The Unemployment Insurance Fund (UIF) is a government fund that offers financial assistance to individuals who have lost their jobs and income due to various circumstances. If you find yourself recently retrenched or terminated, you may be eligible for a UIF payout.
Primarily, the fund offers short-term financial assistance to workers when they become unemployed or are unable to work because of illness, maternity or adoption leave. The fund also assists dependents of a contributing worker who has died.
Essentially, it’s meant to be a financial safety net for South Africans when they become unexpectedly unemployed or are unable to work.
If you are looking to claim from UIF, it helps to understand the process and – most importantly – the time frames. You will only start receiving your benefits up to eight weeks after registering.
This is the maximum time it should take for payments to start coming through, and you will receive payments every four weeks until your benefits are exhausted.
Can You Lodge a UIF Claim if Your Employer Becomes Bankrupt or the Business Closes?
You can lodge a UIF claim if your employer goes bankrupt, your contract ends, or you are fired or retrenched.
When the employer is unable to meet the financial needs of the business and applies for sequestration or liquidation of the business, depending on the type of entity, a trustee or liquidator is appointed to take control of the financial affairs of the employer.
From the moment that the trustee or liquidator is appointed, the existing employment contracts are suspended for 45 days. During this time, employees are not required to work and are not entitled to any compensation or benefits in any form; for example salaries, wages, annual leave, sick leave and so forth.
However, employees are entitled to submit an application to the Unemployment Insurance Fund (UIF) during this suspension period.
All employees are required by law to be registered to the UIF regulated by the Unemployment Insurance Act. In addition, employers are required to have all their employees registered to the UIF and failure to comply, may result in penalties and/or fines.
How is the UIF Funded?
Every employee pays 1% of their salaries to the fund, and employers match that 1% so that there is a monthly 2% contribution.
The responsibility falls on employers to make sure all their workers are registered with the UIF, and they have to make sure that an employee’s contribution is deducted from their salary every month.
If an employee has been registered and the contributions are paid, then that employee will be able to claim from the fund at the time if/when unemployment occurs. The employee does not need a card or any other proof that they have contributed to the UIF.
Who Doesn't Have to Contribute to UIF?
An employee doesn’t have to contribute to a UIF if:
- they are employed for less than 24 hours a month with a specific employer
- their contract came about as part of a Skills Development Act initiative
- they are an employee in the national or provincial Government
- they are a traditional healer or member of a municipal council
