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What You need to know about UIF

On the 19th January 2017 the President assented to an amendment to the Unemployment Insurance Act that significantly improves the benefits that can be received from UIF and even better takes away some of the obstacles that existed in claiming these benefits. The improvement in benefits has been motivated by the surplus of R111 Billion that the Fund has in reserve at the moment. In 2015 the fund collected R16 Billion rand and paid R7 Billion in benefits.

There are essentially five benefits that can be claimed from UIF and over the next few weeks, we will explain these benefits and the changes that this amendment to the act introduces.

It is to be noted that although the act has been assented to, it has not yet been promulgated and there is no indication as to when the Minister of Labour will promulgate the act, but we anticipate that it will be within the next few weeks.

So, as a contributor to UIF employees can claim benefits in the event of:

  1. Becoming unemployed as a result of your dismissal. Dismissal may be for misconduct, incapacity, operational reasons (retrenchment) or retirement.
  2. Becoming too ill to work, either permanently or temporarily
  3. Having a baby (maternity leave)
  4. Adopting a baby
  5. And in addition their beneficiaries can claim a dependents benefit in the event of their death.

Legal Requirement

In the new amendment, all employees are required to contribute towards an Unemployment Insurance Fund administered through the Department of Labour. This includes everyone, from Executive Directors to Domestic Workers. It includes foreign nationals, even if they are working on work permits (or even illegal employees) and part-time employees. The only employees who do not contribute to Unemployment Insurance are those that work for less than 24 hours and independent contractors.

What this means is that if you employ a person for more than three days you have to deduct UIF from their pensionable earnings.

If you don’t’ (and please when you consider this put on your hat as the employee of a domestic worker even if she only works for you one day a week), you face a potential fine or a maximum of 12 months in prison. You also become liable to pay the benefits that the employee would have received if they had been contributing.

At the moment the maximum contribution level is capped at R148-72 per month which caps an employees benefit to a salary level of R14 872-00. This means that whatever their salary is their maximum benefit from UIF is 38% of R14 872-00, i.e. R5 617-16 per month. They can claim this for 34 weeks which works out to 7,85 months or until they start contributing to UIF again.

The good news is that when the amendment is promulgated, maternity leave will increase to a flat 66% of salary which means that during maternity leave if the employee’s salary is over the capped limit, they would be entitled to R9 815.52 per month for the four months that they are on maternity leave. Below that they would receive 66% of their actual salary.

In our next blog, we will discuss how to claim for unemployment benefits and the changes in applying that the new act has brought in.

If you are an employer of a domestic worker, please made sure that you register for UIF and pay the contribution across. This can be done by Ufiling and EFT and it can be done annually.