The Rand, the Pound and Your Payroll: Managing Exchange-Rate Risk When You Hire in South Africa

When you hire someone in South Africa, they are paid in rand. Your budget is in pounds. So the cost of the same salary goes up and down as the pound to rand rate moves. Over the past year, the swing was big enough to change the yearly cost of a hypothetical R40,000 a month salary by over £1,600.

You cannot control the rate. But you can choose who carries the risk. You can also decide how often to review pay, and how much room to leave in the budget. This guide shows the real size of the swings, using Bank of England figures, and four practical ways to set pay. It is a planning guide, not financial advice.

Why the exchange rate matters for a South African hire

A South African employee lives and spends in rand. Their rent and food are priced in rand. So their salary is set and paid in rand too.

Flink's guide to what an employer of record is lists "monthly payroll in local currency" as one of the things a proper set-up handles. The same page warns that putting a South African employee on a UK payroll and paying them in pounds is legally incorrect. In most cases, then, the contract salary is a rand figure.

Your side is different. You plan, price and report in pounds. Each month, someone has to turn pounds into rand to cover the payroll. If the pound buys fewer rand that month, the same salary costs you more. If it buys more rand, the salary costs you less.

That is the whole risk in one line. The pay does not change. Only the number of pounds it takes to fund it does.

A quick word on direction

People get the direction muddled, so here it is in plain terms.

• More rand per pound (for example, £1 buys R23 not R22): your hire costs you less in pounds.
• Fewer rand per pound (for example, £1 buys R21 not R22): your hire costs you more in pounds.

News reports often say the rand "weakened" or "strengthened". A weaker rand means more rand per pound, which is good for your budget. A stronger rand means fewer rand per pound, which costs you more.

How much has the pound to rand rate moved?

The Bank of England publishes a daily table of spot exchange rates against sterling. On 22 October 2026 it showed £1 to R22.0675*. The same table gives the highest and lowest rates over the past 52 weeks: R23.0525 and R21.4005*.

A year earlier, the Bank's table for 22 October 2025 showed £1 to R23.2352*. So over that year, the pound bought about 5% fewer rand.

One point to keep in mind. The Bank of England says these are not official rates. Your bank or payment provider will use its own rate on the day, and may add a margin or fee. Use the Bank's figures to plan, not to predict what you will pay.

Nobody can tell you where the rate goes next. That is why the rest of this guide is about planning for a range, not guessing a number.

What the swings do to one salary

The examples below use one salary so you can see the effect clearly.

Example (hypothetical): a R40,000 a month hire

Say you agree a salary of R40,000 a month, or R480,000 a year. This is a made-up figure to show the maths. It is not a benchmark for any role. For real pay ranges, see South African salary benchmarks for UK-facing remote roles.

Between the best and worst rates of the past year, the same R480,000 cost anywhere from about £20,822 to about £22,429. That is a gap of over £1,600 on one hire, with no change to the person's pay.

Now scale it up. If you have five people on similar pay, that gap is around £8,000 a year. For a small firm, that can be the difference between a budget that holds and one that does not.

This is salary only. Employer charges in South Africa are paid in rand too, so they move with the rate as well. They are small next to UK costs. For the detail, see the guide to UIF, SDL and COIDA for UK businesses.

Stress test: what if the rate moves further?

The past year is only one year. A simple stress test shows what bigger moves would do. These figures start from the 22 October 2026 rate and apply a straight percentage change.

These are not forecasts. They are a way to ask yourself one question: if the rate moved this much, could we still afford the hire? If a 10% move would break your plan, you need one of the options below.

Four ways to set pay and share the risk

There is no single right answer. Each option moves the risk to a different place. The table sums them up, and the sections below explain each one.

Option 1: Agree pay in rand and absorb the swings

This is the most common approach and the simplest. You agree a rand salary. The employee gets the same pay every month. Your cost in pounds goes up and down.

For the employee, this is clear and fair. Their pay matches how they live. For you, it means your monthly bill is never quite the same. Over a year the ups and downs may even out, but there is no promise that they will.

This option works best when the hire is a small part of your total costs, or when you have some slack in the budget.

Option 2: Link pay to a fixed pound amount

Some firms ask whether they can fix the cost in pounds instead. In this set-up, the salary is still paid in rand through a South African payroll. But the rand amount changes each month to match a fixed pound figure.

Example (hypothetical): you agree that pay will be worth about £1,813 a month. At R22.0675 to the pound, that is about R40,000. If the rate fell to R21.4005, the employee would get about R38,790. If it rose to R23.0525, they would get about R41,785.

Your cost is now steady. But the risk has moved to the employee. Their rent and food bills do not go down when the pound weakens. A drop of over R1,000 in a month can cause real strain, and good people may leave.

There is also a legal side. Pay terms are part of the employment contract. Changing pay from month to month, or changing how it is worked out, may need clear written terms and the employee's agreement. In most cases you should take advice on South African employment law before you use this option. Flink's guide to South African employment law for UK employers is a useful starting point.

Option 3: Agree pay in rand and review it once a year

Here you agree a rand salary and leave it alone for 12 months. Once a year, you review pay and your budget together. You check the current rate, look back at the past year's range and set the next year's plan.

This fits well with how most UK firms budget. It also matches the way pay rises on a rand salary are agreed, in rand, once a year. It gives the employee steady pay and gives you one clear point each year to reset.

The weakness is the middle of the year. If the rate moves a lot in month four, you still carry it until the review. That is why many firms pair this with option 4.

Option 4: Build a buffer into the budget

A buffer is money you set aside in your plan to cover a weaker pound. You do not pay it to anyone. It just sits in the budget so a bad month does not cause a problem.

Example (hypothetical): with the R480,000 salary at R22.0675, your base cost is about £21,751. A 10% buffer takes the budget to about £23,927. That would cover the pound buying about 9% fewer rand. If the rate stays where it is, the buffer is simply unspent.

How big should the buffer be? There is no fixed rule. One way is to look at the past 52 weeks and budget at the worst rate in that range. Another is to pick the move you could not live with, such as 10%, and plan for it. The bigger the buffer, the safer the plan, but the more cash you hold back.

A decision aid: which option suits you?

Work through these questions in order. Write down your answers. They will point you to a sensible starting point.

1. How big is this hire next to your total costs? If it is a small share, option 1 is usually fine. If it is a large share, look at options 3 and 4.
2. Could you absorb a 10% move without cutting something else? Use the stress test table above. If the answer is no, add a buffer (option 4).
3. Do you set budgets once a year? If yes, option 3 fits the way you already work.
4. Does the employee want steady pay? Almost everyone does. If you are thinking about option 2, ask yourself how you would feel if your own pay moved every month.
5. Have you had advice on the contract? If you plan anything other than a plain rand salary, get advice first.

Worksheet: plan your own hire

Copy this into a spreadsheet and fill in your own numbers.

If F is more than you could comfortably find, either raise G or think again about the salary level or the timing of the hire.

Other things that change your cost in pounds

The headline rate is not the only thing that moves your bill. Keep these in mind too.

Fees and margins on the transfer. Banks and payment firms often use a rate that differs from the Bank of England figure, and some add a fee. Ask any provider to show you the rate and the fee separately.

When the money is changed. If pounds are changed into rand at a set point each month, a bad day can cost more than a bad month on average. Ask when the conversion happens.

Pay rises. A yearly pay rise in rand adds to your cost on top of any rate change. Plan both together at your review.

Employer charges. UIF, SDL and COIDA are paid in rand, so they move with the rate too. They are small, but include them.

Your UK costs move as well. A UK hire has its own rising costs. If you are comparing the two, read what employer NI at 15% now costs at every UK salary band. For a full side-by-side view, see how to compare total costs for UK and South African hires.

What exchange-rate risk does not change

It is easy to let currency worry crowd out the bigger picture. In the example above, a full year of swings moved the cost by about 8%. That matters, but it is not the main driver of the cost of a hire.

The salary level, the role, the experience and the way the person is employed all matter more. If you want to test the headline claims about savings, read whether hiring in South Africa is really 40-60% cheaper. It checks the maths in detail.

Remote hiring is also one of several ways firms keep costs in check. If you run a tech business, see how software and app development companies keep costs down. If you run an agency, see how web design and digital agencies keep overheads low.

And there are other costs that are easy to miss when hiring abroad. The guide to the hidden costs of hiring abroad covers them.

Where Flink fits

Flink Remotely helps UK businesses hire skilled remote staff in South Africa. We act as recruitment partner and employer of record. We find the person, then employ them in South Africa and handle the contract, payroll and benefits there. Our FAQ on payroll and employee contracts sums it up: we provide everything from payroll to employee management. You manage the daily work.

That means the South African payroll, in rand, is run for you. You do not need your own local bank account or payroll provider. To see how the steps fit together, read how an employer of record works, step by step.

Every candidate is pre-vetted through video interviews, psychometric tests and reference checks. There is no upfront cost to engage Flink. A once-off setup fee covers sourcing, onboarding, equipment and testing.

Our savings calculator gives indicative yearly costs in pounds. For example, a general admin role with 2 to 5 years' experience shows an indicative £19,364* + VAT. These figures are indicative, from Flink's savings calculator (September 2026); a once-off setup fee also applies; your exact quote depends on the role.

This route tends to suit UK firms that want a full-time, long-term hire and would like the South African employment side handled. It may not suit you if you only need a few hours of work a month, or if you want to run your own payroll in South Africa.

Before you decide, ask any provider, including us, what currency you will be invoiced in, how exchange-rate changes are handled and when prices are reviewed. Get the answer in writing. You still own the budget decision and the buffer you hold.

What this means for you

The pound to rand rate will move. Over the past year, it moved enough to change the cost of a R40,000 a month hire by over £1,600. Plan for that, and it becomes a normal budget line, not a shock.

For most firms, a rand salary with a yearly review and a sensible buffer is a good place to start. It keeps pay steady for your employee and gives you a clear point to reset each year. Linking pay to pounds moves the risk onto your employee, so treat it with care and take advice first.

Use a dated rate from a trusted source, test your plan against the worst rate of the past year and write down your review date.

Frequently asked questions

Can I pay a South African employee in pounds?

In most cases, no. Flink's guide to employers of record says putting a South African employee on a UK payroll and paying them in pounds is legally incorrect. The usual set-up is a rand salary paid through a South African payroll, either through your own local company or an employer of record. Take advice for your own case.

Which exchange rate should I use for my budget?

Use a dated rate from a trusted source, such as the Bank of England's daily spot rates. Then test your budget at the worst rate of the past 52 weeks. Remember that your bank or payment provider will use its own rate, and may add a fee.

How big should my currency buffer be?

There is no fixed rule. Some firms budget at the worst rate of the past year. Others plan for a set move, such as 10%. Pick the move you could not live with, and make sure your plan still works if it happens.

Should I hedge the rand?

This guide does not cover hedging products and is not financial advice. Some firms do discuss ways to fix a rate in advance with their bank. If you want to explore that, speak to a regulated adviser who can look at your own business.

Does the exchange rate wipe out the savings of hiring in South Africa?

Not usually on its own. In our example, a full year of swings moved the cost by about 8%. Salary level, role and how you employ the person usually matter more. Compare the full cost both ways before you decide.

See what your next hire would cost in pounds with Flink's savings calculator.

Correct at the time of writing (October 2026). Rates and rules change, so check the linked source.

Sources

1. Daily spot exchange rates against Sterling, 22 October 2026, Bank of England, (accessed 24 October 2026)
2. Daily spot exchange rates against Sterling, 22 October 2025, Bank of England, (accessed 24 October 2026)
3. What Is an Employer of Record and When Do UK Businesses Need One?, Flink Remotely, (accessed 24 October 2026)
4. Do you handle payroll and employee contracts?, Flink Remotely, (accessed 24 October 2026)
5. Flink Remotely homepage, Flink Remotely, (accessed 24 October 2026)
6. Flink savings calculator, Flink Remotely, (accessed 24 October 2026)