Our Labour Specialist Provides Insights
Quick Summary:
Author: Amy-Lee Landmesser
Amy-Lee is currently pursuing her degree in Human Resources
Reviewed by: Marike Wessels
Marike Wessels LLB, LLM
Senior Associate (WC)
Not all remuneration packages are created equal. The law provides specific guidelines on how it can be structured, what may be deducted and so forth.
We break down some of the main points to consider below.
Understanding minimum wage laws:
Minimum wage refers to the lowest wage an employer is legally required to pay an employee for each hour worked. As of 1 March 2026, the current minimum wage is R30.23 per hour. The only exceptions to this law are workers that are part of an expanded public works program which requires a wage of R16.62 per hour. It is important to note that an employer is not legally permitted to reduce an employee’s existing wage in order to comply with the National Minimum Wage.
Structuring employee benefits packages:
When structuring an employee’s benefits package, it is important to consider the company’s demographics, career stages and the company’s personal preferences in order to maximise effectiveness and engagement.
Benefits are legally required to include and contribute to the Unemployment Insurance Fund, Compensation for Occupational Injuries and Diseases Fund, National Minimum Wage, Leave entitlements and Overtime Compensation.
On the contrary, there are also optional benefits which are not required by the law, which include Medical Aid, Retirement Funds, Death and Disability benefits, Wellness programs, Flexible benefits and other allowances which include, but are not limited to, transport allowances or educational assistance.
There are a few ways in which employee benefit packages can be structured, which include a Total Guaranteed Package or Cost-to-Company package. These packages provide the employer with the total cost outcome while allowing the employee the flexibility to allocate the funds to their preferred benefits.
Similarly, an Add-on approach involving adding benefits to a base salary can be an alternative to a Total Guaranteed Package. An alternative to these structures is the packaging approach which involves the employer offering the employee a selection of benefits that align with the Company’s internal and external policy and legislation.
Need Help with writing a Job Advertisement?
Managing Payroll and deductions:
It is vital when managing payroll and deductions that accuracy and compliance with the relevant regulations and laws are abided by. The first step when managing payroll and deductions is to ensure that the employer is registered with the South African Revenue Service (SARS) for Pay-As-You-Earn (PAYE) and the Unemployment Insurance Fund (UIF).
The next step is to ensure that all the employee information is accurately obtained and stored, such as banking details and employment contracts.
The employer must then calculate the employee’s gross salary, which includes basic salary, overtime, and other payments according to the employee’s employment contracts.
After calculating the employee’s gross salary, the employer must deduct any relevant tax deductions and any other deductions applicable to the employment contract. The employer will then be left with the net pay of the employee. It is important for the employer to ensure all payments are made in a timely manner through the agreed-upon method to both the employee as well as any other relevant authorities.
It may be helpful to make use of any payroll tools, such as payroll software, to make the process easier; however, it is always recommended to check the results that the software produces to reduce the possibility of any errors.