Did You Know?

You are required by law to register with the Unemployment Insurance Fund (UIF) and contribute towards the fund if you have employed people for more than 24 hours per month.
The monthly contribution for UIF is two percent of your worker’s gross salary per month. You must deduct one percent of your worker’s gross salary per month and you as the employer contribute one percent.

Employers must pay unemployment insurance contributions of 2% of the value of each worker’s pay per month. The employer and the worker each contribute 1%. Contributions are paid to the Unemployment Insurance Fund (UIF) or the South African Revenue Services (SARS).

The Unemployment Insurance Act and Unemployment Insurance Contributions Act apply to all employers and workers, but not to:

• 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 are, since 07/2/2007, no longer excluded from contributing towards UIF; or
• Workers who only earn a commission.

What Employers may not do:

• Deduct more than 1%;
• Deduct outstanding amounts when they fall behind with payments; and may not
• Ask for a fee for deducting the money.

If employers deduct too much money by accident, they must pay the extra money back to workers.
Based on Legislation in Section 6 and Section 7 of the Unemployment Insurance Contributions Act

Registration and Declarations

Employers must register themselves and their worker(s) as soon as they employ someone. Employers must also inform the UIF of changes (e.g. new workers appointed or changes in salary) before the 7th of every month. Based on Legislation in Section 56, of the Unemployment Insurance Act

What is the 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 parental leave, or illness. It also provides relief to the dependants of a deceased contributor.

The 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 allowed, and the imposition and collection of the contributions to the UIF, respectively, and came into operation on 1 April 2002.

Who is it for?

All employees, as well as their employers, are responsible for contributions to the UIF. However, an employee is excluded from contributing to the UIF if he or she:
• Is employed by the employer for less than 24 hours a month
• Is employed as an officer or employee in the national or provincial sphere of Government
• Is the President, Deputy President, Minister, Deputy Minister, 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, also needs to register to pay UIF contributions. You can register once for all different tax types using the client information system.

The following employers must register at the UI Commissioner’s office for purposes of paying UIF contributions, an employer who:
• Doesn’t need to register with SARS for Employees’ Tax purposes
• Hasn’t voluntarily registered with SARS as an employer
• Isn’t liable for the payment of the skills development levy.
• Pays or is liable to pay remuneration to an employee who must contribute on a monthly basis to the UI Fund.

How Much do you Need to Pay?

• The amount of the contribution due by an employee, must be 1% of the remuneration paid by the employer to the employee.
• The employer must pay a total contribution of 2% (1% contributed by the employee and 1% contributed by the employer) within the prescribed period.
• A contribution shall not apply to so much of the remuneration paid or payable by an employer to an employee:
– With effect from 1 June 2021 – R 17 712 per month (R 212 544 annually).

PLEASE NOTE: As of 1 June 2021, the maximum earnings ceiling is R17 712 per month or R212 544 annually. For employees who earn more than this amount, the contribution is calculated using the maximum earnings ceiling amount.

Therefore the maximum contribution that can be deducted, for employees who earn more than R17 712 per month, is R177,12 per month.
• Excess amounts shouldn’t be included as remuneration for the purposes of UIF contributions.
• The amounts deducted or withheld must be paid by the employer to SARS on a monthly basis, by completing the Monthly Employer (EMP201). The EMP201 is a payment declaration in which the employer declares the total payment together with the allocations for PAYE, SDL, UIF, and/or Employment Tax Incentive (ETI), if applicable.
• A unique Payment Reference Number (PRN) will be pre-populated on the EMP201 and will be used to link the actual payment with the relevant EMP201 payment declaration.

How and When should it be Paid?

It must be paid within seven days after the end of the month during which the amount was deducted. If the last day for payment falls on a public holiday or weekend, the payment must be made on the last business day before the public holiday or weekend.

The following payment methods are available:
• eFiling
• Electronic payments through the Internet (EFT)
• At a branch of one of the relevant approved banking institutions.

Offenses

Chapter 17 of the Tax Administration Act, 2011 deals with offenses committed under a Tax Act, which also applies to the UIC Act.

An Offense is committed if a Person:
• Fails to:
o Submit a return or document to SARS or
o Issue a document to a person as needed.
• Fails or neglects to:
o Deduct withhold or pay to SARS contributions to the UIF or
o Furnish, produce, or make available any information or document required by SARS or
o Register or let SARS know of a change in registered details or
o Keep records as needed.
• Submits a false certificate or statement.
• Refuses or neglects to take an oath or make a solemn declaration.

A person convicted of any of these offenses may be liable to a fine or imprisonment for a period of not more than TWO years.