ANNUAL COMPLIANCE AUDITS FOR EMPLOYERS
Written by Phumzile Eliya
Consider a common year-end scenario. It is a Thursday in December, the busiest trading period of the year. The establishment is fully booked, and the telephones are ringing.
In the middle of the afternoon, a designated agent from the Bargaining Council arrives to conduct a compliance inspection.
The owner is courteous and cooperative. The questions, however, are direct. Where are the signed employment contracts of the two newest therapists? Can the payslips be produced? Where are the leave records? The answer to the last question is that they are in a WhatsApp group.
The owner believed the establishment was compliant. In reality, the records had never been reviewed.
An annual compliance audit exists to prevent this situation. It allows an employer to identify and correct gaps proactively, before an inspector, an employee, or a dispute exposes them.
Why the audit should be done now
The coming year will bring change, and the end of the year is the appropriate time to prepare for it.
The Main Amending Collective Agreement, extended to non-parties by Notice No. 3906 of 2026, remains in operation until 28 February 2027. Employers should expect the industry framework to be renewed or replaced.
Prescribed minimum wages increased by 6% on 1 March 2026, subject to the applicable provisions of the Main Collective Agreement. An audit confirms that every employee is paid correctly.
The Employers’ Organisation for Hairdressing, Cosmetology and Beauty (EOHCB) has reported that negotiations for 2027 onwards have begun, with a plan to consolidate the four area agreements. Employers should therefore expect updates to payroll and contracts.
An audit completed before the new year allows the employer to begin it informed rather than exposed.
What a compliance audit is
A compliance audit is a structured comparison between what the establishment actually does and what the law and the Main Collective Agreement require.
It is not an exercise in apportioning blame, and it is not a once-off event. Properly done, it protects the employer from disputes, back-pay claims and penalties, and it protects employees from underpayment.
Where to look
The EOHCB has a compliance checklist for employers, and the six areas below follow it.
Registration, contracts and records
Is the establishment registered with the Bargaining Council, and have all employees who fall within the scope of the Main Collective Agreement been registered or reported as required? Does each employee have completed personal particulars, a written contract, a job description, a record of hours worked and payslips? The Basic Conditions of Employment Act 75 of 1997 (BCEA) requires records to be kept for three years.
Pay and working conditions
Is every employee paid at least the prescribed wage or salary in the Main Collective Agreement for their category and area? Are working hours, leave, overtime, Sunday and public holiday work, and notice periods applied as the agreement and the BCEA require? Are deductions lawful and agreed?
Contributions and returns
Are Council and National Sick Pay Fund contributions paid correctly and on time? Are PAYE and UIF registered and paid? Is the Skills Development Levy paid where annual payroll exceeds R500,000? Is the establishment registered with the Compensation Fund under the Compensation for Occupational Injuries and Diseases Act (COIDA), and has it submitted its Return of Earnings, the annual declaration of earnings on which the Compensation Fund assessment is based? The 2026 submission window ran from 1 April to 30 June 2026. Where applicable, is the establishment registered with the Companies and Intellectual Property Commission (CIPC)?
Health and safety
Are risk assessments and safety training conducted in terms of the Occupational Health and Safety Act? Is there a valid Certificate of Compliance for the electrical installation?
Personal information and equality
Is employee and client information protected as the Protection of Personal Information Act requires? Does the workplace comply with the Promotion of Equality and Prevention of Unfair Discrimination Act? Where applicable, does the employer have an employment equity plan and comply with the consultation, implementation and reporting requirements of the Employment Equity Act?
Policies and discipline
Are there written health and safety, disciplinary, and code of conduct policies? Are disciplinary warnings properly documented, communicated to the employee and kept on file, including where an employee refuses to acknowledge receipt?
Use the EOHCB checklist
The checklist is titled “Navigating Compliance with Labour Laws & Legislation in the Workplace: A Checklist for Employers”. It is available to EOHCB members on the EOHCB website, www.eohcb.co.za, under Resources.
It is set out as a table of yes and no questions. Members may complete it in print or electronically, answer each item honestly and treat every “no” as an action item. The EOHCB can assist with any item that is unclear.
Keeping records in a modern workplace
Most compliance failures are record-keeping failures. A modern establishment should treat its records as a business system, not as a collection of messages and loose papers.
Keep contracts, payslips, timesheets, and leave records in a payroll system or a secure, access-controlled cloud folder, with a regular backup.
Use a leave request form or application, rather than a group chat, so that every approval is recorded in one place.
Limit access to personal information to the people who need it.
Keep records for the required three years, in a form that can be produced promptly on request.
Diarise recurring dates in an electronic calendar, such as the annual Return of Earnings submission period, monthly contributions and the wage review each 1 March.
How to run the audit
Appoint a responsible person and set a date. Choose one month each year and record who is accountable.
Work through the checklist. Complete each of the six areas in turn.
Verify the records. In a larger establishment, review a sample of employee files. In a smaller establishment, review every file. Ask the payroll provider for wage and contribution records, and ask each employee to confirm their own details, such as job title, hours and leave balance.
Record each finding. Note the gap, the risk, the person responsible for the correction, and the deadline.
Correct and diarise. Remedy each gap, then diarise the next review.
Common red flags
Contracts that are unsigned, missing, or older than the current agreement.
Employees paid below the prescribed minimum, or paid incorrectly after the March increase.
Leave that is tracked informally or not at all.
Council or Sick Pay Fund contributions that are late or incomplete.
Deductions made without written agreement.
Disciplinary warnings that cannot be located.
If several are found, address the most serious first, usually wages and contributions. Where an underpayment is identified, correct it and obtain advice on the treatment of any arrears.
A practical example
An establishment audits its leave records and finds no written record of annual leave taken by two stylists. The manager approved the leave verbally, and nothing was intentionally concealed.
Identified in November, the gap is easily corrected. The owner reconstructs the leave from the appointment book and payroll, confirms the balances with each employee in writing, and introduces an electronic leave form from January. Identified by an inspector or in a dispute, the same gap leaves far less room for correction.
In conclusion, compliance is not a form that is completed once. It is a habit. A short annual audit costs a few hours. A failed inspection, a Council dispute or a back-pay claim can cost considerably more in money, time and reputation.
Begin with the EOHCB checklist, your records, your wages and your contributions. Where the requirements of the Main Collective Agreement are unclear, consult the Bargaining Council or the EOHCB, or obtain labour-relations guidance before acting.
