What is the role of the Unemployment Insurance Fund?

Unemployment Insurance Fund

What is the Unemployment Insurance Fund?

The Unemployment Insurance Fund (UIF) is part of the Government’s Social Security programme. The Fund has been established to provide short-term relief to workers, subject to certain conditions when they become unemployed, or are unable to work because of illness, maternity or adoption leave and also to provide relief to the dependents of deceased contributors.

How does the UIF obtain its money?

The Fund obtains its money from monthly contributions made by employers and workers. This contribution is made up of a 1% contribution by the employer. The total contribution that must reach the Fund is therefore 2% of the worker’s salary.

How to register with the Fund?

The employer is compelled to register with the Fund as soon as business activities commence and the first workers begin to work. The prescribed UI 8 form for commercial employers or UI 8(D) form for domestic workers should be completed and submitted to the UIF.

How should employers declare to the Fund?

Employers are required by law to declare details of their workers, i.e. full names, ID numbers, period of service as well as their remuneration to the Fund. Employers could either declare electronically or manually by completing the UI 19 form for workers in the business sector or UI-19D (E) for domestic workers to the Fund. Any change of details of workers should be forwarded to the Fund within seven days after the end of each month. It should be noted that the UI 19 form should not be handed to workers following termination of service, but be submitted directly to the office of the Unemployment Insurance Fund.

Who must contribute to the Fund?

  • Any person working for 24 hours or more per month for an employer, irrespective of how much he/ she earns, should contribute to the Fund.
  • Domestic workers and their employers are also required to contribute to the Fund with effect from 1 April 2003

The following categories of workers are excluded from contributing to the Fund;

  • Workers who work less than 24 hours a month
  • Public servants as defined under Section 1(1) of the Public Service Act of 1994
  • Workers who receive earnings under a contract of employment in terms of the Skills Development Act of 1998
  • Foreigners who enter the country for the purpose of carrying out a contract of service
  • Sole owners of a business
  • Workers in receipt of a monthly State Social Pension (old-age pension)

What benefit does the Fund provide?

  • Unemployment benefits
  • Illness benefits
  • Maternity benefits
  • Adoption benefits
  • Dependants benefits
Unemployment Insurance Fund

Unemployment Insurance Fund Benefits

How will the Fund know how much to pay when a person becomes unemployed?

  • The rates at which the benefits are payable in accordance with the scale of benefits which ranges between 38-58% of your last salary. Low-income earners receive a higher percentage whilst high-income earners receive a lower percentage.
  • Credit days are also given to the workers as they work and contribute to the Fund. Credits are earned as follows: For every six days that you work as a contributor, you receive one day’s credits subject to a maximum of 238 days credits. In order to qualify for the maximum credits, you must have worked continuously as a contributor for at least four years immediately preceding the date of application.

What are the qualifying conditions for Unemployment Benefits?

  • Application for all the benefits must be made within six months of termination of service.
  • Ordinary benefits are payable from the date of application
  • Benefits are only payable if the employer terminates the services of the contributor or a contract of service has expired.
  • In the event of resignation, no benefits will be paid unless it can be proven that it was constructive dismissal.
  • The contributor must be registered as a work seeker with the Department of Labour (complete prescribed form)
  • The contributor must be Capable of and Available for work.
  • The contributor must report at times and places as requested.

CONTACT CAPE LABOUR.

For more information on labour law advice or services. Please feel free to contact us at Cape Labour Consultants and we will gladly assist you. Cape Labour & Industrial Consultants is a Cape Town-based providing Labour Law (Industrial Relations) and advice to employers and employees across all market segments and industries since 1987.

For more information or to Contact Cape Labour. You can find all of our relevant details here.

W.Tel no.: 021-423-3959
Cell: 
082-433-8714
Fax: 
021-4232105
E-mail: 
bernard@capelabour.co.za
Website: 
www.capelabour.co.za