End of an era for businesses that employ foreigners in South Africa
The proposed Employment Services Amendment Bill marks a significant shift in how South Africa regulates the employment of foreign nationals, with employers expected to take a far more active role in ensuring ongoing compliance.
This is the feedback from Lee Masuku, Senior Associate in Employment Law Practice at Cliffe Dekker Hofmeyr (CDH).
In an interview with HOT Business, Masuku explained that the widely reported R1 million penalty is only one part of the proposed changes.
She said the purpose of the bill is to move away from treating foreign employment as a narrow immigration issue and instead view it as an integrated employment, immigration, and labour-market compliance issue.
She noted that the proposed penalties would be tiered, starting at R100,000 for a first contravention and R200,000 for a second contravention within three years.
For repeat offenders, employers could face fines of “R1 million or 10% of an employer’s turnover should there be two or more previous contraventions.”
However, Masuku stressed that the proposed fines are not the most significant aspect of the legislation.
“The key issue is really not so much the size of the proposed penalties, but rather the bigger shift of employers no longer treating foreign national employment as a once-off immigration check,” she said.
Instead, the bill introduces an ongoing employment law compliance framework that includes recruitment, worker classification, visa verification, skills planning, and additional workplace inspections.
According to Masuku, employers often make mistakes by focusing only on the initial hiring process rather than ongoing compliance.
She said businesses must ensure that every foreign national employee has the requisite right to work, not only in South Africa, but also for the specific position for which they’re employed.
She added that compliance does not end once someone is hired, as visas, permits, and passports expire, meaning employers need to maintain records of expiry dates and ensure employees renew their documentation before it lapses.
“The obligation already exists under the Immigration Act. Employers already face potential criminal liability if they fail to ensure foreign employees have the legal right to work,” she said.
Employers should begin conducting skills audits and reviewing their workforce composition
However, she explained that the amendment bill now introduces civil penalties alongside those existing obligations.
Masuku said well-intentioned employers may still encounter difficulties because of the fragmented legal framework.
However, she said businesses that can demonstrate they made “a good faith effort” to verify employees’ right to work, including checking visas and documenting their compliance processes, would be in a far stronger position.
She also pointed to South Africa’s challenges with fraudulent documentation and said employers should be able to demonstrate that they’ve met their obligations to verify documents under the Immigration Act.
Masuku expects enforcement to become more robust despite current capacity constraints.
Masuku believes sectors such as agriculture, hospitality, and increasingly platform-based mobility and delivery services are likely to be among the hardest hit if the bill becomes law.
She also warned that the legislation gives the minister the power to introduce quotas limiting the employment of foreign nationals in certain sectors.
As a result, employers should begin conducting skills audits and reviewing their workforce composition to understand how future quotas could affect them.
To prepare, Masuku said businesses should maintain comprehensive records of visa verification processes and ensure they can demonstrate that foreign employees possess skills that cannot readily be sourced from South African workers.
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