Paying a labour broker: when to deduct PAYE
Why a South African business must deduct PAYE from a labour broker's invoice unless the broker holds a valid IRP30 certificate, and what to keep on file.
By Achekam · · 5 min read · For Running a business businesses in South Africa
A labour broker sends an invoice for the month's temporary staff: so many workers, so many shifts, VAT on top. The accounts clerk enters it like any other supplier bill and pays it in full. That is exactly what most businesses do, and in many cases it is fine.
But it is fine only because of one document the clerk may never have seen. Under South Africa's employees' tax rules, payments to a labour broker are subject to employees' tax unless the broker holds a valid exemption certificate. Without that certificate, the business paying the invoice is expected to deduct PAYE from it, and the consequences of not doing so fall on the business. This article explains the rule, the certificate, the reasons SARS may refuse one, and how to keep the paper trail straight.
Without a valid IRP30, the payment is subject to employees' tax
SARS's employer guide says all payments to a labour broker without a valid IRP30 exemption certificate are subject to employees' tax. A client that does not deduct tax from those payments must hold a certified copy of the certificate for inspection.
Read the two halves together. The default is that PAYE applies to what you pay the broker. The certificate is what lifts that default, and the copy in your file is your proof that you were entitled to pay without deducting. If SARS asks why no tax was withheld from a year of broker invoices, the answer is that copy; the guide names no substitute.
SARS's Guide for Employers in respect of Employees' Tax (2027) sets out the labour broker rules beside the employer's other duties to deduct, pay over and keep records, and it is the reference to keep with your supplier onboarding procedure.
Why the copy on file matters so much
If you pay a broker without deducting and the broker had no valid certificate, you have under-deducted employees' tax. SARS says it is a criminal offence for an employer wilfully or negligently to fail to deduct or pay over PAYE within the prescribed period. Who then carries the tax that should have been deducted is explained in when the employer pays PAYE it failed to deduct.
"We assumed they had one" is the negligent version of this story. Holding the copy before the first payment, and checking its validity before each later one, is what turns an assumption into evidence.
When SARS will not issue a certificate
Some brokers cannot get a certificate, and knowing why helps you anticipate the problem. SARS's employer guide says SARS will not issue a labour broker exemption certificate if more than 80% of the broker's gross income comes from one client, unless the broker employs three or more full-time employees who are not connected persons.
So a small broker that works almost entirely for your business, with no staff of its own beyond the workers it places with you, is the kind of supplier that may not qualify. If you are that broker's main client, ask early whether they hold a certificate, and do not be surprised if the answer is no.
Renewals: diarise the expiry date
Certificates expire. SARS's guide adds that a labour broker must apply annually on form IRP30(a) at least two months before its current certificate expires.
For you as the client, that means the copy on file has a shelf life. A certificate valid in March may have lapsed by the following year if the broker did not renew in time. Build the check into your routine:
- When onboarding a broker, ask for a copy of the IRP30 (the guide says the copy you hold must be certified), and note its expiry date.
- Two months before expiry, ask the broker to confirm it has applied to renew.
- On expiry, ask for the new certificate before paying the next invoice.
- If no valid certificate is in hand, stop and speak to your accountant before paying.
Not to be confused with a tax directive
SARS uses several forms with similar names. The IRP30 is the broker's exemption certificate. A tax directive is something different: SARS's employer guide says a directive must be obtained on an employee's retrenchment, retirement or death, applied for on form IRP3(a) for severance benefits, with other IRP3 forms used where tax is deducted at a fixed percentage or a fixed amount. Directives are covered in tax directives and the IRP3.
Recording broker invoices in Achekam
For a broker that holds a valid certificate, its invoice is a supplier bill. In Achekam a business records supplier bills line by line with VAT. A bill without a purchase order waits for approval before it posts, and it can be paid in full or in parts from a chosen bank account.
That approval step is a natural place for the certificate check. Before approving a broker's bill, the approver confirms that a current certificate copy is on file and that the invoice falls within its validity. If it does not, the bill should not be approved for payment in full until the position is resolved.
Keep the certificate copy beside the broker's bills. Achekam's Document Centre is a folder-based store where a business uploads files or whole folders, previews, downloads, renames, moves, tags, archives and searches them, and when a new version of a file is uploaded the earlier ones are kept. A folder per broker, holding each year's certificate as a new version, gives you the full history if SARS asks which certificate covered which payment.
If a broker cannot produce a valid certificate, the payment is subject to employees' tax. Agree with your accountant how the deduction is worked out, declared and recorded before anything is paid. The supplier-bill route above is for brokers holding a valid certificate.
Make the certificate part of onboarding
No certificate, no payment without a deduction: make that the rule for every labour broker, written into your supplier set-up and your bill approval. It costs one e-mail a year per broker, and it removes a liability that would otherwise sit unseen in your creditors' ledger.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
