South Africa’s overtime laws can be a complex payroll proposition: employers and employees should understand their obligations.

South Africa is the second-largest economy in Africa after Nigeria with an employee population of over 10 million. Economic growth in South Africa has maintained an upward trend for the past decade, while the National Development Plan 2030, put in place by President Jacob Zuma in 2009, aims to deliver sustained 5% growth over the next ten years.

The governmental focus on business has led to the development of both infrastructure and regulation in the workplace, with overtime compensation posing a particular administrative challenge for employers. Arlene Leggat, president of the South African Payroll Association has raised concerns that many employees are not familiar with the technicalities of overtime regulations and should scrutinise their entitlements closely. Employers must also understand their obligations towards employees, and ensure their payroll can implement overtime properly.

What are South Africa’s overtime rules?

Overtime rules in South Africa are set out in the Basic Conditions of Employment Act (BCEA), which ensures fair and equal conditions for all employees. Under the BCEA, employees may work a maximum of 45 hours a week (excluding lunch hours) at a normal rate of pay: that breaks down as 9 hours per day for a 5-day work week, and 8 hours a day for a work week of more than 5 days.

Overtime applies when an employee works beyond their normal contracted hours – or works over 45 hours per week. Overtime in South Africa is implemented under the following conditions:

  • Employees may work a maximum of 3 hours overtime per day - or 10 hours in any one week.
  • Overtime remuneration is paid at 1.5x normal rate, and 2x normal rate for Sundays and public holidays.
  • Overtime pay is subject to an annual earnings threshold of R205,433.30.
  • All overtime is voluntary and can only be worked under an agreement between employer and employee.
  • Senior management employees do not receive overtime pay, nor do employees who work less than 24 hours a month for their employer, or employees who regulate their own hours (travelling salesmen, for example).

Employers cannot force their employees to work overtime. Similarly, employees who earn over the overtime threshold rate are not subject to overtime pay rules and cannot demand to be paid at overtime rates.

How do employment contracts mandate overtime?

Employees should scrutinise their employment contracts carefully in order to understand how much overtime they are entitled to. References to the BCEA can be technical and even misleading: employees may not realise they are earning a basic salary above the overtime earnings threshold, or even that they are being employed in a senior management position.

The overtime threshold is intended to protect low income earners – who make up the majority of the employees working at the overtime rate. A recent lawsuit saw an employer argue that paying overtime would push their employees over the earnings threshold and so they should not be obliged to pay overtime. The court ruled against the employers, and employees were reimbursed.

Implementing overtime correctly

Employers have a responsibility to implement overtime correctly and create a safe, sustainable work environment for their employees. This means keeping track of employee work hours, especially in industries like food and retail, where overtime shifts are offered frequently, and employees may be vulnerable to exploitation. Similarly, employment contracts must be transparent and clear, and drafted to help employees understand their overtime entitlement.

Practically, employers - and especially international employers - should ensure their payroll administration is set up to deliver overtime compliance in South Africa, and is flexible enough to accommodate irregular shift patterns and pay rates.

For more insight and information into South Africa’s payroll and tax landscape, browse Activpayroll South Africa’s Global Insight guide.

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