Statutory employer costs in South Africa are low next to the UK. On top of salary, a South African employer pays three statutory charges. These are the Unemployment Insurance Fund (UIF), the Skills Development Levy (SDL) and the Compensation Fund under COIDA. UIF is 1% of pay, capped. SDL is 1% of pay, but only once the payroll passes a set level. COIDA is a yearly fee that depends on your industry.
Put together, UIF and SDL can never be more than 2% of pay. In the worked examples below they come to between about 1% and 2%, plus COIDA. A UK employer paying 15% National Insurance and the minimum workplace pension pays about 14% to 16% of salary in the UK examples. This guide shows where every figure comes from, so you can check it for your own hire.
What does an employer pay on top of salary in South Africa?
There are three statutory costs to plan for. Two of them, UIF and SDL, are paid to the South African Revenue Service (SARS) each month through payroll. The third, COIDA, is paid once a year to the Compensation Fund.
SARS calls the monthly employer return the EMP201. It says the EMP201 is a payment return where the employer declares the total payment, split between PAYE, SDL and UIF. So if you employ someone yourself, one monthly return covers the payroll charges.
| Charge | Paid to | Employer share | Cap or threshold | How often |
|---|---|---|---|---|
| UIF | SARS | 1% of pay* | Pay above R17,712 a month is ignored* | Monthly |
| SDL | SARS | 1% of the total pay bill* | Only if pay will be more than R500,000 over the next 12 months* | Monthly |
| COIDA | Compensation Fund | A tariff that depends on your industry | Earnings above R668,000 a year per employee are ignored*; minimum assessment R1,621* | Yearly |
| PAYE | SARS | None (it is the employee's tax) | Not an employer cost | Monthly |
The rest of this guide takes each charge in turn. Then it sets them against the UK.
UIF: the Unemployment Insurance Fund
UIF is South Africa's unemployment insurance scheme. Both sides pay in. SARS says the total UIF contribution is 2%*. The employee pays 1% and the employer pays 1%. The employer deducts the employee's share from their pay and sends both shares to SARS.
The UIF cap
UIF has a ceiling on earnings. Since 1 June 2021, the ceiling has been R17,712 a month, or R212,544 a year*. Pay above that line does not count.
This means the most an employee can have deducted is R177.12 a month*. The employer pays a matching 1%, so the employer's most is also R177.12 a month. Over a year, that is R2,125.44 at most for each employee.
For a well-paid hire, the cap matters a lot. Someone on R80,000 a month still only costs you R177.12 a month in UIF. That is about 0.22% of their pay.
Who is left out of UIF
Not everyone pays UIF. SARS lists some people who are excluded. One example matters for small employers: a person employed for less than 24 hours a month does not contribute. Most full-time remote hires will be in UIF.
SDL: the Skills Development Levy
SDL is a levy on the pay bill. SARS says the Skills Development Levy is 1% of the total amount paid in salaries*. That includes overtime, leave pay, bonuses and commission, not just base pay. There is no cap per employee, so SDL rises in line with pay.
The R500,000 threshold
SDL does not apply to every employer. An employer becomes liable once it expects total salaries to be more than R500,000 over the next 12 months*. Below that, the employer does not need to register for SDL.
This threshold is for the whole payroll, not for each person. So it matters who the legal employer is:
- If you set up your own South African company with one hire on R40,000 a month, the pay bill is R480,000 a year. That is under the threshold, so SDL may not apply until you grow.
- If your hire is employed by a firm with a larger South African payroll, such as an employer of record, SDL is likely to apply to their pay.
SDL is paid monthly. SARS says it must be paid within seven days after the end of the month*.
COIDA: cover for injuries at work
COIDA is the Compensation for Occupational Injuries and Diseases Act. It is South Africa's scheme for workers hurt or made ill at work. The Compensation Fund runs it.
The South African Government says all employers must register with the Compensation Fund. They pay a yearly assessment fee. The fee is based on workers' earnings and on the risk of the type of work. Every April, the Fund sends a notice that says how much to pay.
How the COIDA fee is worked out
The fee is a rate (called a tariff) applied to your payroll. The rate depends on your industry, because riskier work costs more to cover. The Fund also adjusts the fee to your history. Fees can go up or down with your accident costs, and employers with low costs may qualify for a rebate.
Two figures set the limits for the year from 1 March 2026. The Minister of Employment and Labour set them in Notice 3910 of 2026, published by Acts Online:
- Earnings above R668,000 per employee a year are not counted*.
- The minimum assessment is R1,621 for employers*.
This guide does not show a COIDA rate in its examples. The tariff for your business depends on how the Fund classes your work. Ask your payroll provider or employer of record which rate applies, and get it in writing.
Is PAYE an employer cost in South Africa?
No. PAYE is the employee's income tax. SARS describes it as the tax required to be deducted by an employer from an employee's pay. The employer collects it and pays it over, but it comes out of the person's salary.
So when you agree a gross salary, PAYE is already inside it. It does not add to your cost. The work of running PAYE correctly does, though. Someone has to calculate it, file the returns and keep records.
How do South African costs compare with UK employer costs?
UK employers pay two main statutory costs on top of salary: employer National Insurance (NI) and a workplace pension. The size of the gap is clearest when you put them side by side.
UK employer National Insurance
HMRC sets out the rates and thresholds for employers for 2026 to 2027. For the standard category letter A, the employer rate is 15%. It applies to pay above the secondary threshold of £5,000 a year. There is no upper cap for employer NI on this category, so it keeps rising with pay.
Some smaller employers get help. The Employment Allowance lets eligible employers reduce their yearly NI bill. For 2026 to 2027 it is up to £10,500*. Whether you qualify depends on your business, so check with HMRC or your accountant. For a closer look at the UK side, see what employer NI at 15% now costs at every UK salary band.
UK workplace pension
Under automatic enrolment, GOV.UK says the minimum employer pension contribution is 3%. The employee pays 5%, so the total is 8%. In most schemes this is worked out on earnings between £6,240 and £50,270 a year. Many employers pay more than the minimum.
Side by side
| Cost | South Africa (employer share) | UK (employer share) |
|---|---|---|
| Social insurance | UIF 1%, capped at R177.12 a month* | Employer NI 15% above £5,000 a year*, no cap |
| Skills or training levy | SDL 1% of the pay bill, if over R500,000 a year* | Apprenticeship Levy, only if the pay bill is over £3 million* |
| Injury at work cover | COIDA yearly fee, rate by industry | Employers' liability insurance from an insurer |
| Pension | No statutory figure in the sources used here | At least 3% of qualifying earnings* |
| Income tax | PAYE deducted from the employee | PAYE deducted from the employee |
The table shows the main reason for the gap. In the UK, the 15% NI rate applies to almost all of a salary with no ceiling. In South Africa, the biggest single charge is SDL at 1%. UIF is capped at a low monthly amount.
Cover for injury at work also works differently. In the UK, GOV.UK says you must get employers' liability insurance as soon as you become an employer. You buy it from an insurer. In South Africa, the COIDA fee goes to a state fund.
Worked examples in rand and sterling
These examples use hypothetical salaries. They are not salary benchmarks for any role. For real pay ranges, see South African salary benchmarks for UK-facing remote roles.
The exchange rate is the Bank of England's spot rate for 15 October 2026: £1 to R21.8884*. The Bank says these are not official rates. Your bank or payment provider will use its own rate on the day.
Example (hypothetical): three South African salaries
These figures assume the employer's total payroll is above R500,000 a year, so SDL applies. COIDA is left out because the rate depends on the industry.
| Monthly salary | Yearly salary | UIF (employer) per year | SDL per year | UIF plus SDL | As % of salary | UIF plus SDL in £ |
|---|---|---|---|---|---|---|
| R15,000 | R180,000 (about £8,224) | R1,800 | R1,800 | R3,600 | 2.0% | about £164 |
| R40,000 | R480,000 (about £21,929) | R2,125 | R4,800 | R6,925 | 1.4% | about £316 |
| R80,000 | R960,000 (about £43,859) | R2,125 | R9,600 | R11,725 | 1.2% | about £536 |
At R15,000 a month, pay is under the UIF ceiling, so both charges are a full 1%. Above the ceiling, the UIF cost stops growing. That is why the percentage falls as pay goes up.
COIDA comes on top. On the R80,000 salary, only R668,000 of the R960,000 counts for COIDA. And the employer pays at least the R1,621 minimum assessment for the year.
Example (hypothetical): three UK salaries
These use 15% employer NI above £5,000, and the 3% minimum pension on earnings between £6,240 and £50,270. They ignore the Employment Allowance.
| Yearly salary | Employer NI | Minimum employer pension | Total | As % of salary |
|---|---|---|---|---|
| £25,000 | £3,000 | £563 | £3,563 | 14.3% |
| £36,000 | £4,650 | £893 | £5,543 | 15.4% |
| £62,400 | £8,610 | £1,321 | £9,931 | 15.9% |
So the shorthand of "1 to 2% against 15%" holds up for UIF and SDL, as long as you remember two things. COIDA adds a further cost that depends on your industry. And the UK figure can be lower for small firms that qualify for the Employment Allowance.
If you are pricing a developer, Flink has a separate guide on what a software developer costs in South Africa. On the UK side, Flink's article on the real cost of hiring a software engineer in the UK adds recruitment and other costs to the salary.
What the exchange rate does to these numbers
If you agree the salary in rand, your cost in pounds moves with the rate. The Bank of England table for 15 October 2026 shows a 52-week range of R21.4005 to R23.3176 to the pound*.
Example (hypothetical): a salary of R480,000 a year would have cost about £22,429 at the weaker end of that range, and about £20,585 at the stronger end. That is a swing of over £1,800 a year on one hire, with no change in pay. Read more on managing exchange-rate risk when you hire in South Africa.
What the statutory figures leave out
The three charges above are only the legal minimum on top of pay. They are a small part of the total cost of a hire. Before you compare South Africa with the UK, add the other costs too.
Things the statutory figures do not cover include:
- Benefits you agree in the contract, such as a retirement fund or medical aid.
- Equipment, internet and software licences.
- Recruitment, testing and onboarding.
- The fee for any employer of record or payroll provider.
- Your own time to manage the hire, especially in the first months.
Flink covers these in more depth in the hidden costs of hiring abroad, and which ones an EOR removes. It also has a broader comparison of the cost of hiring in South Africa and the UK.
The rules go wider than pay, too. Leave and notice periods follow South African law as well. Flink's guide to South African employment law for UK employers covers the basics.
A checklist for comparing your own costs
Use this worksheet before you decide. Fill in both columns with your own figures.
| Line | UK hire | South African hire |
|---|---|---|
| Gross salary per year | £ | R and £ (state the exchange rate and date) |
| Employer social insurance | Employer NI at 15% over £5,000* | UIF at 1%, capped at R2,125 a year* |
| Training levy | Apprenticeship Levy, if it applies | SDL at 1%, if the payroll is over R500,000* |
| Injury cover | Employer's liability insurance | COIDA tariff for your industry |
| Pension | At least 3% of qualifying earnings* | Any retirement fund you agree |
| Benefits | ||
| Equipment and software | ||
| Recruitment and onboarding | ||
| Payroll, EOR or entity costs | ||
| Total per year |
Then check these points:
- Who is the legal employer, and is their payroll over the SDL threshold?
- Which COIDA tariff applies, and who pays it?
- Does any quote you get show UIF, SDL and COIDA as separate lines, or is it all in one fee?
- What exchange rate did you use, and on what date?
- Have you tested the cost at the high and low ends of the 52-week range?
The same steps work for any role. That includes hiring software developers in South Africa and specialist roles such as a remote SEO specialist.
Where Flink fits
Working out UIF, SDL and COIDA is not hard for one person. Filing them every month, in another country, is where it gets harder. You would need a South African company, a local payroll, SARS registration and a Compensation Fund account. For one or a few hires, that is a lot of set-up.
Flink Remotely is one option for UK businesses in this position. We act as the employer of record in South Africa. We employ your hire under South African law, and our service covers employment contracts, payroll, statutory contributions and compliance. You manage the person's daily work. If you are new to the idea, read what an employer of record is and when UK businesses need one, or see how an employer of record works, step by step.
We also recruit. Candidates go through video interviews, psychometric tests and reference checks. There is no upfront cost to engage us. A once-off setup fee covers sourcing, onboarding, equipment and testing. We also handle IT and VoIP setup. You can see the short answer on whether Flink handles payroll and employee contracts in our FAQs.
This tends to suit UK firms that want one to a handful of full-time remote staff, in roles like admin, finance, support, marketing or tech. It is less likely to suit you if you plan a large South African team, where your own entity may cost less over time. It may not suit very short projects either.
Before you decide, compare more than the headline price. Ask any provider for an itemised quote that shows salary, statutory costs, benefits and their fee. You still set the work, manage performance and agree pay rises. And you should take advice on your own tax position.
What this means for you
South African statutory employer costs are small. UIF and SDL together are 2% of pay at most, and often less because UIF is capped. COIDA adds a yearly fee that depends on your industry. In the UK, employer NI and the minimum pension come to around 14% to 16% of salary in the examples above.
But statutory costs are only one line. Salary, benefits, equipment, the exchange rate and who runs the payroll will move the total far more. Build the full picture before you decide. And if you want help with a figure for your own business, ask a qualified adviser.
Frequently asked questions
What are the main employer costs in South Africa?
On top of salary, most employers pay UIF at 1% of pay (capped), SDL at 1% of the pay bill once it is over R500,000 a year, and a yearly COIDA fee. PAYE is the employee's tax, so it is not an extra cost to you.
Is there an employer pension contribution in South Africa like UK auto-enrolment?
The SARS and Compensation Fund pages linked in this guide cover UIF, SDL and COIDA. They do not set a pension contribution. Many employers offer a retirement fund as a benefit, so check what the contract includes.
Does SDL apply if I only have one employee in South Africa?
It depends on the total payroll of the legal employer. If total salaries will be more than R500,000 over the next 12 months, SDL applies. If you use an employer of record, it is their payroll that counts.
How much is COIDA for an office-based employee?
It depends on the tariff the Compensation Fund sets for your type of work. The fee only counts earnings up to R668,000 a year per employee, and the minimum assessment is R1,621. Ask for the exact rate in writing.
Which exchange rate should I use for my budget?
Use a dated rate from a reliable source, such as the Bank of England. Then test your budget at the high and low ends of the past year's range. That shows how much the pound cost could move.
Ready to put real numbers on a role? Compare the cost of your next hire with Flink's savings calculator.
Correct at the time of writing (October 2026). Rates and rules change, so check the linked source.
Sources
- Unemployment Insurance Fund, South African Revenue Service, (accessed 17 October 2026)
- Skills Development Levy, South African Revenue Service, (accessed 17 October 2026)
- Pay As You Earn, South African Revenue Service, (accessed 17 October 2026)
- Paying the Compensation Fund as an employer, South African Government, (accessed 17 October 2026)
- Notice 3910 of 2026: Maximum amount of earnings and minimum assessment, Minister of Employment and Labour, published by Acts Online, (accessed 17 October 2026)
- Rates and thresholds for employers 2026 to 2027, HM Revenue and Customs on GOV.UK, (accessed 17 October 2026)
- Workplace pensions: what you, your employer and the government pay, GOV.UK, (accessed 17 October 2026)
- Employers' liability insurance, GOV.UK, (accessed 17 October 2026)
- Daily spot exchange rates against Sterling, 15 October 2026, Bank of England, (accessed 17 October 2026)
- Flink Remotely homepage, Flink Remotely, (accessed 17 October 2026)
- Do you handle payroll and employee contracts?, Flink Remotely, (accessed 17 October 2026)
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