The South African Employer's Payroll Guide: PAYE, UIF & SDL

Read the full guide

Add your name and email and the full guide opens below. We email you a copy as well.

Registering as an employer

Employing someone in South Africa means registering as an employer and collecting PAYE and UIF from every pay run on SARS's behalf, plus SDL once your payroll passes R500,000 a year. Late or wrong payments attract automatic penalties each month.

PAYE

Pay-As-You-Earn is income tax withheld from your employees' salaries using SARS's tax tables and paid over on their behalf. You calculate it each pay run, deduct it, and pay it to SARS. You hold the money as SARS's collection agent, and SARS penalises late payment automatically.

UIF

The Unemployment Insurance Fund is funded by 1% from the employee and 1% from the employer — 2% of remuneration in total, subject to the monthly earnings ceiling. Your staff claim from UIF if they lose their job, go on maternity leave or fall ill. Their claims depend on your declarations being up to date.

SDL

The Skills Development Levy is 1% of your total payroll, payable by employers whose annual payroll exceeds R500,000. Below that you're exempt. It funds the SETA skills system, and you can reclaim a portion through approved training.

The monthly EMP201

Every month you file an EMP201 declaring the PAYE, UIF and SDL due, and pay it, by the 7th of the following month (or the last business day before, if the 7th is a weekend or public holiday). Miss it and SARS levies a 10% penalty plus interest automatically.

The EMP501 reconciliation

Twice a year you reconcile: the interim EMP501 (covering the first six months, filed around September–October) and the annual EMP501 (the full year, filed around April–May). The reconciliation ties your twelve EMP201s to the IRP5/IT3(a) certificates you issue to employees — the documents they need to file their own tax returns. An error here carries through into your employees' personal tax returns.

COIDA

Separately from SARS, employers must register with the Compensation Fund (COIDA) and file an annual Return of Earnings. It covers employees injured at work. You need a Letter of Good Standing from the Compensation Fund to bid for many tenders, and you cannot get one without registering.

Our payroll service

Each year an employer files twelve EMP201s, two EMP501 reconciliations, year-end IRP5 certificates and a COIDA Return of Earnings. We run the payroll and prepare and submit the EMP201s, EMP501 reconciliations and IRP5 certificates for you. See how our payroll service works.

Common questions

When exactly is the EMP201 due?

By the 7th of the month following the pay period — or the last business day before the 7th if it falls on a weekend or public holiday. Late payment triggers a 10% penalty plus interest automatically.

Do I have to pay SDL?

Only if your total annual payroll exceeds R500,000. Below that you're exempt from SDL, though you still handle PAYE and UIF.

What's the difference between the EMP201 and EMP501?

The EMP201 is the monthly declaration and payment. The EMP501 is the twice-yearly reconciliation that ties those monthly filings to the IRP5 certificates your employees receive — an interim one mid-year and the annual one after tax year-end.

Can you run payroll for just one or two employees?

Yes. The obligations and deadlines are the same whether you employ one person or fifty.

The employer's guide to PAYE, UIF and SDL