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.
FAQs
Employees in South Africa are entitled to extra compensation for overtime, receiving 1.5 times their usual pay. On Sundays and public holidays, the pay rate doubles. Alternatively, an agreement between the employer and employee can alter this arrangement.
How do you calculate overtime hours in South Africa? ›
To calculate overtime pay, you need to take the employee's hourly wage and times it by 150%, giving you the hourly overtime wage. For example, if an employee receives R10000 a month and works 220 hours, their hourly wage is R55. 55; in this way, their overtime rate will be R83.
Can an employee refuse to work overtime in South Africa case law? ›
Section 8 of the Basic Conditions of Employment Act, No 3 of 1983, as amended, states that "No employer shall require or permit an employee to work overtime otherwise than in terms of an agreement concluded by him with the employee and provided such overtime does not exceed three hours on any day or 10 hours in any ...
What is the formula for calculating overtime pay? ›
According to the FLSA, the formula for calculating overtime pay is the nonexempt employee's regular rate of pay x 1.5 x overtime hours worked. This calculation may differ in states that have requirements, such as double time, which are more favorable to the employee.
How much tax do you pay on overtime in South Africa? ›
In fact, overtime is taxed as the same rate as ordinary pay. However, this can be slightly more complicated where your overtime isn't paid at the same rate as your ordinary hours.
Is it a must to work overtime in South Africa? ›
There must be an agreement
The BCEA states that “[a]n employer may not require or permit an employee ... to work overtime except in accordance with an agreement”. This does not have to be a written agreement, but to avoid any doubt, it is common practice to include an overtime clause in the contract of employment.
Is Saturday a working day in South Africa? ›
Working days (or business days) commonly refer to the days that most South Africans are at work, namely Monday to Friday. Working days excludes government-recognised public holidays such as New Years Day, Human Rights Day, Good Friday, etc.
What are the rights of employees in South Africa? ›
General employee rights
not to be unfairly dismissed or discriminated against. to be provided with appropriate resources and equipment. to have safe working conditions. to receive the agreed remuneration on the agreed date and time.
Can an employer refuse leave South Africa? ›
The employer can refuse to grant the leave until a later date if he can show good cause, but he may not stipulate that the employee can “only take 5 days” or “can only take 7 days” If the employee has 11 days accumulated to him, he is entitled to take the 11 days consecutively.
Is it illegal to not pay overtime in South Africa? ›
Overtime must be paid at one-and-a-half (1.5) times of your normal hourly pay rate. You and your employer may also agree to paid time off instead of extra pay or a combination of time off and paid overtime.
COMPRESSED WORKING WEEK
By written agreement, employees can work up to 12 hours a day (including lunch intervals) with no overtime pay, not on more than five days a week, provided they work not more than 45 hours' ordinary time a week, and not more than ten hours' overtime per week.
Can you be fired for refusing to work overtime in South Africa? ›
Failure to do so will render the initial agreement to work overtime to be of no effect. The subsequent dismissal of an employee for refusing to work overtime will therefore be unfair in the absence of a binding agreement. Summary of judgement prepared by Jan du Toit, Director at Labour Guide.
How much is overtime pay for $18 an hour? ›
$18 multiplied by 1.5 equals $27. Multiply $27 by 5 (the number of overtime hours), which equals $135 - the amount you owe them for overtime. Multiply $18 by 40, which equals $720 — the amount you owe them for the standard workweek.
What is the difference between overtime and premium overtime? ›
Premium overtime is compensated at the rate of time-and-one half per hour. Straight overtime is time worked that is more than an employee's regularly scheduled hours, but less than 40 actual hours in a workweek. Straight time is compensated at the rate of one hour of pay per hour worked.
Are tips included in overtime calculation? ›
Are the tips I receive considered part of my "regular rate of pay" for overtime calculations? A. No. Since tips are voluntarily left for you by the customer of the business and are not being provided by the employer, they are not considered as part of your regular rate of pay when calculating overtime.
What is time off in lieu of overtime? ›
“In lieu” is a French expression meaning “instead of”. It refers to the paid time-off work employees receive “instead of” getting paid for additional hours worked above their normal contracted working week. In this way, it can be seen as an added vacation on top of the vacation days included in an employee's contract.
How many hours is a work month in South Africa? ›
The average working hours over a 12 month period calculates to 195 hours per month. However, no individual month's working hours will calculate to exactly 195 hours. The working hours per WEEK as prescribed by Law, is 45 hours per week.
How does leave work in South Africa? ›
Annual l eave entitlement
The entitlement is 21 consecutive days annual leave on full remuneration, in respect of each annual leave cycle, and if an employee works a five-day week then this is equal to 15 working days, or if the employee works a six-day week then it is equal to 18 working days.
