Operating a Business

flag South Africa South Africa: Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources


Legal Forms of Companies

Private Limited Liability Company
Number of partners: Minimum: 1, no upper limit.
Capital (max/min): No legal limit.
Shareholders and liability: Liability limited to amount of capital contributed.
Public Limited Liability Company
Number of partners: Directors: minimum of 3, no upper limit.
Shareholders: minimum of 1, no upper limit.
Capital (max/min): No legal limit.
Shareholders and liability: A member's liability is limited to the par value of the shares he/she owns.
Private Company
Number of partners: 1 partner.
Capital (max/min): No minimum capital.
Shareholders and liability: The active partner's liability is unlimited. 
Number of partners: Minimum 2, Maximum 20 partners.
Capital (max/min): No minimum capital.
Shareholders and liability: The active partner's liability is unlimited. Associates' liability is limited to the amount of capital they contributed.

Business Setup Procedures

Setting Up a Company South Africa Sub-Saharan Africa
Procedures (number) 7.00 7.51
Time (days) 40.00 21.30

Source: The World Bank - Doing Business, Latest data available.

The Competent Organisation
Companies and Intellectual Property Registration Office
For Further Information
Doing Business, to learn more about how to start a business in South Africa.
Companies and International Property Commission (CIPC)

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses


Recovery Procedures

The Insolvency Act (which regulates bankruptcy of companies in South Africa), entitles creditors to apply to court for recovery purpose (even if actual insolvency has not been proved).

Certain creditors may be secured, such as the mortgagees of mortgage bonds over immovable property of the insolvent or the holders of book debts/recoverables. Other creditors may have preferred claims, such as the claims of employees for outstanding wages and the revenue authorities for arrear taxes. Creditors without secured or preferred claims are treated as concurrent creditors and only share in whatever excess remains after payment of secured and preferred creditors.

Investors who choose to acquire equity in the company rather than simply loaning money to the company are not regarded as creditors at all and accordingly are unlikely to receive anything. Foreign creditors are treated in the same manner as local creditors.

Minimum Debt-to-Capital Ratio Triggering Liquidation
Not applicable
Bankruptcy Laws
Companies Act 1973
Reorganization and Rehabilitation Laws
A liquidator is appointed to supervise the winding up of an insolvent company. The liquidator acts according to the directions of creditors who have proved claims, and are also subject to supervision by the Master of the High Court in the applicable jurisdiction. It is also possible for companies to be placed under judicial management if they are in financial difficulty. The purpose is to allow the company to trade itself out of financial difficulty.

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The Active Population in Figures

Labour Force 22,948,48123,326,43021,742,744

Source: International Labour Organization - ILOSTAT, Latest data available.

Total activity rate 60.10%59.96%60.13%
Men activity rate 66.43%66.19%66.31%
Women activity rate 53.89%53.85%54.07%

Source: International Labour Organization - ILOSTAT, Latest data available.

For Further Statistics
Statistics South Africa
For Further Information About the Labour Market
South Africa Labour Law Profile

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Working Conditions

Opening Hours
  • Legal Weekly Duration
45 hours in a week or 9 hours in a day. For employees who work a 6-day week, it is 8 hours per day.
  • Maximum Duration
10 hours per week and not exceed 3 hours of overtime per day.
  • Night Hours
6 o’clock in the evening till 6 o’clock the next morning
Working Rest Day
The rest period must include a Sunday unless otherwise agreed.
Paid Annual Vacation
Leave period of at least 21 consecutive days per completed year of employment (or 1 day for 17 day’s worked, or 1 hour for 17 hours worked), on full pay. Leave accumulation from one year to another not allowed.
Retirement Age
The retirement age is 65 for men and 60 for women.
Child Labour and Minimum Age For Employment
15 years of age or under the minimum school-leaving age.
Informal Labour Market
The informal employment sector (excluding agricultural sector) is substantial. In the year 2006, it accounted for 17.6% of the total employed work force.

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The Cost of Labour


Minimum Wage
The National Minimum Wage (NMW) for each ordinary hour worked is R23.19.
Average Wage
According to the latest survey by Stats SA, average monthly earnings were measured at R23,982 in the formal non-agricultural sector of the economy in November 2021. This is a 0.3% increase compared with August 2021, and an annual increase of 3.9%.
Other Forms of Pay
  • Pay For Overtime
50% more than the regular wages.
  • Pay For Rest Days Worked
100% more than the regular wages, if the employee does not normally work on Sundays, Otherwise 50% more than the regular wages, if the employee does normally work on Sundays.
  • Pay For Night Hours
Paid extra, %age varies depending on nature of work.
  • Pay For Overtime at Night
Paid extra, %age varies.

Social Security Costs

The Areas Covered
South African social security includes payroll tax (PAYE), contributions to the Unemployment Insurance Fund (UIF) and the skills development levy (SDL). For more information, consult the Social Security Program in South Africa from the U.S Social Security Administration's website.
Contributions Paid By the Employer: South Africa does not have a comprehensive social security system or a national healthcare program; consequently, no significant social security taxes are levied.
Employers are obligated to make contributions to an unemployment insurance fund at the rate of 1% of gross remuneration.
Contributions Paid By the Employee: 1% contribution of unemployement insurance fund.
Competent Organization
Department of Social Development

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Management of Human Resources



Method of Recruitment
The various methods of recruitment used by companies in South Africa are :
2.Direct recruitment
3.Employment Exchanges
4.Educational Institutions
Recruitment Agencies
There are mainly three types of recruitment agencies available in South Africa :

- Employment Exchanges (Public)

-Employment Agencies (Private)

-Labor Contractors ( Private )

Recruitment Websites
Career Junction
Executives in Africa

The Contract

Type of Contract
Employment is mainly regulated by contract law and by the Labour Relations Act (LRA), 66 of 1995. Employment contracts must clearly mention: the maximum hours of work allowed, overtime rates, minimum periods of annual leave, notice of termination, organisational rights regarding trade unions, strike laws, the rights and responsibilities of employers and workers in the event of a conflict, rules regarding insolvency and transfers of business, protection from unfair dismissal and the prohibition of unfair discrimination.

Breach of Contracts

  • Retirement
It can take several forms : general resignation, resignation for one’s own convenience, resignation by agreement, resignation by employee’s request, voluntary retirement, etc.
  • Dismissals
Dismissals are tightly controlled by regulations like LRA and Basic Conditions of Employment Act (BCEA). Employees’ contracts cannot be terminated simply by the giving of notice and every employee has the right to be fairly dismissed.

Broadly, three reasons are recognized as fair reasons for dismissal, namely misconduct on the part of the employee, incapacity (poor work performance or inability to perform due to ill-health or injury) and the operational requirements of the employer.

  • Other Possible Methods
-Collective dismissals due to economic reasons.

-Resignation as per the terms of contract.

Labour Laws
South Africa Labor Law Guide
Labor Protect
Department of Labor , South Africa
Consult the Doing Business Website, to obtain a summary of the labour regulations that apply to local entreprises.

Dispute Settlement


Conciliation Process

Cases of Dispute
Dismissal, harassment, poor working conditions, conflict over salary payments, retirement issues, etc.
  • Legal Framework
LRA has formulated a body called Commission for Conciliation, Mediation and Arbitration (CCMA), which has far-reaching powers to order re-instatement and/or compensation.
  • Procedure
Labour Relations Act (LRA),1995

Judicial Structures

  • Legal Framework
Labour Relations Act (LRA),1995
  • Competent Legal Body
Labor Court ( (which has High Court status)
Labor Appeal Court

Social Partners

Employer Associations
NAFCOC - National African Federated Chamber of Commerce and Industry
Social Dialogue and Involvement of Social Partners
For effective bargaining, South Africa has a Bargaining Council system. Bargaining takes place between the employers and trade unions under the auspices of the Bargaining Council. The collective agreements concluded in the Bargaining Council bind only the parties to the Bargaining Council.

The Congress of South African Trade Unions (COSATU) is the largest and most effective trade union in South Africa. It is affiliated with the African National Congress (ANC) and the South African Communist Party. COSATU represents 21 national industrial affiliates.

Unionisation Rate
30% (approximately)
Labour Unions
FEDUSA (Federation of Unions of South Africa)

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Latest Update: April 2024