Starting a business in South Africa comes with numerous legal responsibilities, including ensuring that you are compliant with the various labour laws designed to protect your employees. One of the most crucial steps is registering your business with the Department of Labour. This guide will walk you through how to register with the Department of Labour, covering key aspects such as the Compensation Fund (CF), Unemployment Insurance Fund (UIF), and other necessary registrations.
Why is Registration with the Department of Labour Important?
The Department of Labour plays a vital role in ensuring that South African businesses adhere to labour standards and laws, protecting both employers and employees. By registering with the Department of Labour, businesses demonstrate compliance with the law, providing protection to employees against occupational injuries, diseases, and unemployment. For employers, proper registration means avoiding fines, penalties, or potential legal challenges.
Furthermore, these registrations protect your employees by ensuring they are covered in the event of workplace injury, disease, unemployment, or other unforeseen circumstances. For any employer who wishes to operate legally in South Africa, compliance with these regulations is a must.
Step 1: Registering with the Compensation Fund (CF)
One of the first and most critical registrations your business must undertake is with the Compensation Fund (CF). This fund insures employees in the event they are injured or contract diseases at work.
1.1 Who Needs to Register?
According to South African law, every employer must register with the Compensation Fund within seven days of appointing any employees. The fund covers employees, not the business, protecting them in case of occupational injuries or diseases contracted during their employment.
1.2 How to Register
Registration with the Compensation Fund can be completed in two ways:
Online Registration: Employers can visit the Department of Labour’s official website and complete the registration online. The website offers a user-friendly portal that guides you through the process, step by step.
In-Person Registration: Alternatively, employers can visit the office of the Compensation Commissioner and submit the necessary forms.
1.3 Required Documentation
To initiate the registration, you will need to complete and submit the WAs2 form. This form requests essential information about your business, such as the business name, physical address, and contact details. The form can be downloaded from the Department of Labour’s website or collected from their offices.
Once registered, you will receive additional forms for ongoing compliance. These forms include:
WAs8: Annual filing form
WAs6a: Used for assessing your business’s premiums
Claims Forms: WG30, WAs2, WAc1(E) are used for any claims that may arise under the Compensation Fund.
These forms must be kept on hand for any future reference or claims.
1.4 Return of Earnings (ROE)
As an employer, you must submit an annual Return of Earnings (ROE) to the Compensation Fund. The filing window for the ROE typically falls between April 1 and May 31 each year. The ROE reports the total earnings of your employees during the previous financial year, which in turn determines the premiums you must pay to the Compensation Fund.
1.5 Letter of Good Standing
Once you are registered with the Compensation Fund and have submitted the necessary documents, you can request a Letter of Good Standing from the Compensation Fund. This letter is proof that your business is compliant with the law and up to date with its payments to the Fund. It is often required for legal and contractual purposes, such as securing tenders or entering into contracts.
Step 2: Registering for the Unemployment Insurance Fund (UIF)
Another essential registration for South African businesses is with the Unemployment Insurance Fund (UIF). The UIF provides employees with compensation in case they are unemployed, go on maternity or adoption leave, or fall ill and cannot work.
2.1 Who Needs to Register?
All employers are required by law to register their employees for UIF. This includes all businesses, regardless of size. The UIF protects workers in various scenarios, including:
Unemployment: If an employee loses their job, they can claim UIF benefits.
Maternity Leave: Female employees can claim UIF during maternity leave.
Adoption Leave: Employees who adopt children are entitled to adoption leave and can claim UIF benefits during this period.
Sick Leave: Employees who are ill and unable to work can also claim UIF for the period of their illness.
2.2 How to Register for UIF
You can register for UIF at any SARS office or online via the SARS eFiling system. To complete the registration process, you will need the following:
Company documents: Proof of registration, such as your business’s registration certificate from the CIPC.
Certified ID copies of the directors, members, or partners of the company.
Employee details: A list of all employees, including their full names, ID numbers, and salaries.
Payroll information: Detailed payroll information to verify employees’ salaries.
Upon successful registration, you will receive a UIF reference number, which you must use to submit monthly contributions on behalf of your employees.
2.3 Monthly Contributions
As an employer, you must contribute 1% of each employee’s salary to the UIF. You are also required to deduct an additional 1% from each employee’s salary to contribute to the fund. These monthly contributions must be submitted to SARS using the UIF reference number.
2.4 UIF Benefits for Employees
Once employees are registered for UIF, they can claim benefits under various circumstances. The benefits include:
Unemployment Benefits: Employees who are retrenched or dismissed may be eligible for unemployment benefits.
Maternity Benefits: Female employees who take maternity leave can claim a portion of their salary.
Illness Benefits: Employees who are unable to work due to illness are entitled to illness benefits.
Step 3: Registering for Employee Tax (PAYE) and Skills Development Levy (SDL)
If your employees earn more than a specified amount annually, you must also register for Pay-As-You-Earn (PAYE) tax contributions and, if your payroll exceeds a specific threshold, the Skills Development Levy (SDL).
3.1 PAYE Registration
PAYE is the tax system used in South Africa where employers are required to withhold tax from employees’ salaries. If any employee earns more than R40,000 per year, your business must register for PAYE. This is done by completing the EMP101 form at any SARS office.
Once registered, you must withhold the applicable tax from employees’ wages and submit it to SARS monthly.
3.2 SDL Registration
The Skills Development Levy (SDL) is an additional levy that businesses must pay if their monthly payroll exceeds R500,000. This contribution helps fund training programs for employees in South Africa.
To register for SDL, complete the EMP101 form at SARS.
Step 4: Ongoing Registration and Compliance
Once your business is fully registered with the Department of Labour and other relevant entities, it is vital to maintain compliance. This includes notifying the Compensation Fund of any changes to your business, such as changes in your business name, address, or employee details.
4.1 Notify the Compensation Fund of Changes
If there are any changes to your business (such as a change of business address or a change in your employee numbers), you must inform the Compensation Fund within 7 business days. Failure to do so could result in penalties or non-compliance issues.
4.2 Ensure Timely Payment of Contributions
It’s important to ensure that all contributions to the Compensation Fund, UIF, PAYE, and SDL are paid on time. Late payments could lead to fines, interest charges, and possibly the suspension of your business’s registration.
Step 5: Online User Registration for Compensation Fund Services
To simplify the management of your business’s compensation fund account, you can register as a user on the Department of Labour’s eCOID Compensation Made Easy system. This online platform allows employers to manage their accounts and track their payments, forms, and contributions conveniently.
5.1 Additional Documentation for Multiple Clients
If you represent more than one company or multiple clients, you will need to provide additional documentation to link those companies to your profile in the eCOID system.
Check also: How to Verify the Status of Your Business Online in South Africa
Registering your business with the Department of Labour is an essential step for any employer in South Africa. It ensures that both you and your employees are covered in the event of accidents, illness, unemployment, or other unforeseen circumstances. By following this step-by-step guide, you can ensure that your business complies with South African labour laws and provides your employees with the protection they need.
