Employer Payroll & PAYE Guide
A comprehensive guide to employer obligations, payroll setup, and monthly SARS compliance in South Africa.
Employer Obligations Overview
PAYE
Pay-As-You-Earn
Deducted from employee salaries based on SARS tax tables. Employers withhold and pay to SARS monthly.
UIF
1% employer + 1% employee
Unemployment Insurance Fund contribution totalling 2% of remuneration, split equally between employer and employee.
SDL
1% of payroll
Skills Development Levy paid by employers with an annual payroll exceeding R500,000 to fund workplace training.
COIDA
Variable rate
Compensation for Occupational Injuries and Diseases. Rate varies by industry and covers workplace injury claims.
Setting Up Payroll
Register With SARS as an Employer
Complete an EMP101e form via SARS eFiling or visit a SARS branch. You will receive a PAYE reference number, UIF reference number, and SDL number.
Obtain IRP5 Certificates
Set up your system to generate IRP5/IT3(a) certificates for each employee. These are annual tax certificates employees need for their personal tax returns.
Choose Payroll Software
Select SARS-compliant payroll software such as Sage Payroll, SimplePay, or PaySpace. Ensure it supports EMP201 submissions and IRP5 generation.
Configure Tax Tables
Load the latest SARS tax tables for the current year. These determine how much PAYE to deduct based on each employee’s earnings and tax bracket.
Monthly Payroll Process
Calculate gross pay
Include basic salary, overtime, commission, and any allowances.
Deduct PAYE
Apply SARS tax tables to calculate PAYE based on the employee’s annual equivalent earnings.
Deduct UIF
Deduct 1% from the employee and add 1% employer contribution (capped at the UIF ceiling).
Calculate SDL
Calculate 1% of total payroll as the employer’s Skills Development Levy.
Generate payslips
Issue itemised payslips to every employee showing gross pay, deductions, and net pay.
Submit EMP201
File your monthly employer declaration on SARS eFiling showing total PAYE, UIF, and SDL.
Pay SARS by the 7th
All PAYE, UIF, and SDL amounts must be paid to SARS by the 7th of the following month to avoid penalties and interest.
Annual Reconciliation (EMP501)
Reconcile All IRP5s
Ensure every employee’s IRP5 certificate matches the monthly EMP201 submissions for the full tax year.
Submit to SARS by 31 May
File the EMP501 reconciliation and all IRP5 certificates electronically via SARS eFiling before the deadline.
Issue IRP5s to Employees
Provide each employee with their IRP5 certificate so they can file their personal income tax returns.
Key Payroll Rates
| Contribution | Rate | Paid By | Notes |
|---|---|---|---|
| PAYE | Per SARS tax tables | Employee (deducted by employer) | Based on annual equivalent income and tax bracket |
| UIF | 2% (1% + 1%) | Split: employer & employee | Subject to monthly remuneration ceiling |
| SDL | 1% | Employer | Applies if annual payroll exceeds R500,000 |
| Medical Aid Credits | R364/month (main member) | Reduces PAYE | R364 for main, R364 first dependant, R246 each additional |
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