UIF Contributions – Guide for South African Employers and Workers

The Unemployment Insurance Fund (UIF) is a vital institution in South Africa, providing financial support to workers who have lost their jobs or are unable to work due to illness or injury. As an employer, it is crucial to understand the UIF contributions and how they impact your business and employees.

In this article, we will delve into the details of UIF contributions, including who must contribute, how much, and when.

Who Must Contribute

The Unemployment Insurance Act and Unemployment Insurance Contributions Act apply to all employers and workers, except for specific groups such as:

• Workers working less than 24 hours a month for an employer
• Learners
• Public servants
• Foreigners working on contract
• Employees in receipt of an old age pension (since 07/2/2007)
• Workers who only earn commission
• Domestic employers and their workers (since 1 April 2003)

Contributions Payable

Employers must pay unemployment insurance contributions of 2% of the value of each worker’s pay per month. This contribution is split evenly between the employer and the worker, with each contributing 1%. The contributions are paid to the Unemployment Insurance Fund (UIF) or the South African Revenue Services (SARS).

Example

Let’s consider an example to illustrate how UIF contributions work. Suppose a worker earns R1 000 per month. The employer must deduct 1% of the worker’s total earnings, which is R10. In addition, the employer must contribute 1% for every worker they employ, which is also R10. The total contribution paid to the UIF is therefore R20.

Earnings Ceiling

Workers who earn more than the annual, monthly, or weekly maximum earnings ceiling must also contribute to the Fund, but their contributions are worked out on the maximum earnings ceiling. For instance, if a worker earns R10 000 per month and the monthly earning ceiling is R1 096 per month, the worker’s contribution will be worked out on R8 836.

What Employers May Not Do

Employers are prohibited from:

• Deducting more than 1% from a worker’s pay
• Deducting outstanding amounts when they fall behind with payments
• Asking a fee for deducting the money
• Deducting too much money by accident, which must be paid back to the worker

Payment of Contributions

Employers must pay the 1% they deducted from workers, together with the 1% they have contributed, to the UIF or SARS before the 7th of every month. If the 7th day of a month is not a business day, employers must pay on or before the last business day before the 7th.

Conclusion

UIF contributions are a vital aspect of employment in South Africa, providing financial support to workers who have lost their jobs or are unable to work. As an employer, it is crucial to understand the UIF contributions and how they impact your business and employees.

By following the guidelines outlined in this article, you can ensure compliance with the law and provide the necessary support to your workers during times of need.