Employers are of the view that registration at the Unemployment Insurance Fund (UIF) is voluntary and are usually faced with interest and penalties payable by them for non-compliance or non-payment. The purpose of the fund is to give short-term relief to employees or their dependents when they become unemployed or are unable to work for a certain period.
Who must register?
All employers must register directly with the UIF unless they are required to register as employers under the Income Tax Act or if they pay the skills development levy under the Skills Development Act. Therefore, employers who are required to register their employees with SARS for the payment of Pay As You Earn (PAYE) and/ or Skills Development Levy must also register with SARS for their UIF. Employers must register themselves and, thereafter, all employees (exclusions are applicable) as soon as the employee is appointed.
Application of UIF
The Unemployment Insurance Contributions Act and Unemployment Insurance Act which amendments was assented on 18 January 2018, apply to all employers and all their employees with the exclusion of employees working less than 24 hours per month with a particular employer and employees who only earns commission.
Contributions towards UIF
Employers must deduct 1% of employee’s salaries and contribute 1% themselves in which the 2% contribution must be paid towards UIF or SARS before the 7th of each month. Contributions are, however, capped at a maximum of R148.72 per month for employees earning R14 872 per month or more. Employers may not deduct more than 1% from employees, ask a fee for such deduction or deduct outstanding amounts from employees if they fall behind on payments. When employers accidentally deduct too much from employees, said amount must be paid back to employees.
Employers are obliged to declare any changes in employment to the UIF on the 7th of each month for example termination of service of employees, whether in terms of dismissals, retrenchments, incapacity procedures and employees who absconded.
ABOUT THE AUTHOR
Eleanor du Plessis obtained her LLB degree and Post Graduate Diploma in Labour Law from the University of the Free State. She is an admitted attorney of the High Court of South Africa and has 3 years and 10 months experience in the field of labour law.