TerraLex Cross-Border Guide to Cross-Border Labor & Employment Guidance

This note is intended to provide a high-level guide to employment law in South Africa. It does not contain advice on any specific case and should not be used as a substitute for taking proper legal advice.

South African labour law is characterised by a highly regulated environment in which employers are subject to extensive substantive and procedural obligations throughout the employment lifecycle, from recruitment and onboarding to discipline, dismissal, restructuring and post-employment enforcement.

Employers operating in South Africa must ensure compliance not only with statutory obligations but also with extensive case law developed by the Labour Court, Labour Appeal Court, Constitutional Court, Commission for Conciliation, Mediation and Arbitration (“CCMA”) and Bargaining Councils.

The practical reality in South Africa, is that employers cannot rely solely on statutory protections to safeguard their commercial interests. South African labour law places significant substantive and procedural obligations on employers while simultaneously affording employees extensive rights and remedies. Accordingly, prudent employers should proactively protect their businesses through legally compliant contracts, workplace policies, disciplinary procedures, restraint mechanisms, governance structures and risk management strategies. However, any such protective measures must themselves comply with applicable labour legislation and constitutional principles to ensure enforceability.

South African courts assess the true status of an employment relationship and not merely the label assigned by the parties. An individual described as an independent contractor may nevertheless be regarded as an employee if the factual circumstances indicate an employment relationship exists. Factors considered include supervision and control, economic dependence, integration into the employer's business, exclusivity of service, and the manner in which remuneration is structured.

Certain categories of persons are excluded from some or all labour law protections or are not regarded as employees for purposes of specific labour legislation. These generally include:

• Independent contractors who genuinely operate their own businesses and are not economically dependent on the client;
• Members of the South African National Defence Force, National Intelligence Agency and South African Secret Service, who are excluded from certain provisions of the Labour Relations Act 66 of 1995 (“LRA”);
• Volunteers who perform services without remuneration; and
• Certain categories of office bearers appointed in terms of statute rather than under a contract of employment.

In addition, certain South African labour statutes exclude employees who work less than 24 hours per month from specific statutory protections, including some provisions relating to working hours and holiday entitlements under the Basic Conditions of Employment Act 75 of 1997 (“BCEA”).

Although commonly referred to as "casual employees or labour", this is not a legally recognised category of employment. Whether a person is an employee is ultimately determined by the facts of each case and not by the title given to the relationship by the parties.

The employment of foreigners in South Africa is regulated by the Immigration Act 13 of 2002, as amended (the “Immigration Act”). The Immigration Act provides for the admission of foreigners to, their residence in and departure from South Africa and matters connected therewith including the ability of foreigners to work in South Africa.

The Employment Services Act 4 of 2014 (“ESA”), provides a regulatory framework for employment practices in South Africa, including the employment of foreign nationals. Depending on the visa category and circumstances, employers may be required to demonstrate that reasonable efforts were made to recruit suitably qualified South African citizens or permanent residents before employing a foreign national.

In terms of the Immigration Act, a duty is placed on an employer to make an effort, in good faith, to ensure that no illegal foreigner is employed by it and to ascertain the status or citizenship of the persons it employs.

Under the Immigration Act and its associated regulations, employers may be required to accept responsibility for the costs related to the deportation of foreign employees. This obligation is explicitly outlined in the context of certain visa categories, such as general work visas, critical skills work visas, and intra-company transfer work visas. Employers are required to provide a written undertaking to cover deportation costs should it become necessary.

The Immigration Act further provides that anyone who knowingly employs an illegal foreigner or a foreigner in violation of the Immigration Act shall be guilty of an offence and liable to a fine or a period of imprisonment not exceeding one year for a first offence.

Foreign employees in South Africa, including those who do not have valid working permits, retain the right to enforce claims arising from employment relationships or statutory entitlements against their employers as the Constitution of the Republic of South Africa, provides that everyone has the right to fair labour practices and not only citizens.

An employment relationship between an employer and an employee can generally be created verbally, tacitly or in writing. An employment contract can be formed without any formalities under common law. When an employee unconditionally accepts an offer from an employer, a contract of employment is formed. Although the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) requires an employer to provide the employee with written particulars of employment, this does not imply that a written contract is necessary or that an unwritten agreement is invalid. According to other South African statutes, certain employment contracts must be in writing (for example: Fixed Term Contracts).

Where an employment relationship has been established, the provisions of employment law, specifically the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) apply to such relationship as a basis and the parties may contract to more favourable terms over and above the BCEA.

The contract must be freely and willingly entered into by the parties. According to the BCEA, no one may be forced to work for another. Like all contracts under South African law, no employer can be forced to hire a specific individual, and parties cannot engage in illegitimate employment contracts.

An employer is obliged to pay remuneration within 7 days after the completion of the period for which the remuneration is payable. If there is a particular pay date stipulated in any contract of employment or other agreement, then the employer must adhere to that schedule. An employer is also obliged to provide an employee with a proper payslip on each payday.

In accordance with the BCEA, the South African Minister of Employment and Labour set minimum terms and conditions of employment, including minimum wages. Under the National Minimum Wage Act 9 of 2018, a national minimum wage is set annually. Certain sectors may remain subject to higher minimum rates through collective agreements or bargaining council arrangements. Effective 1 March 2026, the National Minimum Wage is R30.23 per ordinary hour worked, subject to limited statutory exceptions.

Employers must also remain mindful of equal pay obligations under the Employment Equity Act 55 of 1998 and should ensure that remuneration practices do not give rise to unfair discrimination claims.

A collective agreement is defined in the LRA as a “written agreement concerning terms and conditions of employment or any other matter of mutual interest” concluded between a registered trade union and one or more employers (or an employers’ organisation). If there is a majority union in the workplace, the agreement may also bind non-union members.

Employees who are not party to the majority union but are identified in the collective agreement are bound by the agreement if there is a provision expressly binding them. If an employee resigns from the trade union, they are still bound by the agreement for the period that it is in force.

Collective agreements supersede any individual contracts of employment and endure for the period agreed between the parties.

Collective bargaining remains a central feature of South African labour relations. Bargaining council agreements may be extended to non-parties and can regulate wages, benefits, working conditions and dispute resolution procedures within particular industries. Employers should establish whether any bargaining council agreement applies to their operations, as non-compliance may result in enforcement proceedings and financial penalties.

There are currently no South African statutory obligations on employers to provide retirement benefits (such as pension or provident fund benefits) unless contractually elected or enforced by a collective agreement. If an employer has contractually elected to provide such benefits, the employer must make the required contributions on behalf of the employee to the relevant fund.

An employer is not entitled to make any deductions from an employee’s salary unless the employee agrees in writing to the deduction, or the deduction is justified in terms of a law, collective agreement, court order or arbitration award.

The BCEA obliges an employer who deducts a contribution from an employee’s salary for a benefit fund (for example, pension, provident or medical aid fund) to pay the amount into the fund within seven days after the deduction has been made.

Many employers also provide additional benefits including medical aid, group life cover, disability cover, wellness programmes, employee assistance programmes and flexible benefit structures with cash components.

During any workplace process (where an employee may be dismissed), such as a disciplinary enquiry, during any incapacity or redundancy/retrenchment consultation, an employee has the right to be represented/assisted by a fellow employee or a trade union representative. Legal representation is generally not permitted in internal disciplinary, incapacity or retrenchment processes unless the employer's policies permit it or exceptional circumstances justify its inclusion.

Following a dismissal, a trade union may refer and represent its member in an unfair dismissal dispute at the CCMA or Labour Court.

Trade unions enjoy extensive organisational rights under the LRA, including rights relating to access, stop-order facilities, disclosure of information and collective bargaining.

Employers with unionised workforces should proactively manage labour relations through consultation, engagement and collective bargaining structures where appropriate.

Effective 1 May 2026, employees in South Africa earning above the BCEA earnings threshold of R269,900.90 per annum are excluded from various statutory protections relating to working time, overtime, meal intervals, rest periods, unless contractual arrangements provide otherwise.

Subject to the BCEA and applicable earnings thresholds, employees may by written agreement, work compressed working weeks of up to 12 hours per day (including meal intervals), provided that weekly working hour limits (45 ordinary hours in a week and not more than 10 hours of overtime in any week). Remuneration for overtime is at a rate of 1.5 (or an equivalent paid day off may be given).

Employees are entitled to at least 21 consecutive days of annual leave. For employees who work a 5-day week, that equates to 15 paid working days off per annum.

Subject to the BCEA and applicable earnings thresholds, employees must be paid for working on a public holiday, and they may only work on a public holiday if they have agreed to do so in writing. If an employee works on a public holiday, remuneration may be doubled (or an equivalent paid day off may be given) to compensate the employee. If a South African employee is required to observe foreign public holidays and bank holidays by an international Employer/ Client, this agreement must be reduced to writing to exchange South African public holidays with foreign public holidays and bank holidays.

The growth of hybrid and remote work arrangements by international employers / clients has created additional compliance considerations, including monitoring working hours and employee wellbeing.

Under the the Labour Relations Act 66 of 1995 (“LRA”) (Code of Practice: Dismissal), an employee has the right to be fairly dismissed. A fair dismissal must be both substantively and procedurally fair. In terms of the LRA, the three recognized fair grounds for dismissal are:

1. misconduct;
2. operational requirements (restructuring/retrenchment); and
3. incapacity (including ill health or poor work performance).

Each of these grounds has its own requirements for fairness. Generally for a misconduct, this includes an inquiry into whether there was a breach of a known, reasonable, and consistently applied rule or policy, and whether a fair process was followed after the alleged breach, leading to the dismissal.

Automatically unfair dismissals attract significantly greater risk and may arise where dismissal is linked to protected conduct, including discrimination, whistleblowing, pregnancy, trade union participation, protected disclosures, or the exercise of statutory rights. Compensation of up to 24 months' remuneration may be awarded in cases of automatically unfair dismissal.

When dismissals are contemplated for operational requirements (retrenchment or redundancy), the Labour Relations Act 66 of 1995 (“LRA”) requires that consultations occur in a meaningful and consensus-seeking manner between the employer and affected employees or their representatives. The LRA sets out specific issues that, at a minimum, the parties must consult on. No final decision on dismissals may be taken before completing the consultation process.

For large-scale retrenchments (50 or more employees), where the employer contemplates dismissing a number of employees over a certain threshold, section 189A of the LRA applies. The process may be either facilitated or non-facilitated. In a facilitated process, after a notice of proposed retrenchment is issued, the parties meet with a CCMA facilitator, and no dismissals may occur until 60 days have elapsed from the notice. In a non-facilitated process, after the notice is issued, at least 30 days must elapse before any dismissals or dispute referrals.

Employers in South Africa should ensure that retrenchment decisions are supported by genuine operational rationale and that alternatives to dismissal are properly considered due to its consequences. In South Africa, redundancy is a dismissal based on a company's operational requirements. It means a specific job is no longer needed due to restructuring, financial distress, etc. Employers should exercise caution before recruiting into a position that was recently declared redundant, as doing so may be relied upon as evidence that the operational rationale for the retrenchment was not genuine.

South African workforce restructuring increasingly involves technological transformation, artificial intelligence implementation, automation, changing service delivery models, and even profit generating, which all trigger consultation obligations.

Employees who are dismissed for operational requirements in South Africa are generally entitled to severance pay of at least one week's remuneration for each completed year of continuous service with the employer, in addition to notice pay (or payment in lieu of notice), accrued annual leave pay, and any other contractual or statutory amounts due in terms of any applicable collective agreement. An employee who unreasonably refuses an offer of alternative employment with the same employer or another employer may forfeit their entitlement to severance pay. Employers may agree to enhanced severance packages during consultations, particularly in large-scale restructuring exercises or voluntary severance programmes.

The Labour Relations Act 66 of 1995 (“LRA”) protects employees’ right to continuity of employment during a business sale through section 197 (transfer of a going concern). Whether a transfer of a business as a going concern has occurred is determined by substance rather than form and requires a factual assessment of the transaction as a whole. When a business is sold or transferred, the new employer is automatically substituted in place of the previous employer for all contracts of employment. All rights and obligations that existed under the old employer (whether written or oral) continue in force against the new employer.

The transferred employees’ rights and obligations cannot be less favourable than they were under the previous employer. If a transfer results in less favourable terms (for example, worse employment conditions), the affected employee may refer the matter to the CCMA or Labour Court for adjudication.Transfer-related due diligence should include detailed assessment of employment liabilities, collective agreements, litigation exposure, benefit arrangements and compliance risks.

Regarding accrued employment liabilities (like leave pay or severance), both the old and new employers are jointly and severally liable for a period of 12 months after the transfer date. If the new employer defaults or fails to pay, affected employees can hold the previous employer liable for accrued dues within this 12-month window.

In South Africa, labour disputes are resolved under the Labour Relations Act 66 of 1995 (“LRA”) framework rather than the ordinary civil litigation rules. The LRA provides procedures to ensure procedurally fair dispute resolution. The most common method is conciliation at the Commission for Conciliation, Mediation and Arbitration (“CCMA”). If conciliation fails, the dispute may be referred to arbitration, the Labour Court, or the Labour Appeal Court, depending on the issue.

In April 2023, the CCMA updated its Rules on the conduct of proceedings to reflect legislative amendments made since 2003. Once a dispute is lodged at the CCMA, the parties are notified of the conciliation and/or arbitration date. Legal representation at the CCMA is generally permitted in legal disputes and certain arbitrations but remains restricted in conciliation, misconduct and incapacity arbitrations unless consent or permission is obtained in accordance with the CCMA Rules.

If the CCMA does not allow legal representation, the employee may still seek independent legal advice or assistance outside of the CCMA proceedings (for example: assistance in preparing for conciliation or arbitration).

Recent CCMA, Labour Court, and the Labour Appeal Court developments continue to emphasise digital dispute resolution processes, virtual hearings and electronic filing systems.

There are various statutes that afford rights to employees in South Africa, including but not limited to the National Minimum Wage Act 9 of 2018 (establishing a uniform national minimum wage), the Pension Funds Act 24 of 1956, the Employment Equity Act 55 of 1998 (amended by the Employment Equity Amendment Act 4 of 2022, effective 1 January 2025), the Labour Relations Act 66 of 1995, the Basic Conditions of Employment Act 75 of 1997, and the Skills Development Act 97 of 1998.

In particular, the Employment Equity Act has been significantly amended by the 2022 Amendment Act (effective 1 January 2025). Notable changes include expanding the definition of people with disabilities, lowering the threshold for designated employers to 50 employees, introducing sector-specific employment equity targets set by the Minister, and requiring employers who contract with the state to obtain Employment Equity compliance certificates (the certificate requires meeting the targets or explaining non-compliance, filing annual Employment Equity reports, and having no recent findings of discrimination or non-payment of the minimum wage).

The Basic Conditions of Employment Act 75 of 1997 (“BCEA”) makes it a criminal offence to employ a child under 15 years of age or under the minimum school-leaving age. The BCEA explicitly prohibits child labour and forced labour. Children under 18 have the right to be protected from work that is exploitative, hazardous, inappropriate for their age, detrimental to their schooling, or harmful to their social, physical, mental, spiritual, or moral development.

Children aged 15 to 18 may not be employed to do work that is inappropriate for their age or places them at risk. One exception is that a child aged 15 or younger may be employed in the performing arts if there is a valid permit from the Department of Employment and Labour.

South African anti-discrimination protections are among the most extensive globally. Employers should also be aware that discrimination claims increasingly arise from workplace policies, recruitment practices, artificial intelligence-assisted decision-making, pay transparency issues, disability accommodation obligations, gender identity considerations and harassment allegations.

Dismissal on the grounds of any prohibited form of unfair discrimination (other than age) is automatically unfair under the Labour Relations Act 66 of 1995 (“LRA”). Grounds include race, gender, sex, pregnancy, marital status, family responsibility, etc. Under the Employment Equity Act, both current employees and job applicants are protected from unfair discrimination in the workplace. Disputes must be referred to the CCMA for conciliation within six months of the alleged discriminatory act or omission. South African employers must safely store all application forms, resumes, assessments, and interview notes for at least 6 months (though keeping them for 1 to 3 years is legally safer under general prescription laws).

In South Africa, a labour broker is formally known as a Temporary Employment Service (“TES”). To protect vulnerable workers, Section 198A of the Labour Relations Act 66 of 1995 (“LRA”) strictly limits "temporary services" to work for a client that does not exceed a consecutive period of three months, replacing an employee who is temporarily absent (e.g., parental or sick leave) and categories of work deemed temporary by a collective agreement or sectoral determination.

Recent case law has continued to reinforce the "deemed employee" principle under section 198A of the LRA, under which qualifying temporary employees may become employees of the client after three months for purposes of the LRA.

When a business function is outsourced completely (e.g. cleaning, security, etc.), section 197 of the LRA may be triggered if the outsourcing involves an entire function (a “transfer of a going concern”). In that case, the new service provider may be deemed the successor employer with the same obligations as the old employer. Simply outsourcing a service or hiring independent contractors (without transferring an entire function) will not usually trigger section 197.

As noted above, various laws protect employees’ rights. For example, the Unemployment Insurance Act 63 of 2001 provides social insurance benefits (through Unemployment Insurance Fund contributions) for employees during periods of unemployment, parental leave, or illness. The unemployment insurance fund further provides a dependant's benefit, which functions as financial support for surviving beneficiaries of employees.

The Compensation for Occupational Injuries and Diseases Act 130 of 1993 provides for compensation to employees who are injured or contract diseases at work. The general rule is that an employer has no direct civil liability for damages. This system replaces an employer's common-law liability with a centralized "no-fault" insurance structure

South Africa has also strengthened protections for whistleblowers through the Protected Disclosures Act 26 of 2000. Employees who make protected disclosures regarding unlawful or improper conduct enjoy protection against occupational detriment, including dismissal, disciplinary action, intimidation or harassment.

Under the Protection of Personal Information Act 4 of 2013 (“POPIA”), employee rights are protected by requiring employers to process personal information lawfully and transparently. Workers have the right to be notified when their data is collected or breached, view what records are held, and request corrections or deletions. Employers are legally obligated to secure this data against unauthorized access and only use it for strictly defined employment purposes.

South African employment law continues to evolve rapidly. Key developments currently being monitored include the Labour Law Amendment Bill 2025, proposed reforms to parental leave and family responsibility leave, increasing regulation of atypical employment arrangements, heightened employment equity compliance obligations, workplace artificial intelligence governance, enhanced whistleblower protections, and ongoing reforms aimed at strengthening collective bargaining and labour migration regulation.