South Africa: Remote working and the global mobility policy for employers

Since the pandemic, new ways of working have forced employers and employees to reevaluate their typical remuneration and mobility policies. Remote and hybrid working arrangements have now become a common and accepted means of acquiring key talent.

According to the Global Intelligent Unit’s Global Digital Nomad Report, as of 2024, 65 jurisdictions offer some form of digital nomad legislation to encourage remote workers to live and work in their jurisdictions for a limited period, simulating tourism and encouraging spending. Digital nomad visas generally prescribe a minimum level of income that the mobile employee should earn whilst providing the ability to work in the relevant jurisdiction.

In Africa, this includes Cape Verde, Mauritius, Namibia and the Seychelles, with Kenya announcing in October 2024 that it would also soon introduce a digital nomad visa.

South Africa introduced its digital nomad visa by way of amendments to the Immigration Regulations, which initially came into operation with effect from 28 March 2024. Shortly thereafter, on 12 April, the Minister of Home Affairs withdrew these regulations, informing the public that he had been ‘ill advised’ to publish them prematurely.

The amendments to the Immigration Regulations were then republished, with some changes, including those related to the definition of remote work, the period in which remote workers would be exempt from registering with the South African Revenue Services for tax purposes, and compliance with South African employment law.

In October 2024, the new Home Affairs minister gazetted further reforms to the country’s digital nomad visa requirements. The amendments include changes to the qualification criteria, namely, to qualify for a remote worker visa, the applicant must show financial means in the form of proof of earnings of no less than the equivalent of ZAR 650 976 per annum.

Tax considerations related to remote working are also addressed in the amendments, specifically the requirements for residents of countries with double taxation agreements (DTAs) with South Africa and those from countries without DTAs.

Challenges

South Africa faces specific challenges that have hindered developments in the area of remote working and global mobility for both employees and employers. Some of the considerations limiting the attraction of global talent and the move to mobile employment arrangements are:

• The skills shortage crisis;
• Delays in obtaining critical skills and other visas, making it difficult for companies to recruit scarce skills from other jurisdictions (we note that the Home Affairs minister is actively tackling this issue by addressing backlogs in applications and introducing reforms relating to how applications are assessed);
• Labour and regulatory complexity in South Africa; and
• Recent amendments to the tax legislation, effective 22 December 2023, which require non-resident employers with a permanent establishment in South Africa, to register for and withhold employees’ tax, UIF and SDL contributions for employees in South Africa, regardless of whether the foreign employer has an office or subsidiary in South Africa.

With the advent of flexibility as a key part of the employee value proposition, many skilled employees have been looking offshore for lucrative job opportunities, either remaining in South Africa or relocating to foreign jurisdictions.

South Africa is a very attractive remote working proposition for those with flexibility, offering a relatively low cost of living and fair weather while earning income in a comparatively stronger foreign currency such as US dollars or British pounds. The imposition of new tax regulation may negatively affect this, however.

Aside from the impediments above, South African employers would benefit from keeping pace with developments in this increasingly mobile and competitive global labour environment to ensure they attract and retain the correct talent to further company and shareholder objectives.

In this regard, a quietly emerging trend in South Africa, particularly amongst multinationals, has been to consider the adoption of a global mobility policy. The contents of these policies vary, but they consider the tax, legal and regulatory implications of remote working and global appointments.

They may also include policy decisions on the ‘softer’ elements such as quality of life and mental well-being. One of the more important considerations for companies wishing to consider employing global talent, seconding talent to offshore entities, or allowing employees to work remotely from other jurisdictions, is the company’s remuneration policy around these global or flexible arrangements.  

The following are some key questions that an organisation could ask when preparing a global mobility policy and aligning its remuneration policy to global mobility trends whilst ensuring equity within the workforce:

• How does a company determine the level of remuneration for two employees performing the same job in two different jurisdictions?
• Would a cost-of-living adjustment be included, and would this position remain the same if the move was initiated by the employee as opposed to the employer?
• Would the company consider allowing employees to work remotely on a permanent basis and continue to remunerate them from South Africa, and how would the tax and regulatory implications of this decision impact the level of remuneration provided?
• Would the position differ when considering the retention of scarce and critical skills and would the employees’ families be accommodated? How does this affect the variable remuneration of the particular employee when benchmarking their position?
• How will variable remuneration be structured for flexible or mobile employees and how would these incentives be benchmarked?
• What are the tax implications of long-term incentives where employees are not employed in the same location throughout the vesting period?

These are relatively unchartered waters for South African employers, but policy around global mobility is developing at a steady pace. Blink and you may miss it!

This article was first published by Global Mobility Lawyer.