Paying staff correctly every month is one of the biggest responsibilities of running a business. Get it wrong and you face SARS penalties, unhappy employees and CCMA claims. This guide explains how to do payroll in South Africa step by step: registering as an employer, calculating PAYE and UIF, issuing payslips, paying SARS on time and reconciling at year end.
Tired of payroll spreadsheets breaking?
Our company payroll system calculates PAYE and UIF on the current SARS tables and emails payslips to staff. R2,500 once-off, unlimited employees, no monthly fee.
Try the Payroll System →How to do payroll in South Africa: 8 steps at a glance
- Register as an employer with SARS, UIF and the Compensation Fund
- Set up a record for each employee
- Calculate gross pay for the period
- Calculate PAYE, UIF and other deductions
- Issue a payslip to every employee
- Pay staff, then declare and pay SARS by the 7th
- Reconcile with SARS twice a year and issue IRP5s
- Keep payroll records safe
Step 1: Register as an employer for payroll in South Africa
Before you run your first payroll, you must register as an employer. First, register with SARS for PAYE if any employee earns above the tax threshold, and for Skills Development Levy (SDL) once your annual payroll exceeds R500,000. Next, register for UIF, which applies to all employees working more than 24 hours a month. Finally, register with the Compensation Fund for COIDA. We explain each registration in registering as an employer.
Step 2: Set up your employee records
First, for each employee, capture their full name, ID number, tax number, start date, job title, bank details and salary, as well as any allowances, medical aid and pension contributions. Every employee should also have a signed employment contract that confirms their pay and working hours.
Step 3: Calculate gross pay
To begin with, gross pay is everything the employee earned in the period before deductions. This includes the basic salary or wages, overtime, commission, bonuses and taxable allowances. Remember that overtime is paid at no less than one-and-a-half times the normal rate, and work on a Sunday or public holiday usually earns double. In addition, deduct any unpaid leave; our guide to leave laws in South Africa explains when leave is paid.
Step 4: Calculate PAYE, UIF and payroll deductions in South Africa
PAYE (Pay-As-You-Earn)
PAYE is calculated by annualising the employee’s taxable income, applying the SARS tax tables, subtracting the rebates and dividing the result back to a monthly figure. However, the tables change every year on 1 March, so always use the current ones. Our free PAYE calculator is a quick way to check a figure.
UIF (Unemployment Insurance Fund)
UIF is 2% of gross pay: 1% deducted from the employee and 1% paid by the employer. It is capped at the UIF earnings ceiling (R17,712 a month at the time of writing), so the maximum employee contribution is R177.12.
SDL and other deductions
Meanwhile, SDL is 1% of total payroll, and only the employer pays it. Other deductions, such as medical aid, pension, loans or union fees, may only be made with the employee’s written consent or where the law requires them.
Step 5: Issue payslips
The BCEA requires you to give every employee a written payslip each pay day. It must show:
- Your company name and address
- The employee’s name and occupation
- The pay period
- Gross pay and each earning (salary, overtime, allowances)
- Each deduction (PAYE, UIF, medical aid, pension)
- Net pay (the amount actually paid)
For one or two staff you can use our free payslip generator. For a whole team, a payroll system generates and emails every payslip in one click.
Run your whole payroll in minutes
Add staff once, pick the pay period, and the system works out PAYE and UIF, creates PDF payslips and emails them to each employee.
See the Payroll System →Step 6: Pay staff and pay SARS by the 7th
After paying salaries, declare PAYE, UIF and SDL to SARS on the EMP201 return and pay the total by the 7th of the following month. If the 7th falls on a weekend or public holiday, pay by the last business day before it. Otherwise, late payment attracts a 10% penalty plus interest. You must also submit monthly UIF declarations to the Department of Employment and Labour.
Step 7: Reconcile with SARS twice a year
In addition, twice a year you submit an EMP501 reconciliation. The interim reconciliation covers March to August, and the annual reconciliation covers the full tax year ending on the last day of February. Then, at year end, you also issue each employee an IRP5 tax certificate, which they need for their own tax return. In addition, COIDA requires an annual Return of Earnings to the Compensation Fund.
Step 8: Keep payroll records for SARS in South Africa
Finally, keep payslips, EMP201s, reconciliations and employee records for at least five years for SARS purposes. As a result, good records make audits, bank loan applications and labour disputes far easier.
Payroll deadlines in South Africa
| What | When |
|---|---|
| Pay staff | On the pay day in the contract |
| EMP201 (PAYE, UIF, SDL) and payment | By the 7th of the following month |
| UIF declaration | Monthly |
| EMP501 interim reconciliation | Around October (covers March to August) |
| EMP501 annual reconciliation and IRP5s | Around the end of May (covers the full tax year) |
| COIDA Return of Earnings | Annually, usually by the end of May |
| New tax tables | 1 March each year |
For more dates, see our SARS 2026 deadlines.
Common mistakes when you do payroll in South Africa
- Using last year’s tax tables after 1 March
- Forgetting the UIF ceiling, or not deducting UIF for part-time staff
- Paying the EMP201 late and picking up penalties
- Making deductions without written consent
- Not giving staff a proper payslip
- Keeping payroll in one spreadsheet that only one person understands
Spreadsheet vs an online payroll system in South Africa
Most small businesses start payroll in a spreadsheet. However, it works only until a formula breaks, SARS changes the tables or the person who built it goes on leave. Our company payroll system keeps staff records, calculations and payslip history in one place, and it works on any phone, tablet or laptop.
| Spreadsheet | Bekin payroll system | |
|---|---|---|
| PAYE and UIF | Manual formulas | Calculated on current SARS tables |
| Payslips | Built one by one | Whole team in one click, as PDF |
| Sending payslips | Manual email | Emailed to each employee |
| History | Scattered files | Every payslip stored and searchable |
| Cost | Your time and risk | R2,500 once-off, unlimited employees |
Frequently Asked Questions
You must register for PAYE if any employee earns above the annual tax threshold. UIF, however, applies to every employee who works more than 24 hours a month, regardless of how much they earn.
PAYE, UIF and SDL are declared on the EMP201 and paid to SARS by the 7th of the month after the salaries were paid. If the 7th is a weekend or public holiday, payment is due on the last business day before it.
UIF is 1% of the employee’s gross pay, matched by a further 1% from the employer. Contributions are capped at the UIF earnings ceiling.
The Skills Development Levy is 1% of total payroll, paid by the employer only. It applies once your annual payroll is more than R500,000.
The EMP501 is the reconciliation you submit to SARS twice a year. It matches the PAYE, UIF and SDL you declared and paid with the tax certificates (IRP5s) issued to employees.
Yes. Many small businesses run their own payroll. A payroll system that uses the current SARS tables and generates payslips automatically makes it quicker and reduces errors.
Bekin Consulting helps South African businesses understand how to do payroll in South Africa and run it properly. Use our company payroll system for PAYE, UIF and payslips, and Leave Desk to manage staff leave.
