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Global Payment and Compliance
Remote work has become a standard way of work around the world. It's a shift that a significant
Remote work has become a standard way of work around the world. It's a shift that a significant number of employers have embraced. Additionally, the remote work model has helped employers access some of the top talents from different places worldwide, from Europe to Asia and Africa.
South Africa is a country of about 59.62 million people with diverse cultures. English and Afrikaans are the main languages, but there are other nine languages. Most importantly, there are many skilled people in different fields such as healthcare, finance/banking, IT, business management, engineering, and programming. However, legalities can limit you from hiring some competent employees in South Africa.
This post is a comprehensive guide on hiring and paying remote employees in South Africa inexpensively and legally.
Legal issues can limit an employer (particularly foreign employers operating in other countries) from hiring remote employees in South Africa. One of the obvious yet rigorous ways for a foreign employer to get work permits and visas for employees to relocate to where they're located. It's quite a long, tiresome, and complex process. So, what are the alternatives, especially when you want to work with remote employees?
There are two main ways to hire remote employees in South Africa, i.e., set up a subsidiary of your entity in South Africa or use EOR services. Let's dive into each of these ways as we explore the most suitable method.
If you want to stay compliant with the South African laws when hiring remote employees, setting up a subsidiary is an alternative. Generally, it means having your overseas company's physical entity/ premises in South Africa.
It also entails registering your business with the relevant agencies, opening local bank accounts, observing local employment laws, and setting up a local payroll. Additionally, you'll have a legal entity in South Africa.
Consequently, that gives you access to the South African labour market, whereby you can hire local skilled persons to work for you.
However, this approach is not suitable for every employer, especially for individual employers, startups, and some SMEs. But why? Setting up a subsidiary is expensive and takes a lot of time (months to a year). You'll also have to deal with complex immigration and compliance requirements.
Additionally, setting up a subsidiary is not an alternative if you're an employer who only needs a short-term partnership with remote employees in South Africa.
Using Employer of Records (EOR) services is another viable option when you want to hire remote employees in South Africa. An EOR provider is a company that hires and pays employees on your behalf. It plays a critical role, especially when a foreign employer doesn't understand or want to deal with local payroll, employment, or work permit requirements of remote employees' country of residence.
Subsequently, the EOR service provider helps avoid all the hassles you could have dealt with setting up a subsidiary in South Africa. Also, you'll not deal with all the hurdles of working with remote employees.
Some EOR provider, such as Workpay Africa, understands Africa's employment landscape; therefore, they onboard and pay remote employees effectively and legally on your behalf in South Africa. Most importantly, they take care of compliance issues, and your employees remain your employees.
You may also check out this guide on hiring remote employees across Africa.
Now that you understand how to hire remote employees in South Africa let's explore how you can pay them smoothly and in compliance.
As outlined earlier, legality is essential while dealing with employees. Before we look into different methods of paying remote employees, let's first glance at some payment insights in South Africa. Rules and laws regarding employee payments and taxes vary from country to country.
First, you should register all employees with the South African Revenue Service (SARS). It's where they submit their taxes through South Africa's PAYE system. However, if employees are working with an EOR, employees' registration with SARS is not necessary.
Like most countries, employers in South Africa must withhold taxes and other necessary contributions from their employees' pay.
The below table outlines updated tax rates in South Africa:
Additionally, employers must deduct 1% of an employee's taxable income up to R148.72/ month and remit it to South Africa's UIF benefit. Lastly, employers who provide employees with health insurance coverage stipends may qualify for South Africa's Medical Scheme Fee Tax Credit (MTC).
Check out the SARS website for more details.
Direct bank transfers are one way to send your South African remote employees payments. All you need is to provide your local bank or online bank account with your remote employees' names, bank account details, and contact information.
However, you've to be sure that their local banks accept international transfers. For instance, banks such as Nedbank and Standard bank in South Africa allow South African to receive international transfers.
Another excellent way to pay remote employees in South Africa is through the following digital payment methods such as:
The above methods offer digital wallet services and accommodate direct bank deposits to central banks in South Africa.
Another method of transferring payments to remote employees is through money order services. Some of the standard and best money order service providers include:
All you need is to provide your South African recipient's national ID details and pay a transaction fee.
The last method of paying remote employees in South Africa is outsourcing payroll or using an EOR service provider.
It's one of the compelling methods if you don't want to deal with all the legal and compliance issues of paying remote employees. Outsourcing payroll means tasking another South African company to handle the payroll process.
EOR service provider handles the entire process from hiring to paying remote employees on your behalf. For this reason, consider working with a reliable EOR provider such as Workpay, which understands South African labour laws, taxation, and payroll requirements.
Workpay is a dedicated EOR provider who understands the African labour market and relevant compliance requirements across the African continent, from Nigeria to Uganda and South Africa.
Among other benefits you get to enjoy include:
To hire remote employees in South Africa, you need to set up a subsidiary or work with an employer of records (EOR). EOR provider handles the entire process of hiring and paying remote employees on your behalf.
Among the standard and frictionless methods to pay remote employees in South Africa include direct bank transfers, money orders, outsourcing payroll, and digital payments such as PayPal and Wise.
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