Sometimes in life it’s the small things that matter – UIF is a small obligation that has a massive
impact on your business and the employees working for you.
Get it right the 1st time!
Unemployment Insurance Fund (UIF)
The Unemployment Insurance Fund (UIF) gives short-term relief to workers when they become unemployed or are unable to work because of maternity, adoption leave, or illness. It also provides relief to the dependents of a deceased contributor.
As soon as you have appointed your first employee, you are deemed to be an Employer and must register all employees, ensuring that your business complies with UIF. The employee and employer makes equal contributions each month of 1% of the gross salary of each individual.
Who must contribute to UIF?
The Unemployment Insurance Act (No 63 of 2001) and Unemployment Insurance Contributions Act apply to all employers and employees, but not to –
- employees working less than 24 hours a month for an employer;
- public servants;
- foreigners working on contract;
- employees who get a monthly Old Age Grant; or
- employees who only earn commission or do ad-hoc (piece) work.
Domestic employers and their employees have been included under the Act since 1 April 2003.
A working member of a close corporation or working director of a company must also pay UIF, as they are deemed to be the 1st employees of the business.
The employer cannot claim money from the UIF if the business fails and has to close down.
Who must register for UIF?
All employers must register either with SARS or directly with the Unemployment Insurance Fund.
Employers must register directly with the UIF; unless they –
- are required to register as employers under the Income Tax Act; or
- pay the skills development levy under the Skills Development Act.
Employers who are required to register their employees with SARS for the payment of PAYE (Pay As You Earn) and/or SDL (Skills Development Levy) must register with SARS for their UIF.
Which benefits do the UIF provide?
The five statutory types of unemployment benefits have been retained in the main UIF Act, namely:
What are your monthly obligations?
As soon as you have registered yourself as an employer and listed all your employees, your responsibilities to ensure your business complies with UIF are:
- deduct 1% of every employees’ salary
- add another 1% for every employee – this is paid by the employer
- pay the 2% contribution every month to the SARS or UIF
- submit a declaration to the UIF of any new employments, resignations and/or other forms of terminations and any changes in an employee’s salary.
How to Pay the UIF
As an employer, you deducted the required 1% from your employees’ salaries and added your 1% contribution to the initial deduction. This 2% total UIF contribution now has to be paid to the correct authority.
There are various ways to pay the UIF and depending on whether your payments are due to SARS or the UIF, this will differ from employer-to-employer, but in both instances the payment has to made on or before the 7th of each month.
If you do not pay any SDL on behalf of- or deduct any PAYE from your employees, the total contribution can be paid over to the UIF via EFT and the required return submitted via uFiling.
If your payment is however due to SARS, the return will be submitted via SARS eFiling and the payment made directly from your business bank account. SARS will then forward information and payment directly to UIF for their records.
How to inform UIF of employee changes?
Employers must inform the UIF of changes (for example, new employees appointed or changes in salary) before the 7th of every month. This is done from the payroll information for the specific month, completed on a UI19 form and electronically submitted to the UIF. This ensures that their records are always up to date, so that in the case of a claim against the UIF, there is no delay in settling the matter. This is also the critical step ensuring your business complies with UIF.