UNEMPLOYMENT INSURANCE (UIF)

1. The purpose of the Unemployment Insurance Act, No 63 of 2001, as amended, is set out in Section 2 thereof and is to establish an Unemployment Insurance Fund to which employers and employees contribute and from which employees who become unemployed or their beneficiaries, as the case may be, are entitled to benefits and in so doing to alleviate the harmful economic and social effects of unemployment.

2. The Act applies to all employers and employees but not to:

2.1. Employees employed for less than 24 (twenty four) hours per month;
2.2. Learners;
2.3. Public servants;
2.4. Foreigners working on contract;
2.5. Employees who receive a monthly state pension; or
2.6. Workers who only earn commission.

3. Employers must register themselves and their employees with the Unemployment Insurance Fund as soon as they employ them and pay their contributions every month. Employers must also inform the Unemployment Insurance Fund of changes i.e., new employees appointed or changes in salary before the 7th of every month.

4. Every employer must provide the following information to the Commissioner:
4.1. The street address of the business, and any of its branches, of the employer.
4.2. If the employer is not resident in the Republic, the particulars of the authorised person who is required to carry out the duties of the employer in terms of this Act.
4.3. The names, identification numbers and monthly remuneration of each employee and the address at which the employee is employed.

5. Employers are not required to register with the Unemployment Insurance Fund if they:

5.1. Are required to register as employers under the Income Tax Act; or
5.2. Pay the skills development levy under the Skills Development Act.

6. Employers must pay unemployment insurance contributions of 2% of the value of each employee’s salary per month. The employer and the employee each contribute 1%.

7. Application for Unemployment Insurance Fund benefits must be made in the prescribed form at an employment office. The application must be made within 6 (six) months of the employee becoming unemployed but the Commissioner may accept an application made after the 6 (six) month time limit on just cause shown. The Claims Officer must investigate the application and, if necessary, request further information regarding the applicant’s continued unemployment.

8. Employees can claim from the day they became unemployed until their benefits are used up or they become employed again.

9. No tax is payable on benefits received.

10.1. For purposes of calculating the benefit payable to an employee, the daily rate of remuneration of the employee, subject to the prescribed maximum must be determined-

(a) If paid monthly, by multiplying the monthly remuneration by 12 and dividing it by 365;
(b) If paid weekly, by multiplying the weekly remuneration by 52 and dividing it by 365.

10.2 If the employee’s remuneration fluctuates significantly from period to period, the calculation must be based on the average remuneration of the employee over the previous six months.

10.3 An employee’s entitlement to benefits in terms of this Chapter accrues at a rate of one day’s benefit for every completed six days of employment as an employee subject to a maximum accrual of 238 days benefit in the four year period immediately preceding the date of application for benefits, less any days of benefit received by the employee during this period.

11. If an employee receives more benefits than he or she should then he or she must pay back the excess received.

12. Employees can claim unemployment benefits, illness benefits, maternity benefits, adoption benefits or dependent’s benefits as the case may be.

13. Employees who earn more than the annual monthly or weekly maximum earning ceiling must also contribute to the Unemployment Insurance Fund, but their contributions are worked out on the maximum earnings ceiling. The maximum earnings ceiling currently stands at R14,872.00 per month or R178,464.00 per annum.

14. The benefit to which an employee is entitled is calculated in one of two ways, depending on the employee’s income prior to becoming unemployed:

14.1 Employees who earned less than a particular amount (known as the “benefit transition income level”) are entitled to a percentage of their previous pay.
14.2 Employees who earned more than the benefit transition income level are entitled to a flat benefit, equal to the entitlement of an employee who was previously paid at the benefit transition income level.

15. An employee cannot claim benefits from the Unemployment Insurance Fund if they get:

15.1 Benefits from the Compensation Fund established under the Compensation for Occupational Injuries and Diseases Act, 1993 as a result of an occupational injury or disease;
15.2 Benefits from an Unemployment Fund under the Labor Relations Act; or
15.3 If they are suspended from claiming because of fraud, quit their job, do not report at said dates and times or refuse training and advice.

16. Employees can claim if their employers become insolvent, their contracts are terminated or if they are dismissed.

17.1. Domestic employers and their workers are included under the Act since 1 April 2003.
17.2. In addition to what is set out above domestic workers can also claim if they work for more than one employer and lose their job at one of the employers or their employer dies.

18. The Unemployment Insurance Fund may stop paying benefits to an employee if the employee refuses to accept employment, go for training or go for advice.

19. Any person convicted of an offence in terms of this Act is liable to a fine or to imprisonment, or to both a fine and imprisonment.