The Unemployment Insurance Fund (“UIF”) allows contributors to receive benefits from the fund in the event that they become unemployed, or are unable to work as a result of maternity leave, illness or the adoption of a child. UIF also provides benefits to the dependants of a deceased contributor.
There are two pieces of legislation that govern Unemployment Insurance, namely the Unemployment Insurance Contributions Act which speaks to contributing to the UIF, and the Unemployment Insurance Act which provides the benefits to contributors.
Over the last few months there have been some significant changes to the Unemployment Contributions Act, where changes came into effect as of 1 March 2018. Prior to the amendments gazetted in December 2017, the Unemployment Insurance Contributions Act, specifically excluded the following employees under section 4(1):
- an employee and his or her employer, where such employee is employed by that employer for less than 24 hours a month;
- an employee and his or her employer, where that employee receives remuneration under a learnership agreement registered in terms of the Skills Development Act, 1998;
- employers and employees in the national and provincial spheres of government; and
- an employee and his or her employer, where that employee has entered the Republic for the purpose of carrying out a contract of service, apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service, apprenticeship or learnership, as the case may be, or by any other agreement or undertaking, to repatriate that person, or if that person is so required to leave the Republic.
As a result of the amendments gazetted in December 2017, employees on learnerships, as well as foreign nationals, regardless of whether they intend to repatriate or not, are no longer excluded from the application of the Unemployment Insurance Contributions Act and, as of 1 March 2018, are required to contribute to the Unemployment Insurance Fund.
This situation is unusual as at the time of writing this article, the Unemployment Insurance Amendment Act which would allow employees on learnerships and foreign nationals to claim UIF is not yet effective. Accordingly, these employees are currently in limbo in that they are required to contribute to UIF but are not yet able to claim from UIF. As an aside, it is worth noting that the contributions to UIF are a statutory deduction, and as such there is no option for the aforementioned employees to “opt out” of contributing to the fund until they are formally able to benefit.
Candice Eaton Gaul
Regional Divisional Director: Head of HR & Labour Consulting
If you would like further information on the above, please feel free to contact Candice Eaton Gaul directly.