Payroll in South Africa: What You Need to Know

Payroll in South Africa - How does it work

Payroll is an essential requirement of employers and unfortunately is something that you cannot avoid. Yes, unsurprisingly payroll in South Africa is just as needed here as it is elsewhere in the world. Even though the idea of payroll might be daunting, we have decided to explain the basics and give you the information you need to be on your way to compliance! 

In this article, we will discuss the basics of what you need to know about payroll is South Africa. 

Payroll  in South Africa – How does it work?

It is an exciting time when you first grow your business and start hiring employees to increase productivity and handle a larger workload. This does however also increase admin and it is extremely important that you ensure absolute compliance with the law. Payroll is one of the administrative tasks that cannot be overlooked. Some of the basics that you should take care of include:


It is required that you register for Pay As You Earn (PAYE) within 14 days of hiring an employee. This registration ultimately indicates that you are an employer and calls for you to deduct taxes (owed to SARS) from an employee’s salary every month. In order to register one must complete and submit an EMP101 form to SARS. PAYE also requires employees to deduct fees owed to SARS from any additional earnings and benefits that an employee might receive, this includes bonuses. The fees that are deducted must be paid to SARS by the 7th of each month and one needs to submit an EMP102 return document along with the payment. 


Within 14 days of hiring an employee, one must also register for SDL (Skills Development Levy). If the total remuneration paid to all employees over a 12-month period does not exceed R500 000 you will not be required to register for SDL. If you are required to register you can fill in the relevant section on the EMP101 document along with your PAYE registration. The same payment rules as are required of PAYE payments are applicable for SDL payments. This TAX is specifically to further support skills development within South Africa. 


The Unemployment Insurance Fund (UIF) also requires the employer to complete registration within the first 14 days of employment and the section can also be found on the EMP101 form. This TAX does however require both the employee and the employer to contribute to monthly payments. The amount is 1% of the employee’s monthly salary. Also forming part of the monthly EMP102 submission and payment, the payment is due on the 7th of each month. UIF also requires you to declare your monthly payments either by completing a UI-19 form or submitting a declaration electronically.

TAX Certificates

IRP5 TAX certificates must be provided to employees annually (at the end of February) or when they leave your employment. You are also required to submit an EMP105 form at the end of each TAX year to declare and reconcile your UIF, PAYE, and SDL payments as well as your TAX certificate information and EMP201 declaration. This process is made much easier by making use of a comprehensive payroll software system. 


Even though this is not a requirement it is advisable to register to the SARS eFiling system as this will allow you to perform all of these tasks and make payments in a secure online environment. If you are registered to eFiling you will also receive some small extensions on certain payments such as VAT. 

The Best Payroll Software in South Africa

Keeping track of and completing payroll is made much easier (and faster) when you make use of a comprehensive payroll software solution. As a cloud-native payroll software solution, PaySpace has up-to-date legislation built into the software ensuring you are always compliant with the newest payroll regulations. 

Contact our team to find out more about PaySpace and how we can streamline your payroll process.