Unemployment Insurance Fund (UIF)

What is it?

The payment of contributions to cover workers within the labour market in South Africa was introduced as early as 1946, but has changed quite a lot since then.

Currently, the Unemployment Insurance Fund (UIF) provides short-term relief to workers when they become unemployed or are unable to work because of maternity or adoption leave, or illness. It also provides relief to the dependants of a deceased contributor.

The current unemployment insurance system in South Africa is governed by the following legislation:

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

These Acts provide for the benefits, to which contributors are entitled, and the imposition and collection of the contributions to the UIF, respectively, and came into operation on 1 April 2002, replacing the previous legislation that was implemented in 1966.

Who is it for?

All employees, as well as their employers, are liable for contributions to the UIF. However, an employees is excluded from contributing to the UIF if he or she –
  • is employed by the employer for less than 24 hours a month;
  • receives remuneration under a contract of employment as contemplated in section 18(2) of the Skills Development Act, 1998 (Act No.97 of 1998);
  • is employed as an officer or employee, as defined in section 1(1) of the Public Service Act, 1994 (Proclamation  No.103   of 1994), in the national or provincial sphere of Government;
  • has entered the Republic for the purpose of carrying out a contract of service, apprenticeship or learnership within the Republic, if upon termination thereof, the employer is required by law or by the contract of service, apprenticeship or learnership (as the case may be), or by any other agreement or undertaking, to repatriate that person, or if that person is so required to leave the Republic;
  • is the President, Deputy President, a Minister, Deputy Minister, a member of the National Assembly, a permanent delegate to the National Council of Provinces, a Premier, a member of an Executive Council or a member of a provincial legislature; or
  • is a member of a municipal council, a traditional leader, a member of a provincial House of Traditional Leaders and a member of the Council of Traditional Leaders.

What steps must I take?

Any employer who is registered with SARS for employees’ tax purposes is also required to register with SARS for purposes of paying UIF contributions.
 
Any employer who pays or is liable to pay remuneration to an employee must contribute on a monthly basis to the UI Fund.
 
Application for registration for UIF contribution purposes is made on an EMP101e form  and it is for those employers who are registered with SARS for employees tax purposes.

How much is payable?

  • The amount of the contribution payable -by an employee, must be 1%​ of the remuneration paid to him/her by his/her employer; by an employer in respect of any one of its employees, must be equal to 1% of the remuneration paid to that employee.
  • The employer must, therefore, pay a total contribution of 2% (1% contributed by the employee and 1% contributed by the employer) within the prescribed period. A contribution applies to so much of the remuneration paid or payable by an employer to an employee as it does not exceeds R14872 per month (R178464 annually) with effect from 1 October  2012.
  • Excess amount should not be included as remuneration or leviable amount for the purposes of UIF contribution.

What are the payments methods available?

  • eFiling
  • Electronically, using the internet (EFT – electronic fund transfer)
  • At a branch of one of the relevant banking institutions (ABSA, FNB, Nedbank and Standard Bank)
  • At a specific SARS branch, for selected payments only
  • Internet payments where payments can be made using the new beneficiary account ID process offered by banks
  • Mail payments

Offenses

Chapter 17 of the Tax Administration Act, 2011(the TA Act) deals with offences committed under a Tax Act. These offences also apply to the UIC Act. There are three categories of offences, as they may relate to UIF.

Criminal offences relating to non-compliance could be committed if a person does not comply with an obligation imposed under a tax Act. The TA Act contains a comprehensive list of these obligations. These offences are committed if the person performs or fails to perform an act or omission wilfully and without just cause.

If convicted, the person is subject to a fine or to imprisonment for a period not exceeding two years.
 

These category includes offences such as (but not limited to) the failure register or notify SARS of a change of particulars when required, failure to retain records, failure to provide information, documents or material facts to SARS as and when required under a Tax Act, and obstructing or hindering a SARS official in carrying out his or her duties.

Criminal offences relating to tax evasion could be committed if a person intentionally evades tax or obtains an undue refund, or assists another person in such an endeavour. If convicted, that person may be subject to a fine or to imprisonment for a period not exceeding five years.

This includes the making of false entries in books of account or returns without reasonable grounds for believing that entry to be true, providing false answers to information requests, and fraud.
 
A person who – 
  • submits a return or other document to SARS under a forged signature; or
  • uses another person’s electronic or digital signature; or submits to SARS a communication on behalf of another person,

without that other person’s consent, is guilty of a criminal offence relating to filing a return without authority and if convicted could be subject to a fine or imprisonment for a period not exceeding two years.

In terms of section 74 of the Tax Administration Act, 2011  the Commissioner may, notwithstanding the secrecy provisions, from time to time publish for general information the particulars relating to any offence in terms of a Tax Act, including the UIC Act. Such publication may specify the following:

  • Name and area of residence  of the offender;
  • The particulars of the offence as the Commissioner may think fit; and
  • The particulars of the fine or sentence imposed.
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