Episode 17: Payroll in South Africa

Luisa Rollenhagen (00:07): Hello, and welcome to another episode of Payroll Around the World! I’m your host, Luisa Rollenhagen.  

This audio series is your in-depth guide to exploring the intricacies of global payroll. Each episode spotlights a specific country and features interviews with ADP experts on the ground, as well as locals who share their perspectives on work and pay in their homeland.  

After all, payroll can’t truly be global if it isn’t local as well.  

Today, we’re going to South Africa. Famed for its distinctive wines, vibrant cities like Cape Town and Johannesburg, and its iconic wildlife reserves such as Kruger National Park, South Africa stands as a vital hub of economic, cultural, and political activity across the region and the continent. As a member of the BRICS group, South Africa also has a leading role in one of the world’s major emerging-economy blocs.  

Speaking of the economy: This African nation is the largest economy in sub-Saharan Africa and one of the continent’s top three, alongside Nigeria and Egypt. Its strategic location, including busy ports in Durban and Cape Town, as well as its advanced infrastructure have long defined the nation as a gateway for investment into the region, with Johannesburg serving as Africa’s financial hub.   

Tracey Wiehman (01:37):  In the southern region of Africa, South Africa has the largest economy and it’s actually 10 times the size of the next African economy, which is Zimbabwe. So in the southern part of Africa, it’s definitely the place you want to be.  

Luisa Rollenhagen (01:54): South Africa’s payroll and HR landscape is also marked by its history. Policies like the Employment Equity Act and the Broad-Based Black Economic Empowerment act, also know as Triple B Double E, are designed to address and correct the systematic discrimination that existed during Apartheid.   

Oswald Bailey (02:13):  The Employment Equity Act in itself, I mean is legislated, so it’s a legal obligation and it was introduced to obviously address workplace discrimination, promoting affirmative action for previously disadvantaged individuals, which are now called designated groups. So those include primarily people classified as Black, so Black people, Black women, people with disabilities.   

Luisa Rollenhagen (02:42): In addition to these policies, payroll managers must also be aware of mandatory employer contributions such as the Skills Development Levy. The SDL is a compulsory tax that is used to fund training and development initiatives across the country. Employees can access training opportunities that can have a career-advancing impact. 

Naomi (03:03):  This is a levy that the government charges companies. So companies that qualify, there are criteria obviously that qualify have to them contribute towards the skills development levy, but they have an opportunity to claim back when they develop their staff. So for me, I think it is beneficial on both sides in that yes, companies, through training their staff or their employees, benefit because when you train your employees, they enhance your opportunities, they enhance how you do things as an organization and on the other hand you are able to claim back.  

Luisa Rollenhagen (03:41): South Africa offers many opportunities for multinational companies looking to tap into the region’s potential, but the payroll and regulatory challenges should not be underestimated. In order to help us understand how to navigate this landscape, we’ve invited ADP experts Tracey and Oswald to break it down for us.  

Hi you two, thanks for joining us! Would you mind introducing yourselves?  

Tracey Wiehman (04:06):  My name is Tracey Wiehman from ADP South Africa. I am the head of service and I’m based in Pretoria. 

Oswald Bailey (04:13): I’m Oswald Bailey. I’m the business compliance manager for ADP South Africa. I’m based in Cape Town and I support the business with regards to compliance and regulatory affairs.  

Luisa Rollenhagen (04:29): Thank you, I’m excited to dive into the details with you. To kick us off, would you give us an overview of South Africa’s economy and labor force?  

Oswald Bailey (04:38): So on the economy side for South Africa at the moment, I think there is a lot of pressure brought to be in terms of the growth rates that we are experiencing. There’s a lot of noise around how that is being managed at the moment. So we are seeing growth which is below 1% per annum, so slow growth, and that in part is also being challenged by, for example, the unemployment that we are experiencing. We are having some very high unemployment rates at the moment, stagnation, particularly with regards to investment. It’s not consistent, it’s sporadic at the moment. Then we’ve got some infrastructure challenges as well. So if you think about energy, our service provider, our energy service provider is really being monitored closely on that. 

I think in a nutshell, there is quite a bit of challenge, largely economists looking at the growth of South Africa and what needs to be done, but again, there is the potential for change in South Africa, leading the way, particularly in the Africa context. So I think with a little bit more time, a little bit more change, we can see a turnaround for South Africa particularly.  

Tracey Wiehman (05:51):  And just to add to that, so in the southern part of Africa, in the southern region of Africa, South Africa has the largest economy and it’s actually 10 times the size of the next African economy, which is Zimbabwe. So in the southern part of Africa, it’s definitely the place you want to be. And like Oswald says, it does allow you to get a footprint into Africa and then move around. I think geographically it’s also quite convenient for trade routes and things like that because going from east to West and South Africa sort of in the middle, and it does provide, we’ve got really good ports and rail infrastructure as well as road infrastructure. So I think that does provide a lot of gateways into other regions, particularly going into North Africa.  

Luisa Rollenhagen (06:38): That’s a good point. As Oswald pointed out, South Africa is one of the three largest economies in Africa, and home to some very successful multinationals as well.  

However, South Africa does struggle with its high unemployment rate. What’s currently being done to address this?  

Tracey Wiehman (06:55):  So one of the important parts about the high unemployment is that the governments identified that a large part of the unemployment is in the youth sector. So the governments have actually implemented a strategy called Employee Tax Incentive. And what it allows the employers to do is if they hire or employ youngsters in the 18 to 30 age group, they do qualify for a tax incentive on the company side. So the company can actually save tax money, it reduces their tax liability to the revenue authority if they employ people within that age bracket and also within a certain salary bracket. So it’s aimed really more at the school leavers or at those that have just qualified through a tertiary education and trying to get them into the employment system. So it’s obviously, it benefits the company, not the employee, but the employee benefits through employment and experience.  

Luisa Rollenhagen (07:56): I see, that’s good to know. So what are some other things that multinationals coming from abroad should know about employing and paying people in South Africa?  

Tracey Wiehman (08:04):  When we have new clients coming on board and they particularly are located overseas, we see that they are not really prepared for our stringent labor laws and how they protect the employee very strongly. And also because of that we have a very highly unionized environment where a lot of our sectors and a lot of our industries are governed by unions and collective bargaining councils, which do have quite a strong impact on the company and how it operates and they can be quite forceful. So you really do need to understand the unions and the sort of employment type laws in South Africa in order to be successful.  

Luisa Rollenhagen (08:45): Right, I’ve read that South Africa has very active unions and strong worker protection laws.  

Oswald Bailey (08:51):  Interpretation and understanding how to practically apply these laws becomes very important. Tracy mentioned that underestimating it, yeah, that’s one thing. But that does mean in that context it means partnering with the right people to make sure you get the right level of information and people that at least have practical experience on how to apply these laws. So I think that’s always very important for businesses coming in from abroad.  

Luisa Rollenhagen (09:17): Could you explain what you mean by interpretation?  

Oswald Bailey (09:20):  For example, I’ll take one which relates to the, let’s say to the workforce. So Tracey mentioned unionized members. I think it’s very important to understand what that means when you have a group of unionized individuals, it means that there’s a representative body that will bargain on their behalf with regards to their basic conditions of employment. But even so I think maybe just to give an example is that when you have, let’s say individuals that have undergone a disciplinary process in terms of the company disciplinary code, which is also outlined by labor law, invariably it’s never just the end. If there’s, let’s say there’s a sanction reached, there’s a verdict, person’s guilty, there’s a sanction that they will be dismissed. That’s not invariably the end. What foreign companies need to understand that there is the opportunity for people to appeal that process.  

And there are various channels by which employees are given that opportunity. So the first port of call usually would be the council for conciliation mediation and arbitration. So that’s that first port call and there could be a lengthy process with that is concerned. Secondly, if failing and if allowed, you could then end up in the labor courts per se. So I think when multinationals come on board or foreign nationals come on board is just to understand that there are layers of processes or let’s say additional steps to finalize an outcome internally because people are allowed certain remedies or certain actions to further the matter if they feel so that’s what I mean by interpretation and understanding what that means when you impose that.  

Luisa Rollenhagen (11:03): So it’s crucial to have a local partner who’s prepared for these kinds of scenarios and can advise you on how to navigate them.  

One of the things that’s so unique about South Africa is the plethora of official languages the country has, not to mention various additional languages that are spoken in certain regions. How does this shape the way employers and employees interact?  

Oswald Bailey (11:26):  Well we have what, 11 official languages? I believe we do have a 12, which is sign language, but you can probably imagine that that’s a vast array of individuals speaking different languages primarily in South Africa. The business language that we use is English. So the vast majority, if not all companies, we do operate and we do transact in English, but you do have in instances where if you find that your workforce, the majority, the language of understanding the language of working with one another might be, let’s say Zulu, or it might be Xhosa, which is one of our local languages. We are reasonably practical. You can provide details, maybe payroll details or payslip details. You could provide them in that language where possible just to help facilitate an understanding what their income levels are, what their deductions are, just to help them work through that. But again, the primary business language in South Africa is English, so wherever you go you would be able to find that that is being used. I think for the finer details, Tracy can probably shed more light on that.  

Tracey Wiehman (12:45):  I think you’ve summed it up Oswald. And maybe just one thing to add that sometimes in the HR space, particularly if there might be disciplinary hearings or something like that, the employee is allowed to have a representative or an interpreter interpret into their first language because often they maybe have two or three languages that they very fluent in English might be their fourth language or so on. And in those cases, they are entitled to have an interpreter present in these things in order to ensure that they understand the proceedings.  

Luisa Rollenhagen (13:19): Right, that’s a good thing to keep in mind.   

What are some specific payroll challenges that employers should be aware of?  

Tracey Wiehman (13:26):  So South Africa’s payroll, the tax calculations can be quite complex and the application of the law can also be complicated. So it really is best to engage with the experts and let the experts handle these risks. While the South African payroll tax legislation is relatively stable, it can get complicated in certain areas. And for example, if you have a retirement fund or medical aid or those kind of things, any benefits for the employees, there are tax implications and there are quite severe penalties and things like that if things are done incorrectly. So SARS does impose, if you have to correct something and resubmit or you underpay taxes, the penalties for doing so and correcting it are very big. On top of that, we also have two reconciliations a year where they need to reconcile their liabilities and payments to the revenue authority that also has very strict deadlines and very big penalties if it is submitted late or incorrectly.  

Luisa Rollenhagen (14:25): I just want to interrupt to add that SARS stands for the South African Revenue Service. Please continue, Tracey.   

Tracey Wiehman (14:33):  So I would say that it’s definitely important to engage with the experts in the payroll world so the payroll experts can reduce the risk, ensure statutory compliance, and ensure that the payroll is set up run smoothly, firstly, from a tax compliance point of view and avoiding any mishaps with the authorities. And secondly, because it’s such a unionized environment, your employees need to be paid on time and correctly. Otherwise, again, the union members, they get involved and they act on behalf of the employees and they can be quite disruptive. They really can make it difficult for the employer. So it’s very important that the accuracy is there on the payroll and the employees are paid on time.  

Luisa Rollenhagen (15:19): What kind of penalties can be expected?  

Tracey Wiehman (15:21):  For example, if you have to correct something and you resubmit, besides paying the difference in, there’s also a 10% penalty on the amount as interest and well, there’s a 10% penalty and then they charge interest on top of that. So a daily amount. And likewise, if they submitting their returns or their reconciliations late, the ones that need to happen twice a year, there’s also a 10% liability penalty imposed for late submission. So 10% of their total tax, UIF and SDL liability.  

Luisa Rollenhagen (15:54): So as you’ve probably noticed, there are quite a few acronyms that are used in South African tax and labor law. UIF stands for Unemployment Insurance Fund, which is a mandatory monthly employer contribution equivalent to 1% of their employee’s gross salary, as well as deducting an additional 1% from the employee’s salary.  

The SDL is the Skills Development Levy, which was briefly mentioned at the beginning of the episode and which we’ll dive into a bit later.  

So let’s look at some core pieces of legislation that affect payroll. One of those is the BCEA. What can you tell me about that?  

Tracey Wiehman (16:33):  So the BCEA is the Basic Conditions of Employment Act, and it’s exactly that, really it lays out what the companies and the employers need to provide as basic conditions for their employees. So it regulates things like overtime work, days of work, the leave or absences that should be allowed. It gives the employers a platform or a guideline as to what conditions are acceptable for employment within the country.  

Luisa Rollenhagen (17:03): And what about the Employment Equity Act, which was briefly mentioned at the beginning of the episode?  

Oswald Bailey (17:08):  The Employment Equity Act in itself, I mean is legislated, so it’s a legal obligation and it was introduced to obviously address workplace discrimination, promoting affirmative action for previously disadvantaged individuals, which are now called designated groups. So those include primarily people classified black, so black people, black women, people with disabilities.  

So the Employment Equity Act, if you put it in layman’s terms, is to address the past failures in affording everyone employment opportunities and treated all, treat us or treat individuals all equally in the workplace. So that’s really the essence of the Employment Equity Act.  

Tracey Wiehman (17:58):  Just to add to that, so employers are obligated to provide a five-year plan, and the plan needs to aim towards being representative of the country’s demographic split. So they want companies to be representative of the country and of also the area that they operate in. And while they understand that that’s not something that’ll happen overnight, they encourage employers to over a five year plan, get as close as possible to the demographic splits of the country. The employers do report every year to the departments of labor on the statistics and also update plans and so on each year.  

Luisa Rollenhagen (18:41): And how does this differ from the Triple B Double E Act?  

Tracey Wiehman (18:45):  So essentially the Triple B Double E Act encompasses quite a few more pillars than just the equity statistics. So the Employment Equity Act addresses one part of the Triple B Double E, and that is of course, trying to get your workforce representative of the demographics of the country. The Triple B Double E is maybe something that Oswald could just expand on, but there is quite a lot more pillars involved in this process.  

Oswald Bailey (19:13):  So as Tracy said, there are particularly five pillars, but before I get to that, just to say that the Triple B Double E Act is voluntary, but what does help is participation in that process. So it’s a scorecard based economic policy, and again, in order to promote economic participation for designated groups like black people, and again, when you look at that scorecard based approach, they look at the ownership of the company as a locally owned, if locally owned, who are the owners, how is the ownership divided look at management control. So the level of management, does it consist of black managers? Does it consist of other groups of individuals as well? They look at skills development across the organization or across the business. They look at preferential procurement. So are we procuring from also from previously disadvantaged groups or now designated groups? And then look at the enterprise and socioeconomic development aspect as well.  

The employment equity does feed into, or rather, let’s say employment equity compliance. So if you get your targets right, you set up your targets properly and you achieve them, that does feed into the Triple B Double E scorecard. And how it works is that you are assigned, once you achieve certain scores in each of these pillars as measured and as evaluated by independent organizations, again, that assigns you a score and that score will tell you at what level your Triple B Double E activities is rated at. What does this help with? It helps, for example, tendering for government business, because government would say, okay, we are looking for certain organizations to tender for business with us. We might be outsourcing, let’s say for example, our security staffing. We are looking for a company or companies to tender and effectively we are looking for organizations that have achieved a Triple B Double E level of let’s say one or two. And they will look at that certification because companies must be certified. So therefore they are independent companies out there that’s qualified to perform that certification. They will certify the company accordingly based on these five pillars. And then again, with that’s a certification, you can actively get involved in government tenders or you can show that certificate for any other vendor or client that wishes to do business with you as an organization.  

Luisa Rollenhagen (21:54): What are some of the pitfalls that companies can fall into when trying to meet these standards?  

Tracey Wiehman (21:59):  So I think for me, the biggest pitfall is window dressing. So we see a lot of companies do it just to meet the requirements and not really to fulfill its full intention. If done correctly, it really can uplift people. It of course tries to correct the wrongs of the past, and it provides people with a lot of opportunities if done correctly. Unfortunately, there are some companies that would then window dress it and perhaps not fulfill its full intentions behind it just to get the scores in order to get business. And that’s something obviously that we wouldn’t encourage because it really does have its place if it’s done properly. 

Luisa Rollenhagen (22:42): I see. Many of the core pieces of legislation in South Africa’s labor laws are designed to uplift and protect its workforce. I’d like to go into the details of another one of those pieces of legislation, namely the Skills Development Levy. How does that work?  

Tracey Wiehman (22:58):  So the Skills Development Levy is, it’s something that is calculated through the payroll. It’s a company contribution only, which means that there’s no employee deduction and it’s calculated at 1% of the taxable remuneration of each employee. That is then paid over to SARS as part of the EMP201 payment, along with the taxes and the UIF.  

Luisa Rollenhagen (23:22): Just interrupting again to note that the EMP201 is a tax return that employers must submit to SARS on a monthly basis.  

Tracey Wiehman (23:31):  So they are the custodians of that money and that revenue, which then gets distributed to the relevant SETAs. So each industry or sector has a SETA.  

Oswald Bailey (23:42):  It’s the acronym for Sector Education and Training Authorities.  

Luisa Rollenhagen (23:46): Did I mention that there were going to be a lot of acronyms in this episode?  

Tracey Wiehman (23:51):  Each employer would belong to the SETA within the industry, and the SETA offers different opportunities. They also provide stipends for employers that are doing full qualified ownerships for some of these employees. So it all contributes just to the upliftment of the South African people trying to get people more educated, get them more experienced. And on the job type training, there’s a couple of aspects to it. When yes, you do pay, the companies do pay this contribution every month, but there are ways to get some of that contribution back there. Certain requirements need to be met in terms of training and upskilling throughout the year, keeping accurate records of it and so on. So there’s also opportunity for employers to get some of those money back. In terms of the grants, Oswald, I’m not sure if you’ve got anything to add.  

Oswald Bailey (24:40):  As Tracy said, outside of the sector education and training authorities, there’s also the National Skills Fund. So that money is used through that mechanism as well. And again, it’s primary for training purposes and particularly perhaps where there is a, let’s say a skill shortage in a certain industry, they will fund training to get individuals in that particular sector upskilled to the extent possible. So it’s, I mean, if you think of 1% of every contribution, it’s a lot of money that goes into that fund and to just build on and getting people skilled accordingly.  

Luisa Rollenhagen (25:17): We were curious to find out what kind of training opportunities were funded by this levy and how employees felt about it. So we reached out to Naomi, a manager at a financial institution in Johannesburg, to tell us more about her experiences with training opportunities funded by the SDL.  

Naomi (25:35):  My name is Naomi. I work for a development finance institution that provides funding into companies operating in the manufacturing sector. My specific role is funding in the small and medium enterprise sector. So we focus and target the small medium enterprises. I have been there for over 30 years and it’s really because the mandate of my organization dovetails with my passion for developing small and medium enterprises. I am the original manager looking after a team of eight. These are investment analysts that consider the funding applications, and my role is to review, provide strategic direction and review those reports for submission to our various committees.   

Luisa Rollenhagen (26:26): Naomi tells us that her organization has always prioritized skills development opportunities for its workforce.  

Naomi (26:34):  Well, my organization actually is quite dedicated to providing training. It is actually known as the training ground in our country. So from when I started we’ve always had opportunities to pursue training and development. I joined the company in 1992. And so over the 30 years I have participated in different training opportunities at different institutions. Some it’s by nomination, by the organization nominating me to be in a program for women’s development, for instance, where we went to China and we were just looking at how they do things there differently.  

The first training I remember, which was formal, was a principal of business management that was at the business school. And after a couple of years then I pursued, so most of my studies were around business leadership and development. So they were really focused around that. Then I went onto this women’s development program that I was nominated for as I indicated when we went to China, that was really to identify opportunities to come back and see how we can change how we do things internally. And I think the benefit of that was through that program I was part of the team that introduced the new ways of doing things and we actually, my organization then formed a new departmental unit that would facilitate the screening of funding inquiries.  

Luisa Rollenhagen (28:03): For Naomi, the funds collected through the Skills Development Levy are instrumental in facilitating such opportunities. She also explained that because companies are able to claim back some of their contributions to the SDL, it’s a win-win for everyone.  

Naomi (28:18):  I think it’s actually brilliant. It’s actually great because this is a levy that government charges companies. So companies that qualify, there are criteria obviously that qualify have to them contribute towards the skills development levy, but they have an opportunity to claim back when they develop their staff. So for me, I think it is beneficial on both sides in that yes, companies, through training their staff or their employees, benefit because when you train your employees, they enhance your opportunities, they enhance how you do things as an organization and on the other hand you are able to claim back. So it’s really, I think for me, beneficial. I really think it’s brilliant because it provides companies opportunities to upskill their force. And research has shown that when a country has skilled labor, it attracts investments. You reduce crime, you reduce unemployment because then people are able to venture into different avenues.   

And the benefit is I have seen the impact of the training, but also when you train with the mindset of wanting to come back and improve how you do things to add value to organization. I think for me that’s the most valuable reason that companies want to invest in their staff.  

I’m currently pursuing training, it’s called Advanced Diploma in Management Practice through the Henley Business School. And all this is funded by the organization and I like to believe that it is through the skills development levy that my organization is able to do this because they’re able then to claim back.  

Luisa Rollenhagen (29:59): She’s also seen colleagues take advantage of SDL-funded training opportunities, to her team’s benefit.  

Naomi (30:05):  I’ve seen colleagues that graduate, that have pursued training opportunities in the field that they’re in and they graduate. I’ve seen colleagues even leave the organization for higher positions outside. And I know we partnered with the Duke University, colleagues traveled overseas to participate in this leadership training for, and it was targeted at women.  

I have seen the benefits, but you can also see it when colleagues, even my own team members come back and bring solutions and they bring solutions in terms of, you know what, maybe we can do this differently or better. So yeah, I know even within my peers of regional managers, colleagues continue to train and develop.   

Luisa Rollenhagen (30:53): Naomi’s employer also recruits talent through SDL-sponsored programs.  

Naomi (30:58):  We have what we call a program that takes in graduates, especially in the engineering and financial or accounting space that come in through the SDL, they get training internally for two to three years and then they can graduate into the organization. So for me, they provide, it’s like a funnel they provide, it’s a pipeline of employees.  

Luisa Rollenhagen (31:23): I wanted to know more about the levy’s funding structure, so I went back to Tracey and Oswald to find out more.  

Are the opportunities that are funded through this levy across all sectors? Would you find them in both, let’s say, accounting positions and manufacturing sectors?   

Oswald Bailey (31:39):  Absolutely, yeah. As Tracy mentioned, those sectors are exactly representative of those different sectors in South Africa. So you have financial services, you’ve got agriculture, you have retail, you have mining, you have a range of them, and they do, they are representative across sectors in South Africa.  

Tracey Wiehman (31:56):  So that means there is learning opportunities and also opportunities for employers to get some grants back in all the sectors.  

Luisa Rollenhagen (32:04): How do employers get some of the grant back?  

Tracey Wiehman (32:07):  It’s actually a monetary refund. So at the end of each year, each reporting year, the employer would need to submit certain documentation and proof that the requirements have been met and then they calculate a refund based on that.  

Luisa Rollenhagen (32:23): Does a company have to have a certain number of employees to qualify, or do companies of any size participate?  

Tracey Wiehman (32:29):  Any size company.   

Luisa Rollenhagen (32:31): What’s a typical payroll cycle in South Africa like?  

Tracey Wiehman (32:34):  So the typical and most common payroll cycle is monthly, and so there would be 12 pay periods within a year. Our tax year runs from March to February, so we do have two reconciliation periods, one after the first half and then one right at the end of the tax year, and that’s when you would reconcile your payroll liabilities to the payments that have been made to the authority monthly. So each month the employer is required to submit the EMP201, which is basically the declaration of taxes, UIF and SDL to the revenue authority. It’s all fully online and the payments are also done through the portal. And additionally, the employers also need to submit a UIF file to the Department of Labor every month. And that basically contains the breakdown of what is that UIF payment made up of, so which employees? And it also reports the new hires as well as the terminations monthly to the Department of Labor so that if an employee later needed to claim unemployment benefits, they have these records in their system. That’s all that’s done monthly. From a payroll perspective annually, the employers also need to submit to the Workman’s Compensation that basically there is a calculation the payroll system can calculate. We call it the OID remuneration, the Occupational Injury and Diseases remuneration, and this is declared to the Workman’s Compensation once a year. Once the declaration is received, the Workman’s Compensation will do a calculation and advise the employer of what the amount is that needs to be paid. So the employer would then need to make that relevant payments over annually to the Workman’s Compensation.  

Luisa Rollenhagen (34:27): And what exactly does the Unemployment Insurance Fund cover?  

Tracey Wiehman (34:31):  So the Unemployment Insurance Fund covers the employee in the terms of a involuntary loss of work. For example, the contract was ended or perhaps there could have been changements or redundancies. It would cover the employees for a certain amount of time. It also covers employees for a certain amount of months after retirement and also for illness as well as maternity. So those are the main reasons that you would be able to claim UIF. Of course there are calculations and how many days are allowed for each type of claim, but yes, that’s the reason that that’s what it protects them against.  

Luisa Rollenhagen (35:06): Got it. Are there any other challenges that multinationals should be aware of?  

Oswald Bailey (35:11):  What I do also want to mention is foreign companies would at times want to bring or give the opportunity for foreigners to come and work in South Africa. And I think that’s very important to note that we do have laws governing that as well. So for example, you have the immigration Act, so any individual coming to South Africa, you can’t just work, you have to apply for certain permits, you have to apply for certain types of visas, and that allows you then to take up employment in South Africa. I think that is one thing that is highly important for people to recognize. I would also say that South Africa, and maybe in my experience in Cape Town is there’s quite a good expatriate community, but again, those are individuals that see certain parts of Africa as a good lifestyle for having families here whilst they work here as well. So I would say in addition to everything that we’ve mentioned, companies ought need to just be mindful of the Immigration Act, which covers the certifying individuals to work in South Africa.  

Luisa Rollenhagen (36:19): Absolutely, making sure you respect the country’s work and immigration laws for your foreign workforce is crucial. So how can ADP help multinationals coming to South Africa navigate these challenges?  

Tracey Wiehman (36:32):  Well, ADP being a global company has access to many resources, many experiences, and it’s basically the global reach and scalability that we can provide while at the same time maintaining the local knowledge and the local experience around the local legislation. And of course also just the economy and the culture around South Africa and fully understanding that.  

Oswald Bailey (36:56):  And just to add Luisa, in addition to that, what is quite good is also having the experience not just in the South Africa context, but also companies within South Africa who look to expand into other African territories as well. Again, having some sight into some of the tax challenges in other countries is also something that ADP can assist with. And I think having that comfort to ensure that your payroll is accurate, it’s going to be done timely, but most importantly, it’s done completely in terms of what legislation is required from a compliance point of view.  

Also, there’s benefit to when we are reaching out to clients or when we engage with them to help them understand how important security, information security is to us and how important that accuracy of their data and the privacy of their data, just how important that is to us. And I think that’s one thing that shouldn’t be underestimated and clients enjoy when they hear the effort and how much we do around that to ensure that that data stays secure and it stays private.  

Luisa Rollenhagen (38:04): Thank you for bringing up data security, as that’s really a significant consideration.   

We’re reaching the end of the episode. But before I let you go, I want to ask you one of my favorite questions that I ask all of our guests: What do you personally love about working in payroll in South Africa?  

Tracey Wiehman (38:23):  So for me, it’s really fulfilling to know that you are basically enabling the livelihood of the employees. Without their pay, they wouldn’t be able to support their families. And in South Africa, the average that one employee supports is four to six people. So you know that every time you are pushing out a net pay, you are supporting four to six people ensuring that they have food on the table, that they have transport, and they can perhaps get to school. So it’s a very fulfilling and rewarding industry to be in.  

Oswald Bailey (38:55):  For me, Luisa, as Tracy and her teams and the teams in the organization, as they go about their business, for me what’s rewarding is to help them and support them on the compliance front, helping them understand if certain things needs to change, what that change is about, if they want to troubleshoot, if they’ve got some queries, if there’s something that’s unclear, it’s always good to be rich to and provide advice to help them do their jobs to the best of their ability. And I find that very rewarding.  

Luisa Rollenhagen (39:26): That was a great answer from both of you. Tracey and Oswald, thank you so much for joining us today and giving us a deeper insight into South African payroll.  

I learned a lot of new acronyms today, and it was also fascinating to explore how South Africa’s labor legislation is designed to support its workforce.   

I hope you got a bit more insight into South Africa’s payroll and the labor landscape today. If this episode has piqued your interest or your company is considering expanding into South Africa, please visit adp.com.  

And don’t forget to subscribe to learn more about payroll around the world with each new episode.   

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