PURPOSE OF THE UNEMPLOYMENT INSURANCE FUND
The purpose of UIF is to provide short-term relief to workers when they become unemployed or are unable to work due to illness, maternity or adoption leave, and also to provide support to the dependants of a deceased contributor.
UIF defines an employer in exactly the same way the Income tax Act does. This definition effectively includes any person paying remuneration to employees.
An employer has the responsibility of deducting the UIF contribution from the employee and paying it over to either SARS or UIF Commissioner ,depending on which is applicable.
“Employee” means any natural person who receives remuneration, or to whom remuneration accrues, in respect of services rendered or to be rendered by that person, but it excludes an independent contractor.
Excluded from the above definitions are non-natural persons, or all corporate entities. In practice, this means that Personal Service and Personal Service Trust will be excluded from paying UIF.
The UIF Contributions Act applies to all employees, excluding the following:
- An employee who is employed less than 24hours per month;
- An employee who receives remuneration under a learnership;
- An employee(and employer)in the national and provincial spheres of government;
- A repatriated employee.
NOTE: Both the employee and employer contribution is calculated at 1% of the leviable amount. The employer is not allowed to contribute the full 2% UIF contribution. The employee and the employer must contribute 1% each.
PAYMENT OF CONTRIBUTIONS
Employers must pay contributions to both SARS or the UIF commissioner, depending on which one is applicable to the employer. The total UIF amount must be paid over on the EMP201 return within 7days after the end of the month to which the payment relates. Where the 7th day falls on a Saturday, Sunday or Public Holiday it must be paid on the last business day prior to that.
The five statutory types of unemployment benefits have been retained in the main UIF Act, namely: