Every business owner in South Africa, whether you are a new start-up or small business, you have probably heard of all the governing bodies you need to register with such as SARS, COIDA, POPI & UIF. It is not just the company that needs to be registered with these statutory bodies, but also the employees that must be registered with SARS and UIF.
UIF protect people financially for periods of time when they are unable to work. Life can be unpredictable and often circumstances outside of their control lead to unfortunate outcomes, such as being retrenched or being let go because of company restructuring.
To help reduce the potentially devastating effects of not having an income, workers can claim from the Unemployment Insurance Fund. Thus, UIF becomes a financial safety net for South Africans.
Frequently Asked Questions
What is the Employers responsibility?
As an Employer, it is your responsibility to register your employees with UIF. The responsibility does not stop there as you must also submit monthly returns to UIF that will provide details of all employees, employed for the period in question. The returns must be submitted no later than the 7th day of each month for the preceding month. As from GreatSoft Payroll, this return is submitted automatically to UIF, when you proceed to roll over your payroll company from one month to the next.
How is UIF Funded?
Every employee pays 1% of their salaries to the fund, and employers must match that 1% so that there is a monthly 2% contribution. The onus falls on employers to make sure all workers are registered with the UIF, and they have to make sure that an employee’s contribution is deducted from their salary every month. If an employee has been registered and the contributions are paid, then that employee will be able to claim from the fund.
What should employers NOT do?
- Take more than 1 % of an employee’s salary for UIF
- Deduct a larger percentage from salaries if they fall behind with UIF payments
- Charge employees for deducting UIF as if it is an additional service
Note: If for any reason, an employer accidentally deducts too much money at the end of the month, they must pay it back to the employee(s).
Which employees(workers) are exempt?
- Workers who are employed to work for less than 24 hours a month with a specific employer
- Workers who get a monthly state social pension, but excluding a disability or maintenance grant
- Workers who are paid only on a commission basis
- Workers in the national or provincial Government
- Workers classified as a traditional healer
- Workers who are members of a municipal council
Keep in mind that even if these employees are exempt from the fund, you still need to register them with the Fund.
Who is eligible to claim from the UIF?
All workers who contributed to the UIF can claim if they have been let go, retrenched, if their contract has expired, or if their employer is bankrupt. Domestic workers who have more than one employer can claim if they lose their job with one of their employers or if an employer passes away. It is also important to note that foreigners who are employed permanently in SA also qualify for UIF.
Are there any other benefits employees can claim from UIF?
Yes- there are four other types employees can claim for:
Illness benefits: If you cannot work because you are sick and you have been booked off for two weeks, you could be eligible. The benefits will be paid from the starting date of when you stopped working.
Maternity benefits: You are entitled to claim while on maternity leave, and can claim for up to 17 weeks of your pregnancy. In the tragic case of a miscarriage, you can claim for 6 weeks after. What’s more, once the paternity leave amendments are officially signed into law, fathers will be entitled to 10 days’ leave and claim up to 66% of their earnings from the UIF.
Adoption benefits: If the adopted child is younger than two years of age and you are receiving less money while on adoption leave, you can claim benefits. Do note: only one parent can claim adoption benefits over this period.
Death benefits: The spouse or child under 18 of a person who has passed away can claim death benefits, provided that the deceased contributed to a UIF fund.
Recent changes to claims and benefits
The President signed the Unemployment Insurance Amendment Act into law in 2018, which is hailed as a victory for workers and a much-welcomed step forward for South Africa. Some of the changes included:
- Payment for the unemployment benefit will be for 12 months instead of the current eight months.
- Maternity benefits will be paid at a flat rate of 66% instead of the current sliding scale of between 38% and 60%.
- The period within which to submit claims is increased from 6 months to 12 months for unemployment, maternity, illness, and adoption benefits. For death benefit, you can file a claim within 18 months.
- Public servants and people in leadership are going to be able to contribute to and claim from UIF.
- Workers who work for reduced hours or short time will be able to claim for the lost hours.
When can I NOT claim?
The fund is reserved for anyone who has involuntarily lost their job or who cannot work due to pregnancy, illness, or death of an immediate family member.
This means that employees cannot claim if:
- The employee was suspended from their job because they committed fraud or another criminal act.
- The employee voluntarily quit their job.
- The employee refused the required training or advice.
- The employee already qualifies for a benefit from an unemployment fund under the Labour Relations Act.
- The employee is already receiving benefits from any other scheme established by the Labour Relations Act.