What is the Use of UIF?

The Unemployment Insurance Fund (UIF) serves as a support system for workers facing temporary unemployment or an inability to work due to various reasons such as maternity, adoption, parental leave, or illness. It also extends assistance to the dependents of a deceased contributor.

Legal Framework

The UIF operates under the governance of two key legislations:

  • The Unemployment Insurance Act, 2001 (UI Act)
  • The Unemployment Insurance Contributions Act, 2002 (UIC Act)

These acts outline the benefits available to contributors and the regulations concerning the imposition and collection of UIF contributions. Both laws came into effect on 1 April 2002.

Who Qualifies for UIF?

All employees and their employers are obligated to contribute to the UIF. However, certain exceptions apply. Employees are exempt from UIF contributions if they:

  • Work for an employer less than 24 hours a month
  • Hold positions within national or provincial government bodies
  • Occupy specific political or governmental roles such as the President, Deputy President, Minister, etc.

Registration Process

Employers registered with the South African Revenue Service (SARS) for Employees’ Tax must also register for UIF contributions. This registration can be done comprehensively for all tax types through the client information system.

Additionally, employers meeting certain criteria must register directly with the UI Commissioner’s office. These include employers who:

  • Are not obligated to register with SARS for Employees’ Tax
  • Have not voluntarily registered with SARS as employers
  • Are not liable for paying the skills development levy

Contribution Amounts

The UIF contribution amounts to 1% of the employee’s remuneration, which the employer deducts. Employers match this with an additional 1% contribution. However, contributions only apply to remuneration falling below specified ceilings:

  1. From 1 October 2012: R14,872 per month (R178,464 annually)
  2. From 1 June 2021: R17,712 per month (R212,544 annually)

For employees earning above the ceiling, contributions are calculated based on the ceiling amount. Excess earnings are excluded from UIF contribution calculations.

Payment Procedures

Employers are required to remit UIF contributions within seven days after the end of each month. If the deadline coincides with a public holiday or weekend, payment must be made on the last business day preceding the holiday or weekend.

Payment methods include:

  1. eFiling
  2. Electronic payments through internet banking (EFT)
  3. Payment at approved banking institutions

Offenses and Penalties

Offenses related to UIF fall under Chapter 17 of the Tax Administration Act, 2011. These include:

Failure to submit necessary returns or documents to SARS

Neglecting to deduct, withhold, or pay UIF contributions

Refusing to provide required information or documents to SARS

Submitting false certificates or statements

Refusal to take an oath or make a solemn declaration