Unemployment Insurance Act

The aim of the Unemployment Insurance Act, 63 of 2001 as amended, is to establish an unemployment insurance fund in order to alleviate the harmful economic and social consequences of unemployment. Employers and employees contribute to the fund and employees who become unemployed, or their beneficiaries where this may be the case, may be entitled to benefits.

The role and scope of the Unemployment Insurance Fund (UIF) in South Africa’s labour justice system is often a topic of great interest and discourse. It is an essential institution intended to protect employees from financial uncertainty in times of unemployment, illness, maternity, adoption and even death.

However, there are guidelines and restrictions that determine who is eligible. Various criteria are set to determine who can apply. The Unemployment Insurance Act applies to all employers and employees, except for: employees who work for an employer for less than 24 hours a month, members of parliament, cabinet ministers, deputy ministers, members of provincial executive councils, members of provincial legislators and municipal councillors.

Registration

Employers who are obliged to pay unemployment insurance must register with the South African Revenue Service (SARS) or the UIF offices for the payment of contributions. An employer cannot exercise any discretion whether or not to register for unemployment insurance.

Payment of UIF contributions

Monthly UIF contributions must be repaid within seven days after the end of the month in respect of the payable contributions.

The employer’s responsibilities

• UIF registration must be done as soon as the employee’s employment commences.
• Monthly payments.
• 1% deducted from the employee’s salary for the employee’s contribution and 1% from the employee’s salary for the employer’s contribution.
• It is the employer’s responsibility to make the deductions and pay the monies over.
• Submission of statements.
• Submission of UI-19 forms as soon as an employee’s employment starts and ends.
• Keeping records and accurate employee information to be submitted and changes noted.

The employee’s responsibilities

• When an employee needs to claim unemployment insurance for whatever reason, it is the employee’s responsibility to file the claim.
• Employees have an obligation to inform employers of any changes related to their personal details.

Employer’s risk in terms of non-compliance

Any person found guilty of non-compliance with this law will be liable to a fine and/or imprisonment.

It is essential for employers and employees to be aware of their rights and responsibilities.

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