Interest paid on salary late payment in South Africa

Author: Karen van den Bergh

In South Africa, interest paid on late salary payments is governed by a combination of the Basic Conditions of Employment Act (BCEA) and general principles of labour and contract law. Here is a breakdown of everything you need to know.

Is there a legal right to interest on late salary payments?

Yes, under certain conditions. If an employer pays salary late, the employee may be entitled to interest on the delayed amount, especially if the delay is unreasonable or in breach of contract.

Which law applies?

• The Basic Conditions of Employment Act (BCEA) requires employers to pay salaries on the agreed date, typically weekly, bi-weekly or monthly.
• Section 32 of the BCEA states that remuneration must be paid no later than seven days after the end of the period for which the remuneration is payable.
• Failure to comply may constitute a breach, allowing interest claims and even referral to the CCMA.

What is the interest rate?

There is no fixed interest rate in the BCEA, but the Prescribed Rate of Interest Act (Act 55 of 1975) provides guidance:

• As of July 2025, the prescribed rate is 10.75% per annum ((this rate updates when the repo rate changes)). This rate applies by default when no other rate is contractually agreed upon.
• For example, if an employer delays paying R10,000 in salary by 30 days, the interest owed would be around R88.35 (using the 10.75% annual rate as of July 2025).

When is interest enforceable?

• If there is a written employment contract stating that interest will accrue on late payments.
• If an employee lodges a claim with the CCMA, Labour Court or Department of Labour for unpaid salaries.
• If the delay is substantial and causes financial harm, it strengthens the case.

The CCMA and legal recourse

Employees can lodge a complaint at the Department of Employment and Labour, refer a dispute to the CCMA (within six months of non-payment) or claim interest plus unpaid salary.

The CCMA may order payment of arrear salaries and include interest – particularly if the delay was wilful or negligent.

Employer best practices

To avoid penalties or disputes:

• Pay salaries on time, as per the employment agreement
• Communicate transparently if payroll issues arise
• Pay compensatory interest voluntarily where delays occur (a good faith gesture)
• Document any delays and efforts to resolve

In summary

Any questions? Please reach out to the team at [email protected].