. Labour Act

According to the Labour Act, you need to keep a record of each of your employees, specifically about wages, deductions, annual leave, sick leaves, the dates and numbers and other conditions stipulated in their contract of service. You need to store this information for at least one year after the termination of contract of service.

If your business is a factory it must adhere to the requirements of this Act and register for a certificate saying that it adheres to the Labour Act. You will need to obtain a licence from the Labour Department in order to open your factory. 

Every factory employing between 30 and 150 employees, needs to appoint a part-time Industrial Safety Officer. If your factory has more than 150 workers, you need to appoint a full-time Industrial Safety Officer. An Industrial Safety Committee needs to be established in a factory with over 500 employees.

For more information on the Labour Act for specific sectors please see here.

 


6. Employment Equity Act

The purpose of this Act is to achieve equality in the workplace by promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination. It also aims to implement affirmative action measures to redress the disadvantages in employment experienced by designated groups, to ensure their equitable representation in all occupational categories and levels in the workforce.

Keep in mind when you’re hiring people that you can’t unfairly discriminate, directly or indirectly, against an employee in any employment policy or practice, on:

Race, gender, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language, and birth.

If you don’t comply with the Act, you could be found liable and have to pay a penalty.

For more information on the Employment Equity Act please see here.

Related: 4 Essential steps to start-up success

 


7. UIF Contributions Act

UIF is the Unemployment Insurance Fund and you need to register for it, whether or not you employ staff. It applies to all employers and staff members (except those working less than 24 hours a month), public servants, foreigners working on contract, workers who get a monthly State pension and workers who only earn commission. 

This fund is designed to offer support to individuals that have become unemployed, or are unable to work because of illness, maternity or adoption. UIF also provides financial support to dependants of deceased contributors.

You are responsible for registering your whole team, including yourself, with UIF and making monthly payments. These include 1% from you, which will be based on your employees’ individual salaries. You will deduct 1% from your employees’ salary to pay UIF, together with your contribution.

You can register your business by completing a UF8 form and you can register each new employee with a UI-19 form that you can get from the Department of Labour.

 


8. Skills Development Levy Act

You, as a business owner, would need to pay 1% of your workers’ pay to the skills development levy. This money goes to Sector Education and Training Authorities and the Skills Development Fund to pay for training. The Skills Development Levies Act applies to all employers except:

  • The public service
  • Religious or charity organisations
  • Public entities that get more than 80% of their money from Parliament

Employers:

  • Whose total pay to all its workers is less than R 250 000 per year.
  • Who do not have to register according to the Income Tax Act.

You’ll need to register with SARS to pay the skills development levy. For those who don’t pay, you will have to pay interest on the money you owe, and may have to pay a penalty.

Related: 20 Steps to starting a business in South Africa



9. Pensions Act

From the 1 March 2016, 27.5% of your taxable income or remuneration is the most you or your employees can contribute to retirement funds. The annual limit is R350 000 including the cost of risk benefits.

If your employees contribute more in any one year, they can carry forward this unclaimed amount and deduct it from tax in the following years. However, this is subject to the deduction limits in those years. 

Only your team member can claim contributions, both in respect to your and their contributions. Their PAYE deduction needs to reflect these contributions.

 


10. Medical Schemes Act

You don’t receive a discount in a community-rated environment, when it comes to medical aids. However, you can negotiate to reduce or waiver the terms and conditions applicable to underwriting. This means that big companies can underwrite a better rate and scheme for a company if there are enough members.

Unfortunately, until you get to that size it may not be financially viable for your business to offer a medical aid scheme. You can employ the “cost to company model”. This allows you to give your employee a salary package that includes monetary provisions for healthcare, and they must source their own healthcare scheme. 

For more information on the Medial Scheme Act please see here.

Seek professional guidance

Don’t be overwhelmed by the amount you need to comply with once you start your business. To relieve the amount of pressure on you, you should hire an expert. Either outsource these services to someone reputable or hire a qualified HR employee who can help you to set up the systems that you’ll need to comply with the above legislation. 

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