The Unemployment Insurance Fund (UIF), set up under the unemployment insurance system in South Africa (governed by the Unemployment Insurance Act, 2001, and the Unemployment Insurance Contributions Act, 2002), gives short-term relief to workers when they become unemployed or unable to work because of maternity, adoption leave, or illness. It also provides relief to the dependents of a deceased contributor.

It is important for employees and employers to know that the system is undergoing change, with the Minister of Labour having issued a draft regulation to the requirements of the Unemployment Insurance Amendment Act on 14 July 2017.

The UI Amendment Act requires changes to be made to the Fund’s administration processes and forms, and this must be done before the UI Amendment Act can be effectively implemented.

One of the proposed changes is to add section 12(1B) to the Unemployment Insurance Act to ensure provision for a contributor who loses a portion of his/ her income due to reduced working time. The contributor will be entitled to benefits (despite still being employed) in the event that the contributor’s total income falls below the benefit level that the contributor would have received if he or she had become wholly unemployed.

Aside from this significant development, there are a number of regulations pertaining to UIF that have to be kept in mind.

The legislation does not cover: –

  • Workers working less than 24 hours a month for an employer
  • Learners
  • Public servants
  • Foreigners working on contract (there are, however, many instances that do not fall within this exemption where foreign employees will have UIF contributions deducted from their salaries)
  • Workers who get a monthly state (old age) pension
  • Workers who only earn commission

Domestic employers and their workers are included under the Act since 1 April 2003.

You cannot claim if you get benefits from the Compensation Fund or benefits from an unemployment fund under the Labour Relations Act.  Unemployment benefits are also not available to employees who are: suspended from claiming because of fraud, who quit their job, who do not report at set dates and times or who refuse training and advice from the UIF.

Domestic workers can also claim if they work for more than 1 employer and lose their job at one of the employers or if one of their employers dies.

Employer registration

Any employer, who is registered with SARS for Employees’ Tax needs to register to pay UIF contributions.  Employers must register themselves and their worker(s) as soon as they employ someone.

But it is equally important to understand the position when

Employers who have employees working 24 or more hours a month but don’t need to register with SARS for Employees’ Tax purposes or that haven’t voluntarily registered with SARS as an employer, must register at the UI Commissioner’s office for purposes of paying UIF contributions.

Employers must also inform the UIF of changes (e.g. new workers appointed or changes in salary) before the 7th of every month.

The details of the workers are stored in the database of the Fund. When workers become unemployed, the Fund can process the application without delay.

Employers can register with the UIF through various methods.  These are:

  • by completing the online registration (not available to employers of domestic workers); or
  • by completing the UI-8 (Application for registration as an employer with the UIF) and UI-19 (Declaration of information of commercial employees and workers employed in a private household) forms and either post it, fax it or submit it at any branch of the UIF.

Note: Employers of workers in a private household must use form UI-8D in the place of form UI-8.

The amounts and who can claim

The amount of the contribution due by an employee must be 1% of the remuneration paid by the employer to the employee.  The employer must pay a total contribution of 2% (1% contributed by the employee and 1% contributed by the employer) before the 7th of each month.

The amounts deducted or withheld must be paid by the employer to SARS on a monthly basis, by completing the Monthly Employer Declaration (EMP201). The EMP201 is a payment declaration in which the employer declares the total payment together with the allocations for PAYE, SDL, UIF and/or Employment Tax Incentive (ETI), if applicable.

As from 1 October 2012, the maximum earnings ceiling is R14 872 per month or R178 464 annually. For employees who earn more than this amount, the contribution is calculated using the maximum earnings ceiling amount. Therefore, the maximum contribution which can be deducted, for employees who earn more than R14 872 per month, is R148.72 per month.

Workers who become unemployed have the right to claim from the UIF. Workers must apply and will be paid at the labour centre of their choice.

Workers must register as worker-seekers and be available for work.

Workers can claim if their employers are bankrupt, contracts are ended or if they are fired.

In summary

UIF benefits are also available to:

  • Workers who adopt a baby;
  • The dependants of a deceased worker;
  • Workers who become ill;
  • Workers on maternity leave;

To claim benefits, workers must, within six months after the termination of employment, go to their nearest labour centre themselves and hand in the following documents:

  • 13-digit bar-coded ID or passport;
  • form UI-2.8 for banking details;
  • form UI-19 to show that you are no longer working for your employer; and
  • proof of registration as a work-seeker.

As always, CRS Technologies has experts on hand via our legislation team at info@crs.co.za if you require additional information.