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January 30, 2026Year-end payroll can feel like a sprint. December comes with early cut-offs, staff leave, bonus payouts, and a compressed processing window. January then adds to that with tax changes, updated employee information, and the pressure to start the new year clean and compliant.
If you want to avoid errors, failed salary payments, and last-minute stress, you need a plan.
This step-by-step guide is the ultimate year-end payroll checklist for South African businesses. From major December payroll deadlines and bonus rules to leave encashment guidance and payment-processing safeguards, it covers all you need to be ready for the year ahead.
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Key December payroll deadlines in South Africa
December is the most time-sensitive payroll month of the year. With public holidays, company shutdowns, and banks operating on reduced hours, you need to work ahead of schedule.
Here are the core deadlines to plan for:
Earlier payroll cut-off dates
Most businesses process salaries earlier in December so staff can receive funds before the holidays. If you usually run payroll on the 25th, you’ll need to move it up by one to two weeks.
With salaries come payroll taxes. The EMP201 is a monthly employer declaration form used to declare and pay taxes such as Pay-As-You-Earn (PAYE) and Unemployment Insurance Fund (UIF). You’ll also have to file this form a little earlier to ensure compliance and avoid penalties.
You should confirm:
- Your internal payroll cut-off date
- Your HR’s leave-approval deadline
- Your finance team’s deadline for bonuses and final adjustments
- Your payment provider’s settlement times (Netcash provides clear same-day and two-day options)
Public holidays affecting payment timing
The 16th, 25th, and 26th of December all affect salary-processing windows. Settlement cannot occur on these holidays, and many banks slow down processing in the final week of December. Schedule salary batches by the second week of December to avoid any payment delays.
Bonus approvals and tax calculations
Approval for 13th cheques and performance bonuses needs to be done early to give your payroll team time to calculate PAYE and UIF correctly. Bonus tax errors and general misunderstandings about taxation are a common year-end salary run problem in South Africa.
As a business, it’s important to calculate December salaries and any additional bonuses per the contractual agreement early so that tax calculations can go off without any problems.
Final leave updates
Ensure leave applications, shutdowns, and leave requests are approved and recorded before payroll cut-off. Incorrect leave balances in December carry through to the next tax year. Make sure your payroll software updates these checks and balances in a timely manner.
Final reconciliation before shutdown
Reconciliation may be the last part of the process, but it’s an important one. Since your salary payments for December are scheduled to happen earlier than most months of the year, the reconciliation must follow suit. Reconciling 13th checks, bonuses, or any other incentives allows you to start the new year on a clean slate. This makes January salary runs just as seamless.
Here are a few key things to make sure are reconciled:
- Gross salaries
- Overtime
- Bonuses
- Leave payouts
- Deductions
- Employer contributions
- PAYE / UIF / SDL (Skills Development Levy)
Year-end bonuses, 13th cheques & leave encashment rules
December brings three common payroll adjustments: 13th cheques, performance bonuses, and leave encashments. Each has its own compliance rules. Here’s an overview for all three:
How 13th cheques work
Contrary to popular belief, a 13th cheque (or bonus) is not a legal obligation. It’s actually a contractual agreement between the employer and employee. If there is no agreement, your staff is not entitled to receive it. It’s also not a performance-based bonus, which is discretionary.
A 13th check is usually equivalent to one month’s salary and paid in December or on the employee’s birthday month, depending on the employer’s rules. It's treated as regular income and subject to Pay-As-You-Earn (PAYE) tax.
When added to other year-end earnings, it can temporarily push employees into higher PAYE brackets. Use your payroll systems to run a bonus tax simulation before finalising payments.
Performance bonuses
Unlike 13th cheques, performance bonuses are at the employer’s discretion and linked to individual or company performance throughout the years. They often require management approval and are taxed the same way as any other lump sum income, so Pay-As-You-Earn (PAYE). Record the reason for the bonus and the exact amount approved before processing.
Leave encashment (annual leave payouts)
Encashment of leave is allowed under South African labour law only for annual leave and only if an employee leaves the company via termination or retirement. That’s according to the Basic Conditions of Employment Act (BCEA), which states that leave should be taken, not paid out.
Upon termination of employment, businesses must pay for unused (or accrued) leave days from the current and prior cycles, and for any additional accrued leave if no forfeiture policy exists.
Leave paid out is considered remuneration and is entirely subject to PAYE, UIF, and SDL.
December shutdown periods
If your business closes for the holidays, confirm whether the shutdown is annual or special leave, and ensure employees with insufficient leave are informed of any unpaid days. You should also update leave balances before running December payroll. Mismanaging shutdown leave is one of the top year-end compliance risks, leading to hefty penalties.
How to avoid failed payments during December payroll runs
Failed or late salary payments in December cause unnecessary stress for both staff and HR teams. Most failed payments come down to incorrect bank account details, cut-off times, and manual data entry. Here’s how you can prevent them:
Validate all employee bank accounts: Bank account validation prevents incorrect digits, outdated accounts, closed bank accounts, and incorrect bank types (savings vs current).
Use locked payment batches: Mistakes happen when multiple people edit the same payroll spreadsheet. Locked batches allow only authorised users to make changes, ensure all modifications are logged, and minimise accidental or unauthorised adjustments.
Process earlier than usual: Avoid same-day processing in December. Give yourself a margin for: rejections, late approvals, missing documents, and banking delays. Aim to finalise the payroll batch at least three days before your planned payment date.
Use a payment service that supports multiple banks: Pick a secure payment gateway that supports all major South African banks with reliable settlement times. This way, you avoid the delays and inconsistencies that often happen with individual bank platforms in December.
Reduce manual data transfer: The more times data is retyped or copied, the higher the likelihood of errors. Uploading batches directly from your payroll system reduces the risk of mismatched figures.
Year-end payroll checklist for South African businesses
Use this checklist to stay compliant and organised during the December-to-January transition.
December: Final payroll of the year
Employee & HR updates
- Finalise all approved leave requests
- Update leave balances
- Record shutdown leave allocations
- Confirm resignations, terminations, and last working days
- Verify new employees and bank details
Bonuses & adjustments
- Approve 13th cheques and bonuses
- Run bonus tax simulations
- Process leave encashment where applicable
- Confirm overtime and commission totals
Payroll processing
- Verify PAYE, UIF, and SDL calculations
- Lock payroll data
- Export salary batch
- Validate bank account details
- Submit the salary batch early
Payments
- Confirm the payment date and settlement timeline
- Ensure no public holidays affect the transfer
- Approve the final batch
January: First payroll of the new year
Compliance & updates
- Update employee tax numbers, marital status, and personal details
- Confirm any new salary structures or benefits
- Load new payroll year settings
- Update medical aid, pension, and provident fund changes
- Clear outstanding leave queries from December
Reporting
- Reconcile December EMP201
- Start preparing EMP501 requirements for mid-year
- Update financial year budgets and cost centres
Payments
- Revalidate salary batches
- Confirm new banking details where employees changed accounts after the holidays
Want to make salary payments more efficient?
Contact Netcash today to find out how our payroll services are helping small businesses in South Africa thrive.
Frequently asked questions: Year-end payroll in South Africa
Streamline your December & January salary runs with Netcash
Year-end payroll doesn’t have to be stressful. Netcash Salary Payments reduces errors with automatic bank account validation, locked payment batches, and secure processing.
You can upload your payroll file, approve payments, and get a complete audit trail. It saves time, prevents failed payments, and ensures every employee is paid correctly the first time.
Let Netcash help you run smoother, safer December and January payroll cycles. Contact us!
Need help managing your December payrolls so January rolls around with any hassle?
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Author:
Velda Morris
Key Accounts Manager
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Velda Morris is a seasoned business development expert with a proven track record of success in the financial services and payments industry. With over three decades of experience, Velda brings a wealth of knowledge and a customer-centric approach to every engagement. As a Senior Business Development Manager, she is adept at identifying new opportunities, tailoring solutions to client needs, and driving growth. Velda's strong communication and negotiation skills, coupled with her solution-oriented mindset, make her a valuable asset to any organisation.
