How payroll works in South Africa
Payroll in South Africa is the monthly process of calculating each employee's gross remuneration, withholding PAYE, UIF and any other deductions, paying the net amount, remitting the statutory amounts to SARS by the 7th on an EMP201, and reconciling everything twice a year on an EMP501 with IRP5 certificates.
Payroll Africa Editorial · SARS Payroll Compliance Team
The Payroll Africa editorial team is composed of registered tax practitioners, payroll administrators and BCEA specialists who maintain the SARS PAYE, UIF, SDL and ETI engines that power the platform. Every article is reviewed against the current SARS BRS and Basic Conditions of Employment Act before publication.
- SARS registered tax practitioners
- SAPA-affiliated payroll administrators
- BCEA and LRA compliance reviewers
Last updated 15 Aug 2026
Step 1 — register as an employer
Before the first payday you must register with SARS for PAYE within 21 business days of becoming an employer, and for UIF with both SARS and the Department of Employment and Labour. SDL registration follows automatically once your total annual payroll is expected to exceed R500,000. Employers of manual or higher-risk workers must also register with the Compensation Fund under COIDA.
- PAYE reference number from SARS (starts with 7)
- UIF reference with SARS and with the Department of Employment and Labour (U-number)
- SDL reference where annual payroll exceeds R500,000
- COIDA registration and annual Return of Earnings
Step 2 — work out gross remuneration
Gross remuneration is basic salary or wages plus every taxable item paid or given for the period: overtime, commission, bonuses, allowances and the taxable portion of fringe benefits such as company cars, low-interest loans and employer-paid medical scheme contributions. Some items are only partly taxable — a travel allowance, for example, is taxed on 80% of the value unless at least 80% of use is for business.
Step 3 — calculate the statutory deductions
Three statutory amounts arise every month. PAYE is withheld from the employee using the SARS tax tables and the age-based rebates. UIF is 1% from the employee and 1% from the employer, each capped on remuneration of R17,712 per month. SDL is 1% of the leviable amount, paid by the employer only.
Deductions the employer may not make without authority are just as important: section 34 of the BCEA prohibits deducting for damages, shortages or training costs unless the employee has agreed in writing and a fair procedure was followed.
- PAYE — employee deduction, SARS tax tables less rebates
- UIF — 1% employee plus 1% employer, ceiling R17,712/month
- SDL — 1% employer levy above the R500,000 payroll threshold
- ETI — a reduction of the PAYE you pay over for qualifying 18–29 year olds
Step 4 — issue a compliant payslip
Section 33 of the BCEA requires a written payslip at the workplace on payday. It must show the employer and employee, the period, hours worked, the pay rate, overtime, gross pay, every deduction itemised, and net pay — plus enough detail for the employee to check the calculation.
Step 5 — pay SARS and reconcile
The EMP201 declaring PAYE, UIF, SDL and any ETI claimed is due by the 7th of the following month, or the last business day before if the 7th falls on a weekend or public holiday. Twice a year the EMP501 reconciliation must agree the EMP201s filed, the payments made and the IRP5/IT3(a) certificates issued: the interim submission covers March to August and the annual submission covers the full tax year.
- EMP201 — monthly, by the 7th
- EMP501 interim — usually September/October, covering March to August
- EMP501 annual — usually April/May, covering the full 1 March to 28/29 February year
- IRP5/IT3(a) certificates issued to employees after the annual reconciliation
Frequently asked questions
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