Hiring your first employee in South Africa triggers six obligations: register as an employer with SARS for PAYE, UIF and SDL within 21 business days, register with the Department of Employment and Labour for UIF, register with the Compensation Fund for COIDA, give the employee written particulars of employment on day one, register the employee for income tax, and issue a payslip every pay period.
The registrations are not difficult. What catches people is the order, the deadlines, and the fact that an employee without an income tax number will block your annual EMP501 reconciliation entirely.
Before you hire: what it actually costs
The salary is not the cost. Budget for roughly 10% to 15% above the gross salary.
Worked example — an employee on R18,000 a month:
| Cost | Monthly |
|---|---|
| Gross salary | R18,000.00 |
| Employer UIF (1%, capped at R17,712) | R177.12 |
| Employer SDL (1%, if annual payroll > R500,000) | R180.00 |
| COIDA assessment (varies by industry) | ~R45 |
| Direct monthly cost | ≈ R18,402 |
Plus the costs that do not appear monthly:
Annual leave — 21 consecutive days, which is 15 working days on a five-day week. On roughly 260 working days a year that is about R1,040 a month of paid non-productive time
Sick leave — 30 days over a 36-month cycle
Public holidays
Equipment, workspace and software
Recruitment cost
Your time managing them
Realistic all-in cost: around R20,500 to R21,500 a month on an R18,000 salary.
One thing that reduces it: if the employee is aged 18 to 29 and earns between R2,500 and under R7,500 a month, you may qualify for the Employment Tax Incentive — up to R1,500 a month. See the Employment Tax Incentive explained.
The six obligations, in order
1. Register as an employer with SARS
Deadline: 21 business days from the first payment of remuneration on which employees' tax is deductible.
Register for:
| Tax | Applies |
|---|---|
| PAYE | Where remuneration exceeds the tax threshold |
| UIF | Generally, subject to exclusions |
| SDL | Only where total annual remuneration exceeds R500,000 |
Done through the RAV01 process on eFiling, or at a SARS branch by appointment.
The prerequisite: your registered representative must be confirmed with SARS first. Without it the registration stalls. See what is a SARS registered representative.
Full detail in when must you register for PAYE.
2. Register with the Department of Employment and Labour for UIF
This is separate from the SARS registration and it is the step most often skipped.
Registering with SARS handles the contributions. Registering with the Department, through uFiling or a labour centre, handles the fund — and then you submit monthly UI-19 declarations of employee details.
Why it matters: the UI-19 is what creates the employment record. Without it, an employee who later claims for unemployment, illness or maternity is told no history exists — and they come back to you. See what is UIF.
3. Register with the Compensation Fund for COIDA
Compulsory from your first employee.
Without it, an employee injured at work has a claim that falls on you personally, with no cap. You also cannot obtain a letter of good standing, which most sites and corporate clients require.
Then file an annual Return of Earnings. See what is COIDA.
4. Give written particulars of employment
Deadline: when employment begins.
Section 29 of the BCEA requires written particulars covering the employer and employee details, place of work, start date, ordinary hours and days, wage and how it is calculated, overtime rate, other payments, deductions, leave, notice period, any applicable council or sectoral determination, and a list of other documents forming part of the contract.
Where the employee cannot read it, it must be explained in a language and manner they understand.
Keep it for three years after employment ends. See what must be in an employment contract.
5. Register the employee for income tax
Do this at onboarding, not at reconciliation time.
From the 202602 reconciliation period, a valid Income Tax Reference Number is mandatory on IRP5 and IT3(a) certificates for every employee required to register. eFiling and e@syFile reject the entire EMP501 submission if any such employee lacks one — no warning, no partial acceptance.
Register through ITREG or BundleReg on eFiling or e@syFile.
The failure mode: you discover in May that four employees have no tax number, the reconciliation deadline is days away, and one of them left in November.
6. Issue a payslip every pay period
Required by the BCEA. It must show the remuneration, the deductions and the net amount.
Also check: does a bargaining council apply?
This overrides the national minimum wage, and it catches new employers by surprise.
Several sectors are covered by bargaining council agreements with prescribed wages, allowances, leave provisions and levies that sit above the statutory minimums — including motor, metal and engineering, hospitality, security, road freight, and wholesale and retail.
Where a council applies, it applies whether or not you are a member. Check before setting the wage, not after.
Where no council applies, the National Minimum Wage of R30.23 per hour from 2 March 2026 is the floor. Check hourly, not monthly — and remember that one employee below it disqualifies your entire ETI claim for that month. See what is the national minimum wage.
Your day-one checklist
[ ] Written particulars of employment signed, one copy each
[ ] Employee's ID and banking details on file
[ ] Employee's income tax number confirmed or registered
[ ] Employee added to payroll
[ ] Employee added to the UI-19 declaration
[ ] Employee covered under COIDA
[ ] Wage checked against the bargaining council rate or the national minimum wage, hourly
[ ] ETI eligibility assessed
[ ] Leave tracking set up — annual and sick
[ ] Emergency contact and next of kin recorded
Your first month's cycle
| Day | Action |
|---|---|
| Pay day | Run payroll, issue payslip, pay net salary |
| Monthly | Submit UI-19 to the Department of Employment and Labour |
| By the 7th | Submit EMP201 and pay PAYE, UIF and SDL |
| Ongoing | Track leave taken and accrued |
The EMP201 deadline moves. Where the 7th falls on a weekend or public holiday, it is the last business day before. Late payment attracts a 10% penalty plus interest at 10.25% per annum. See what is an EMP201.
The five mistakes new employers make
1. Treating them as a contractor to avoid the admin. If the arrangement fails the SARS tests — control over the manner of work or hours — you owe the PAYE you never deducted, plus penalties and interest. See independent contractor or employee.
2. Registering with SARS and not with the Department of Labour. Contributions reach the fund with no employee record behind them.
3. Skipping COIDA. Uncapped personal exposure the first time someone is hurt.
4. Not registering the employee for income tax. Blocks the EMP501 entirely, and it surfaces in May.
5. Setting the wage without checking the bargaining council. Sector rates override the national minimum, and back-pay is owed for the full period.
Frequently asked questions
What do I need to do when I hire my first employee in South Africa? Register as an employer with SARS for PAYE, UIF and SDL within 21 business days, register with the Department of Employment and Labour for UIF, register with the Compensation Fund for COIDA, give the employee written particulars of employment on day one, register the employee for income tax, and issue a payslip every pay period.
How much does an employee actually cost beyond their salary? Roughly 10% to 15% above gross salary in direct costs — employer UIF, SDL where annual payroll exceeds R500,000, and the COIDA assessment — plus paid leave, sick leave, public holidays, equipment and recruitment. An R18,000 salary realistically costs R20,500 to R21,500 a month all-in.
Do I have to register for UIF twice? In effect yes. Registering with SARS covers the contributions, which are paid on the EMP201. Registering with the Department of Employment and Labour covers the fund itself, and requires monthly UI-19 declarations of employee details. Doing only the first means the fund has no record of your employees.
Do I need COIDA for one employee? Yes. The obligation attaches from your first employee, including casual, part-time and domestic workers. Without it, an injured employee's claim falls on you personally with no cap, and you cannot obtain a letter of good standing.
Can I just pay someone as a contractor instead? Only if the arrangement is genuinely independent. Where the person works mainly at your premises and is subject to your control as to the manner of their work or their hours, SARS can treat them as an employee — and you owe the PAYE never deducted plus penalties and interest.
Do I need to register my employee for income tax? Yes, and at onboarding rather than at reconciliation time. From the 202602 reconciliation period, submissions are rejected outright if any employee required to register lacks a valid income tax reference number. Register through ITREG or BundleReg.
What is the minimum I can pay an employee? R30.23 per hour from 2 March 2026 under the National Minimum Wage — unless a bargaining council or sectoral determination applies to your industry, in which case the higher prescribed rate governs whether or not you are a member.
The first hire, set up properly
Hiring your first person converts a business into an employer, with six registrations, three regulators and a monthly cycle attached. Done properly at the outset it is routine. Discovered eighteen months later it is expensive.
Smartbook handles the employer registrations, runs payroll from month one, submits the EMP201s and UI-19s, and files both EMP501 reconciliations. From R750 a month for one to five employees.
Last reviewed: 26 July 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Employment contracts and bargaining council coverage involve legal questions — take labour law advice where the position is unclear. Cost figures are illustrative.
Primary sources: SARS — Pay As You Earn · SARS — Budget 2026 Frequently Asked Questions · Department of Employment and Labour · uFiling · Compensation Fund