What you need to know about UIF

By February 10, 2017Blog

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. 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 put into effect 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 you can claim benefits in the event of:
1. Your 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 your beneficiaries can claim a dependents benefit in the event of your death.

To set the scene:
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.The only employees who do not contribute to Unemployment Insurance are those that work for less than 24 hours. What this means is that if you work for a company for more than three days they have to deduct UIF from you (1%) of your pensionable earnings and they have to pay an additional 1% of your pensionable earnings across on your behalf.

If they 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), they (or you as the employer) face a potential fine or a maximum of 12 months in prison. Employers also become liable to pay the benefits that the employee would have received if they had been contributing.

What we do need to remember is that UIF is an insurance. It is not a fund where money is going in on your behalf and one day you can claim it. Like all insurances you are covered as long as you are contributing and your benefit is limited to the level at which you contribute.

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

The good news is that when the amendment is put into effect, maternity leave will increase to a flat 66% of salary which means that during maternity leave, if your salary is over the capped limit, you would be entitled to R9 815.52 per month for the four months that you are on maternity leave. 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 make sure that you register for UIF and pay the contribution and this can be done by Ufiling and an EFT and it can be done annually.

(Information supplied by Desrae Connold of Connold and Associates- www.connold.co.za on behalf of Ad Talent).

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