Hospitality employment is governed by Sectoral Determination 14, which sets minimum wage levels, working hours, overtime rules and leave entitlements specific to the sector. On top of that sit split shifts, public holidays, high staff turnover and the treatment of tips. The Department of Employment and Labour has been running coordinated inspections of the sector, and roughly half the establishments raided were found to be in breach.
Most restaurant owners are not underpaying deliberately. They are applying rules they half-remember to a roster that changes weekly.
What is Sectoral Determination 14 and does it apply to me?
A sectoral determination is a set of minimum employment conditions made for a specific industry where employees are not covered by a bargaining council. Sectoral Determination 14 covers the hospitality sector — restaurants, cafés, takeaways, catering, pubs, guest houses and similar establishments.
It sets out minimum wage levels, working hours, overtime rules and leave entitlements specific to hospitality, and it applies whether or not you have ever read it.
The first question to settle is scope. Where your business sits within hospitality, and whether any part of your operation falls elsewhere, determines which rules apply. Establish this before you set a wage, not after an inspection.
Check the current wage schedule before running payroll. Hospitality minimum wages are revised periodically, and the national minimum wage acts as a floor beneath them. Confirm the current figures with the Department of Employment and Labour rather than relying on a published article. See the national minimum wage explained.
What makes restaurant hours so difficult?
Four things, and they interact.
Split shifts
A lunch service and a dinner service with a gap between. The gap is not automatically unpaid time you can ignore — how the day is structured has consequences for hours worked, for the daily minimum, and for what the employee is entitled to.
Where the split is imposed rather than chosen, treat it carefully and take advice on how your particular arrangement should be paid.
Overtime
Ordinary hours are capped under the Basic Conditions of Employment Act, and overtime is paid at 1.5 times the ordinary rate unless a permissible alternative arrangement is in place.
In a restaurant, overtime is generated by the week rather than the shift. A Friday that runs late is not the issue. A pattern of Fridays running late across a whole roster is.
Sundays and public holidays
Sunday work is paid at double the ordinary rate where the employee does not ordinarily work Sundays, and 1.5 times where they do.
Public holidays carry their own premium for those who work — and an entitlement to be paid for those who do not, where the holiday falls on a day they would ordinarily have worked.
South Africa has a lot of public holidays and restaurants trade on most of them. This line item is larger than most owners budget for, and the "paid even though rostered off" half is the one most often missed entirely.
Night work
Late closing pushes staff into night work territory, which carries its own allowance or reduced-hours treatment, plus obligations around transport where the work is regular.
How are tips treated?
This is the question restaurant owners ask most, and it deserves a careful answer rather than a confident one.
The broad principle is that the treatment depends on how the money flows. A tip paid directly by a customer to a specific employee, which never passes through the business, sits differently from a service charge collected by the restaurant and distributed to staff, or a pooled tronc administered by the employer.
Where the employer collects and distributes, the amounts are far more likely to form part of remuneration — with consequences for PAYE, for UIF, and for how the minimum wage obligation is measured.
Three things are true regardless of the arrangement:
Tips do not reduce your minimum wage obligation simply because staff earn them. The wage you are required to pay is the wage you are required to pay.
Card tips are the difficult case, because the money demonstrably passes through the business account before reaching the employee.
Whatever the arrangement, write it down. A documented, consistently applied tips policy that staff have agreed to is worth a great deal more than a custom that everybody understands differently.
Take specific advice on your own arrangement. This is genuinely fact-dependent, the amounts add up quickly across a year, and getting it wrong creates both a SARS exposure and a labour one. See which employee benefits are taxable.
What does the Department of Employment and Labour actually look for?
The sector has been identified as a hotspot for non-compliance, with coordinated operations across several provinces and nearly half of the establishments raided found to be in breach — Gauteng, Mpumalanga and the Western Cape worst affected.
The findings cluster around the same things:
Underpayment against the sectoral minimum
Wage theft — hours worked and not paid
Unlawful deductions — breakages, till shortages, walkouts, uniforms
Dismissal without fair procedure
No written particulars of employment
Employees not registered for UIF
Unlawful deductions deserve particular attention, because they are so normalised in this industry. Deducting a walkout or a till shortage from a waiter's wages is not something you may simply decide to do — deductions are tightly regulated and most informal ones are unlawful.
See what must be in an employment contract and how to dismiss an employee legally.
The casual staff problem
The single most common structural error in restaurant payroll.
A person who works two shifts a week, every week, is not a casual in any meaningful sense. They are an employee — for the contract, for UIF, for leave accrual and for PAYE where their earnings require it.
Treating them as casual produces four separate exposures: no written particulars, no UIF registration, no leave accrual, and PAYE that should have been deducted and was not.
And turnover multiplies it. A restaurant cycling through staff continuously may register and deregister the same person for UIF several times a year, and each missed registration is a contravention.
See casual staff, UIF and high-turnover payroll and independent contractor or employee.
What should be in place
Written particulars of employment for every single person, from day one, including the casuals. This is the cheapest item on the list and its absence is the first thing an inspector finds.
A time record that reflects reality. Actual hours, actual shifts, signed. Not the roster — the roster is a plan, and what you must be able to prove is what happened.
UIF registration for everyone, immediately, regardless of how briefly you expect them to stay.
A written tips policy, applied consistently.
A deductions policy that is actually lawful, which for most restaurants means far fewer deductions than are currently being made.
Payroll run from the time records, not from memory or from the roster.
Labour cost tracked as a percentage of revenue, weekly. This is a management number rather than a compliance one, but it is the one that tells you whether the restaurant works. See accounting for restaurants and coffee shops.
Frequently asked questions
What is Sectoral Determination 14? The sectoral determination governing the hospitality sector in South Africa. It sets minimum wage levels, working hours, overtime rules and leave entitlements specific to restaurants, cafés, takeaways, catering and similar establishments.
Does the hospitality sectoral determination apply to my restaurant? Almost certainly, if you operate a restaurant, café, takeaway, pub or catering business and your employees are not covered by a bargaining council. Establish your scope before setting wages rather than after an inspection.
How is Sunday work paid in a restaurant? At double the ordinary rate where the employee does not ordinarily work Sundays, and 1.5 times where they do.
Do I have to pay staff for a public holiday they did not work? Yes, where the public holiday falls on a day they would ordinarily have worked. This half of the rule is the one most often missed.
Do tips count towards the minimum wage? Tips do not relieve you of the obligation to pay the required wage. How tips are treated for tax and UIF depends on how the money flows — direct customer-to-staff tips sit differently from pooled or employer-distributed amounts. Take advice on your specific arrangement.
Can I deduct breakages or till shortages from wages? Deductions are tightly regulated and most informal ones are unlawful. Deducting walkouts, breakages or shortages from wages is one of the findings the Department of Employment and Labour looks for in this sector.
Are my casual staff really casual? Usually not. Someone working regular shifts every week is an employee for the contract, for UIF, for leave accrual and for PAYE where earnings require it — regardless of what you call them.
What does the Department of Employment and Labour check in a restaurant? Underpayment against the sectoral minimum, unpaid hours, unlawful deductions, dismissal without fair procedure, missing written particulars of employment, and employees not registered for UIF.
Payroll is where restaurants get caught
Food cost and labour cost decide whether a restaurant survives. Payroll compliance decides whether it keeps its cash when an inspector arrives — and the sector is being inspected.
Smartbook runs payroll for South African restaurants: the sectoral determination applied correctly, overtime and public holidays calculated from actual time records, everyone registered for UIF from day one, EMP201s filed monthly, and weekly labour cost as a percentage of revenue so you can see the number that matters.
See accounting plans for restaurants →
Last reviewed: 28 August 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Sectoral determination wage schedules are revised periodically — confirm current rates with the Department of Employment and Labour. The tax and labour treatment of tips is fact-dependent; take advice on your specific arrangement. General guidance, not advice on your circumstances.
Primary sources: Department of Employment and Labour · Sectoral Determination 14: Hospitality Sector · Basic Conditions of Employment Act 75 of 1997 · SARS