Employer’s Guide to UIF (Unemployment Insurance Fund)

As an employer in South Africa, it is your legal obligation to register yourself and your employees with the Unemployment Insurance Fund (UIF), deduct and contribute funds every month, and ensure timely declarations. The UIF provides financial security to workers during periods of unemployment, illness, maternity leave, or other qualifying circumstances.

Application of UIF Legislation 

The Unemployment Insurance Act and Unemployment Insurance Contributions Act cover most employers and employees. However, the following are exempt from UIF contributions:

• Employees that work less than 24 hours per month for a single employer.

• Learners undergoing training governed by learnership agreements.  

• Public servants employed by national or provincial government.  

• Foreigners working on fixed-term contracts.  

• Individuals receiving a monthly state pension (e.g., old-age pension).  

• Workers who earn income solely from commission.  

Domestic Employers and Workers: Domestic employers and their workers have been included under the UIF Act since 1 April 2003.

Why UIF Compliance Matters 

UIF contributions provide essential financial relief to employees who are unemployed or unable to work due to certain circumstances. Non-compliance with UIF regulations can result in penalties, interest on late payments, or legal action against employers. Adhering to UIF rules ensures that your employees can access these benefits when needed and protects your business from unnecessary risks.

Employer Responsibilities 

As an employer, your UIF responsibilities include the following:

 1. Registration and Changes 

• Registering: Employers must register themselves and their employees with the UIF as soon as they hire employees.  

• Updating Changes: Notify the UIF of any changes to your workforce, such as new appointments, terminations, salary adjustments, or resignations, before the 7th of every month.  

• Employers of Domestic Workers: Register yourself and your domestic workers separately.  

Relevant Legislation: Based on Section 56 of the Unemployment Insurance Act.

 2. UIF Contributions 

• Deductions: Employers must deduct 1% of their employees’ gross pay (excluding commission) for UIF contributions.  

• Matching Contribution: In addition to the deduction from the employee, employers must contribute an equal 1% themselves.  

• Total Contribution: A combined total of 2% (1% employer + 1% employee) must be paid to the UIF.  

Relevant Legislation: Section 7 of the Unemployment Insurance Contributions Act.

 3. Payment Process 

• Monthly Payments: UIF contributions (both employer and employee portions) must be paid to either the UIF or SARS by the 7th of each month.  

• Penalties for Late Payments: Failure to pay on time may result in penalties and interest charges.  

Relevant Legislation: Sections 6, 8, and 9 of the Unemployment Insurance Contributions Act.

Submitting Declarations 

Employers are required to submit monthly declarations to the UIF to ensure employees’ details are up to date. The declaration must include:  

• Employee personal details (ID or passport numbers).  

• Employment start and end dates (if applicable).  

• Gross earnings.  

Declarations can be submitted using one of the following methods:  

• uFiling Portal: An online platform for employers to register, submit declarations, and make payments easily. Visit www.ufiling.co.za.  

• Email Submissions: Employers can email UIF declarations to declarations@uif.gov.za.  

• Manual Submission: Declarations can also be submitted at a local labour centre.  

Non-Compliance and Consequences 

Failure to comply with UIF regulations may lead to:

• Penalties: Fines or administrative penalties for late payments or incomplete declarations.  

• Interest: Accrued interest on outstanding UIF contributions.  

• Legal Action: Possible legal consequences for failing to adhere to UIF obligations.

Exemptions 

Certain employers and workers are exempt from UIF contributions:  

• Public Sector Employees: National and provincial government employees.  

• Learnership Employees: Learners under formal learnership agreements.  

• Foreign Nationals on Fixed-Term Contracts: Workers with time-bound contracts not subject to UIF.  

Steps to Ensure Compliance 

1. Register Early: Register yourself and your employees with the UIF promptly.  

2. Submit Accurate Declarations: Regularly update the UIF on employment changes and ensure accuracy in submissions.  

3. Make Payments On Time: Deduct and contribute UIF payments by the 7th of every month to avoid penalties.  

4. Utilise uFiling: Simplify the submission and payment process using the uFiling platform.

Benefits for Employers and Employees 

By ensuring UIF compliance, you provide your employees with access to essential benefits, including:  

• Unemployment Benefits: Assistance when employees lose their jobs.  

• Illness Benefits: Financial relief for employees unable to work due to illness.  

• Maternity Benefits: Support for employees on maternity leave.  

• Adoption and Dependent Benefits: Assistance in specific family-related circumstances.

In turn, UIF compliance helps your business maintain a positive reputation, avoid legal consequences, and contribute to a fair and supportive workplace.