How to Find an EOR in South Africa

An employer of record can help you manage overseas employees in South Africa and elsewhere. Here’s how to find one that meets your requirements.

Outsourcing to South Africa can be extremely rewarding, but you need a knowledgeable partner to help you navigate laws and regulations and to find people with the skills you need. This is where an Employer of Record (EOR) comes in. With more and more businesses looking to build multinational teams and benefit from lower labour costs in places such as South Africa, demand for their services is on the rise. However, finding the right one can be tricky.

What is an EOR?

An employer of record is a third-party organisation set up to manage local employees in a country. They are commonly used in countries such as South Africa by overseas firms looking to outsource business operations without having to set up a legal entity. The EOR is the legal employer of the workers, which means it has responsibility for managing the admin of employment, paying taxes and providing employee benefits. As the legal employer, full legal liability rests with the EOR, which means the hiring company is fully protected from any unintended compliance problems.

In practical terms, this means the EOR will pay the worker’s salary and handle details such as onboarding, provision of entitlements and benefits, withholding tax and making sure all labour laws are fully complied with. Those costs will then be passed on to the hiring company along with a service fee that will normally be based on the salary of that employee. Some EORs will also charge additional fees for extra services such as the use of recruitment software or support with recruitment. In the final analysis, you’ll probably pay around a 10-15% premium for each employee, but for that, you save the costs of admin staff and the need to set up a foreign subsidiary.

Where to find EORs

A good place to start can be with a business directory or online. A quick Google search should reveal a list of suitable businesses offering EOR services. Each website should be transparent about the services it offers, the range of sectors worked in and the fees charged. Marketing claims, though, should not always be taken at face value, so you should conduct a degree of due diligence. By searching online and on social media sites such as X or LinkedIn, you should be able to find mentions of the EOR with testimonials from companies and individuals who have worked with them. This should give you a good sense of whether the EOR is firstly legitimate and secondly, if it has a successful track record of meeting customer expectations.

How to choose EORs

Your choice of EOR partner should depend on several factors, including:

• Area of expertise: EORs may specialise in certain areas such as customer service or technology. They may have existing employees who can be made available or the ability to find people in this sector. Certain areas of business, such as hospitality, also have different regulatory requirements, which means you’ll need a company with a full understanding of these.
• Personalisation: A common concern with some EORs is a lack of personalisation or control offered over the recruitment of employees. As such, you may not get people who have a full understanding or training in your services or company culture. However, many EORs now do offer a full and comprehensive range of services, including support with recruitment and the chance to have full control over the employment of new workers.
• Level of service: Many EORs will now offer additional services such as specialist recruitment software and expert talent acquisition. They may also combine their service offering with an Agent of Record (AOR) offering. AORs tend to offer similar services to EORs but focus on freelancers and contractors. They will not be the employers of your contractors but will manage classification of workers, onboarding, verification and payment of invoices. With business workforces tending to be more varied, with people working over various types of freelance, part-time time and full-time contracts. Work can be fluid with people tending to move across one format to another. Combining the EOR and AOR functions within one organisation can help you to better organise a disparate workforce.
• Location: Depending on your outsourcing strategy, location may be important. Labour costs can vary from city to city in South Africa, as can the range of skills and expertise available. Some EORs will limit their coverage to individual cities, regions or provinces.
• Pricing: Typically, an EOR will pass on basic employee costs and charge a service fee, which may be between 10 and 20% of the overall wages, depending on salary level. However, fees can vary from one company to another, with some firms having additional fees for other options. It’s also worth making sure there are no hidden costs you might not be aware of.

When to use EORs

There may also be some debate about the range of situations in which it’s best to use EOR services.