The Unemployment Insurance Fund (UIF) supplements income lost by workers who previously contributed to the fund.
Every month, 2% of a worker's monthly remuneration must be contributed to the UIF. The employer will contribute 1% while the employee will contribute the remaining 1%.
Over time, these contributions build up credits. The more credits you have, the longer you will be able to claim benefits from the UIF.
Here’s How These Benefits Are Calculated
- The UIF will calculate your average salary for the last six months salaries’ prior to you claiming unemployment benefits. It's important to note that the UIF caps the salary at R17 712.
- The UIF will then calculate your daily remuneration. This is done by multiplying your average salary by 12 (months) then dividing this amount by 365 (days in one year).
- Your value of your daily remuneration is used in the Income Replacement Rate (IRR) formula to determine the percentage of the daily UIF benefits you are entitled to.
- The IRR is the percentage of the employee’s daily income to which they are entitled to in the form of benefits. The minimum IRR is 38% and the maximum IRR is 60%. The daily income multiplied by the IRR will provide the daily UIF benefit amount that the UIF will pay you.
The IRR formula is calculated using the IRR = 29.2 (7,173.92 / (239.92 + Daily remuneration).
Here is an example for someone who earns a salary of R6000 a month
R6000 x 12 / 365
= R197,26c (Daily remuneration)
Daily
R197,26c x 38% (Minimum IRR)
= R74,96c (daily benefit amount)
You will receive this daily benefit depending on your available credits. Credit days are accumulated as follows, for every 4 days you work as a UIF contributor, you receive one day’s credits. The maximum amount of credits you can accumulate is 365 credit days.
