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

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The moment you hire, you become a SARS collector

Employing someone in South Africa means registering as an employer and collecting three things from every pay run on SARS's behalf: PAYE, UIF and — often — SDL. Get the mechanics right once and it's routine; get them wrong and the penalties are automatic and monthly.

PAYE — the big one

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. It's not your money at any point — you're the collection agent, which is exactly why SARS treats late payment so seriously.

UIF — 2% split down the middle

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. It's what lets your staff claim if they lose their job, go on maternity leave or fall ill, so keeping the declarations current genuinely matters to your people, not just to SARS.

SDL — if your payroll is big enough

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 a portion can be reclaimed through approved training — something many small employers pay but never claw back.

The EMP201 — your monthly declaration

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 — no warning, no discretion. This single date is the heartbeat of SA payroll.

The EMP501 — twice-yearly 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. Errors here cascade into your staff's personal tax, so accuracy isn't optional.

COIDA — the one people forget

Separately from SARS, employers must register with the Compensation Fund (COIDA) and file an annual Return of Earnings. It covers employees injured at work. It's easy to overlook because it isn't a SARS deadline — until you need a Letter of Good Standing for a tender and discover you're not registered.

Why most small employers outsource it

None of this is intellectually hard. It's just relentless, dated and unforgiving — a dozen EMP201s, two reconciliations, year-end certificates and COIDA, every year, on time. That's precisely the kind of work worth handing to someone who does nothing but get it right. See how our payroll service works.

Frequently asked questions

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 are the same whether you employ one person or fifty, so a fully-managed service often makes more sense for very small teams, not less — the deadlines don't scale down.

The employer's guide to PAYE, UIF and SDL