5 Things to Know Before Hiring Your First Employee

Hiring your first employee is a big step for your business and it’s definitely something to celebrate. It’s exciting but can also be a bit tricky with all the rules you need to follow. Here are the key steps to make it go smoothly:

1. Create an Employment Contract

When you hire someone, you need a clear contract. This contract should explain:

• The job
• When they work
• How many leave days they get
• How to end the contract.

It also needs to be laid out in a specific way. We suggest using a ready-made contract to make sure everything is right.

A contract is important because it protects both you and your employee and ensures everyone is on the same page about the job.

2. Tax Number & PAYE

As the boss, you need to set up your employee’s tax number. This means you need to register them with the South African Revenue Service (SARS). This is done at the SARS office or online.

Once registered, they’re set up for Pay-As-You-Earn (PAYE) tax. Signing up for PAYE is a key step when you hire an employee, as this system lets SARS collect taxes from your employee every month.

3. Learn About Labour Laws

South Africa has special labour laws that bosses need to follow. It’s good to learn these laws to make sure you’re doing everything right. Some of these laws include:

Overtime:

• Overtime in South Africa is always voluntary. Employees can work up to 3 extra hours a day or 10 extra hours a week, but only if they want to and you both agree.
• For overtime, you need to pay your employees 1.5 times more than usual, and double on Sundays or public holidays.

Leave:

• It's your responsibility to make sure your employees have at least 21 consecutive days of annual leave each year.
• If a public holiday falls during your employee's annual leave, it doesn't count as part of their leave days.

Dispute Resolution:

• If there's ever a disagreement between you and your employees, there's a process to follow which usually starts with conciliation, handled by an organisation called the CCMA.
• If things escalate, it might end up in court.

4. Register for UIF

The Unemployment Insurance Fund (UIF) gives short-term help to workers when they lose their job or can’t work because of maternity, adoption leave, or sickness.

All bosses need to sign their workers up for UIF, according to the law. Here you can register your company for UIF with SARS and the Department of Labour.

5. Register for COID

The Compensation for Occupational Injuries and Diseases (COID) is a type of insurance that covers workers who get hurt or sick because of their job. It’s a law and protects your business from having to pay a lot of money if an accident happens at work. Find out more about COID registration here.

For more information on starting a company in South Africa, check out this article.