South African Payroll Glossary

A payment made to an employee in addition to basic salary, such as a travel, housing or meal allowance. Some allowances are fully taxable; others are partially or fully exempt depending on SARS rules.

The minimum paid leave entitlement under the BCEA — 15 working days per year (1.25 days per month). Employees must be allowed to take their leave; it cannot be permanently substituted with cash.

Annual Recurring Revenue — the total predictable revenue generated per year from subscriptions or contracts. ARR = MRR × 12.

The fixed monthly amount agreed in an employment contract, before overtime, bonuses, allowances or deductions. It forms the base for calculating UIF contributions.

The Basic Conditions of Employment Act 75 of 1997. The primary South African legislation that sets minimum employment standards — working hours, leave, notice periods, overtime and more.

A discretionary or contractual payment made to an employee in addition to salary. Bonuses are fully taxable as remuneration and attract PAYE in the month they are paid.

The Compensation for Occupational Injuries and Diseases Act. Employers must register with the Compensation Fund and pay an annual assessment to cover employees injured at work.

Variable pay based on sales performance or targets achieved. Commission is treated as remuneration and is subject to PAYE and UIF in the month it is paid.

The total cost an employer incurs for employing a person — basic salary plus employer contributions (UIF, SDL, retirement fund, medical aid, etc.). CTC is often used in job offer letters.

An amount subtracted from an employee's gross salary. Statutory deductions (PAYE, UIF) are mandatory. Voluntary deductions (retirement fund, medical aid) require employee consent.

The monthly employer return submitted to SARS via eFiling declaring PAYE, UIF, SDL and ETI. Due by the 7th of the following month.

The annual employer reconciliation return submitted to SARS, reconciling all PAYE, UIF and SDL paid during the tax year (March to February). Due by 31 May.

A SARS incentive that allows qualifying employers to reduce their monthly PAYE liability by employing young workers (aged 18–29) earning below R6,500/month.

3 days of paid leave per year under the BCEA for the birth of a child, death of a close family member, or illness of a child.

Total remuneration before any deductions. Gross salary includes basic salary, overtime, allowances and bonuses. PAYE and UIF are calculated on gross (or taxable) remuneration.

The annual employee tax certificate issued by employers after each tax year (March–February). The IRP5 shows total income, tax deducted and contributions. Employees need it to file their personal tax return.

The 12-month period over which annual leave accrues. It typically runs from the employment start date anniversary or a fixed company date (e.g. January to December).

4 consecutive months of unpaid maternity leave under the BCEA. The employee can claim UIF maternity benefits (up to 66% of salary) during this period.

Monthly Recurring Revenue — the total predictable revenue generated per month from subscriptions. A key SaaS metric.

Take-home pay — the amount deposited into an employee's bank account after all statutory and voluntary deductions (PAYE, UIF, retirement fund, etc.) are subtracted from gross salary.

The legally mandated lowest hourly rate employers may pay in South Africa. Updated annually on 1 March. From 1 March 2025, the NMW is R28.79 per hour.

Work performed beyond ordinary daily or weekly hours under the BCEA. Overtime must be compensated at 1.5× the ordinary rate on weekdays and Saturdays, and 2× on Sundays and public holidays.

The mechanism by which employers collect income tax from employees each month and remit it to SARS. PAYE is deducted from gross taxable income using annual SARS tax tables.

A written document provided to employees showing earnings, deductions and net pay. Under the BCEA, employers must issue a payslip in writing on or before each payday.

All payments made by an employer to an employee in return for work — includes salary, wages, bonuses, overtime, allowances and benefits. Remuneration is the base for calculating PAYE, UIF and SDL.

Termination of employment for operational reasons (restructuring, downsizing). Retrenched employees are entitled to severance pay (1 week per year of service) and can claim UIF unemployment benefits.

The South African Revenue Service — the national tax authority responsible for collecting PAYE, UIF (on behalf of DoL), SDL, VAT and other taxes.

A 1% levy on the total monthly remuneration paid to employees, due from employers with an annual payroll exceeding R500,000. SDL is paid to SARS and distributed to SETAs.

An industry-specific training authority that receives SDL funding and administers skills development grants. Employers can claim back a portion of their SDL via SETA grants.

30 days of paid sick leave per 3-year cycle under the BCEA. In the first 6 months of employment, sick leave is limited to 1 day per 26 working days.

A SARS instruction to an employer specifying the rate at which to deduct PAYE. Used for lump sums, retirement fund payouts, or other scenarios where standard tables produce incorrect results.

The minimum annual income below which no PAYE is payable. For 2025/2026, the primary threshold is R95,750 (R7,979/month). Employees below this earn nothing from a PAYE perspective.

A mandatory insurance fund that provides short-term relief to employees who become unemployed, go on maternity/parental leave, or are unable to work due to illness. Both employee and employer contribute 1% of monthly remuneration, capped at R177.12/month each.

Non-fixed pay that changes each payroll run — bonuses, commissions, overtime, performance incentives. Variable pay is treated as remuneration and is subject to PAYE and UIF.

Remuneration paid to hourly or daily workers, calculated based on hours or days worked. Wages differ from salary in that they vary with hours worked, whereas salary is a fixed monthly amount.