Do you fear being unemployed and having no money to meet ends? The South African government made it compulsory for all the employees working in South Africa to contribute to the UIF. The money from the Unemployment Insurance Fund can be used by employees when they get fired or quit because of an illness.
If you’re unaware of how UIF works and how it is calculated, read the information below. It will help you have an idea about the contributions and benefits. Moreover, you’ll know about the limits and exemptions.
How is UIF Calculated?
The Unemployment Insurance Fund, or UIF, is calculated on the basic salary of the employee. A contribution is made by the employee and the employer every month for UIF. The South African Revenue Service implemented this policy to reduce the economic burden on people during inflation.
The employee and employer make equal contributions. Employees can apply for UIF if they lose their jobs, go on unpaid leave, or have to quit because of a terminal illness. The funds are collected and distributed amongst the employees who have been fired or left their jobs.
As mentioned, UIF or Unemployment Insurance Fund is calculated on the basic salary of the employees. The employee and the employer make at least 1% contribution. The monthly limit SARS determines is R177.12, and the contributions cannot exceed this amount.
If you’re earning more than R17 712 monthly, you can pay only R177.12 for UIF. The employer will also pay the same amount for your unemployment fund. Employees can apply for the UIF through their employer and get the funds if they quit their jobs or go on unpaid maternity leave.
What Is the UIF Limit?
People often get confused about UIF’s limit. They are of the view that the benefits will be paid according to their monthly contributions. It isn’t the case regarding UIF payments in South Africa.
If you’ve been contributing to UIF for years, you can claim 1 day out of every four days. For instance, you’ll get the benefits for one year if you make payments for four years consecutively.
The process of getting the funds can take three hours to four days, depending upon the situation. The fund money is transferred to the bank. Everyone can claim their UIF within six months after leaving their job.
How to Contribute to UIF If Working for Multiple Employers?
According to the Unemployment Insurance Act 1966, people working with multiple employers can apply for UIF through all the employers separately. The employee contributes to the fund from each salary, and the UIF is calculated per income. Deductions are made from all the salaries, and the employee can apply for UIF after quitting the job.
The South Revenue Service has determined a monthly limit of R177.12 for UIF. It isn’t the same if someone works with multiple employers and has registered for the Unemployment Insurance Fund. The employee will get the fund in case he loses all his employment or any one of them in the future.
Exemptions From UIF
Every employee in South Africa must pay the Unemployment Insurance Fund because it can be of great help in the future. All the employees can register and make contributions unless they are exempted because of the law. The domestic workers can also contribute to UIF and apply for the fund later.
Employees who cannot make contributions are mentioned below. They cannot register for UIF according to the law made by the South African government.
- People who work less than 24 hours in a month are exempted from UIF. They cannot contribute and get the funds if they lose their job or quit.
- Public servants are exempted from UIF. If you’re a member of the Parliament or a government servant, you do not become eligible for the unemployment fund.
- People who get their pensions or retirement allowances are also exempted.
- If your monthly income relies on the commissions, you cannot contribute to UIF.
- People who are residing in South Africa and plan on leaving the country as soon as their service ends are not eligible for UIF. They cannot make contributions; neither can they get the funds.
Hence, these employees are exempted from making contributions to UIF as per the law of South Africa.
What is the purpose of a UIF?
The purpose of the Unemployment Insurance Fund is to provide relief to people who lost their jobs or quit for any reason. The law was passed to reduce the economic burden of people during the time of inflation.
Who qualifies for UIF in South Africa?
Every employee working in South Africa can qualify for UIF except the ones who are public servants or work less than 24 hours a month. Moreover, people who rely on commissions, pensions, or allowances do not qualify.
Is UIF compulsory in South Africa?
The Unemployment Insurance Fund, or UIF, is compulsory in South Africa by law. All the employees, including the domestic workers, must register for UIF and contribute. They can claim the fund after losing their job or leaving it.
Do foreign workers pay UIF in South Africa?
Foreign workers contribute to the UIF as per the Unemployment Insurance Act. The amount will be deducted from their salary like the South African workers, and they can use it when needed.
A detailed article explaining the Unemployment Insurance Fund is given so people can have an idea about it. The employees and the employer make equal contributions to this fund. People can use it when they lose their job or have to quit because of an illness.
All the workers in South Africa have to contribute to UIF to decrease their economic burden. It is a law and has to be followed by everyone. I hope the information helped answer all the questions related to UIF.
Article Modified on October 28, 2023. The data in this article is written and collected by multiple authors. Learn how we research on About Us.