As an employer, it is essential to understand your obligations regarding UIF contributions and payment requirements to ensure compliance with the law. This article will guide you through the key aspects of UIF contributions and payment procedures.
Employers Must Register With The UIF
Firstly, employers are required to register their business with the UIF online either on the Bizportal or the uFiling websites. A UI-54 with a unique reference will be emailed or posted confirming the registration was successful. UI-32 will then be sent to confirm the registration of employees.
Responsibilities Of An When Employees’ Services Have Been Terminated
A declaration (electronic, ufiling and UI19 form) form must be completed and returned to the Fund or any of the Department of Employment and Labour’s offices. Information relating to the employee will then be updated to show their employment status.
The employer must then advise the former employees to approach their nearest Labour Department and Labour office.
Who is Covered?
The Unemployment Insurance Act and Unemployment Insurance Contributions Act apply to most employers and workers in South Africa. However, certain categories of individuals are exempt from UIF contributions. These include:
- Workers who work less than 24 hours per month for an employer.
- Learners.
- Public servants.
- Foreigners working on contract.
- Employees in receipt of an old age pension (since 07/2/2007, they are no longer excluded).
- Workers who only earn a commission.
It is important to note that domestic employers and their workers have been included under the Act since 1 April 2003.
Contributions Payable
Employers are required to deduct 1% from each worker's total earnings, excluding commission. Additionally, employers must contribute an equal amount of 1% for each worker they employ. Therefore, the total contribution paid to the UIF amounts to 2%.
For example, if a worker earns R1,000 per month, the employer must deduct R10 (1% of the worker's earnings) and also contribute R10. The total amount of R20 must be paid to the UIF or the South African Revenue Services (SARS) as per the payment procedure.
Earnings Ceiling
Workers who earn more than the prescribed earnings ceiling must also contribute to the UIF, albeit based on the maximum earnings ceiling. The specific ceiling may vary depending on whether it is calculated on an annual, or monthly basis.
Let's consider an example: If a worker earns R10,000 per month, and the monthly earnings ceiling is R1,096, the worker's contribution will be calculated based on the difference, which is R8,836 in this case.
Employer Limitations
There are certain limitations and restrictions on what employers can and cannot do regarding UIF contributions. Employers must be aware of the following:
They may not deduct more than 1% from a worker's earnings. They also cannot deduct outstanding amounts from workers' salaries when they fall behind with UIF contributions.
Furthermore, employers are not allowed to charge a fee for deducting UIF contributions.
If an employer accidentally deducts an amount exceeding 1%, they are obligated to refund the extra money to the affected workers.
Payment of Contributions
Timely payment of UIF contributions is crucial to ensure compliance. Employers must remit the 1% deducted from workers' salaries, along with their own 1% contribution, to the UIF or SARS before the 7th of every month.
For instance, contributions due for January must reach the UIF or SARS on or before February 7th. If the 7th falls on a non-business day, the payment should be made on or before the last business day before the 7th. A "business day" refers to any day that is not a Saturday, Sunday, or public holiday.
To sum up, employers have a legal obligation to make regular UIF contributions on behalf of their workers. By abiding by the prescribed contribution percentages and payment deadlines, employers can fulfil their responsibilities and provide their workers with the benefits they deserve.
