Moving your peopleto your own company.
In most cases the employment transfers automatically under section 197 of the Labour Relations Act, which keeps service, terms and accrued leave intact. Teamed plans the date and runs both payrolls through the change.
Two routes, one of them worse
How do people move from an employer of record to your company
There are two ways to do this and they are not equivalent, whatever a spreadsheet says. One preserves everything your people have built up. The other quietly throws it away.
South Africa has section 197 of the Labour Relations Act, which is its transfer of undertakings provision. Where it applies, the new employer is automatically substituted for the old one, on terms that are on the whole not less favourable, and continuity of employment is preserved by law. Nobody resigns and nobody is rehired.
The alternative is to end the employment and start a new one. It is faster to arrange, which is why it gets chosen, and South African law treats service continuity seriously enough that breaking it is rarely the saving it appears to be.
Why continuous service is the whole argument
Severance and notice both depend on completed years of service, so resetting the clock transfers real value away from your people.
Statutory severance on operational requirements is calculated per completed year of service. Start again at zero and years of accrued entitlement disappear.
Notice lengthens with service. A long-serving employee restarted as a new hire is back to the shortest notice the Act allows.
What moves and what does not
What actually transfers
Where section 197 applies, the new employer takes over the existing contracts. Terms, accrued leave, the original start date and outstanding liabilities all come across, and the old and new employers can be jointly liable for certain obligations that arose before the transfer.
The comparison the Act makes is worth understanding precisely. Terms have to be on the whole not less favourable, which is not the same as identical. That gives room to restructure sensibly, and it also means a package that looks equivalent on salary but weaker elsewhere can still be a problem.
Leave is the practical trap. Accrued leave transfers rather than being paid out, so the receiving company inherits a liability that may not be in its opening budget. Quantify it before the date rather than discovering it in the first audit.
Timing
Pick the date around payroll, not around the paperwork
The cleanest transfer lands on the first day of a month, because South African payroll and labour fund declarations run monthly. A mid-month move means two employers each filing a part period, which is where errors and duplicate contributions come from.
Confirm the company can employ
Registered as an employer, registered with the unemployment insurance and workplace injury funds, and able to pay salaries.
Agree the section 197 position
Including which liabilities sit where, since the old and new employers can be jointly liable for some obligations arising before the transfer.
Quantify accrued leave
It transfers rather than being paid out, so the receiving company inherits the liability. Put a number on it before the date.
Transfer on the first of a month
The old payroll closes, the new one opens, and balances carry across as they stood the night before.
Check every payslip by hand, once
Tax and fund contribution bases are where errors surface, and they are far cheaper to fix in month one.
Worth saying plainly
This is the step where doing it cheaply costs the most
A resign and rehire can be arranged quickly and looks like a saving. Where severance is calculated per completed year of service, it moves real money away from your people and towards nobody.
If your timeline is too tight to do this properly, the better answer is usually to stay where you are for another quarter and move cleanly.
Teamed's employer of record in South Africa is a flat $599 per employee per month, with zero FX mark-up in any currency pairing and one invoice at the end of it. Contractors, employer of record and your own entity all run on one platform, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work, not a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it for South Africa.
Who carries it
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for corporation tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it.
In South Africa that matters a little more than elsewhere, because Teamed employs through its own local entity rather than a partner. The people who would run your company are the people already running ours.
They set up our EU entity and moved hires across without missing a payroll.
Questions
Questions about moving people across
What is section 197?
The provision of the Labour Relations Act that transfers employment automatically when a business is transferred as a going concern. The new employer is substituted for the old one and continuity is preserved by law.
Does their start date change?
No. Continuity of employment is preserved, so the original start date stays. That matters because severance is calculated per completed year of service.
Do terms have to be identical?
They have to be on the whole not less favourable, which is not the same as identical. That allows sensible restructuring, and it also means an apparently equivalent package can still fall short.
What happens to accrued leave?
It transfers rather than being paid out, so the receiving company inherits the liability. Quantify it before the transfer date.
Who is liable for what happened before?
The old and new employers can be jointly liable for certain obligations arising before the transfer, so agree the position explicitly rather than assuming a clean line.
Sources
- Labour Relations Act, section 197 transfer of a business
- Basic Conditions of Employment Act, notice and severance
- SARS, employer registration and monthly declarations
The rest of the South Africa guides
Looking for a job in Moving From Eor To Your Own Entity yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.
