Who must pay UIF?

Last Updated on September 21, 2023 by ufiling

Employers must pay unemployment insurance contributions of 2% of the value of each worker’s pay per month. The employer and the worker each contribute 1%. Contributions are paid to the Unemployment Insurance Fund (UIF) or the South African Revenue Services (SARS).


Application

The Unemployment Insurance Act and Unemployment Insurance Contributions Act apply to all employers and workers, but not to –

  • workers working less than 24 hours a month for an employer;
  • learners;
  • public servants;
  • foreigners working on contract;
  • Employees in receipt of an old age pension are, since 07/2/2007, no longer excluded from contributing towards UIF; or
  • workers who only earn commission.

Domestic employers and their workers are included under the Act since 1 April 2003.


Contributions Payable

The contribution that employers must deduct from a worker’s pay is 1% of the worker’s total earnings, excluding commission. In addition to the 1% deducted from the worker, the employer also contributes 1% for every worker that they employ.  The total contribution paid to the UIF is therefore 2%.

Example:

If a worker earns R1 000 per month, the employer must deduct 1%, namely R10. In addition, the emloyer must pay R10 for that worker. The total of R20 must therefore be paid to the UIF or SARS.

          
Earnings Ceiling

Workers who earn more than the annual, montly or weekly maximum earnings ceiling must also contribute to the Fund, but their contributions are worked out on the maximum earnings ceiling.

          
Example:

If a worker earns R10 000 per month and the monthly earning ceiling is R1 096 per month, the worker’s contribution will be worked out on R8 836.

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What employers may not do

Employers may not –

  • deduct more than 1%;
  • deduct outstanding amounts when they fall behind with payments; and may not
  • ask a fee for deducting the money.

If employers deduct too much money by accident, they must pay the extra money back to workers.

Based on Legislation in Section 6 and Section 7 of the Unemployment Insurance Contributions Act


Payment of Contributions

Employers must pay the 1% they deducted from workers, together with the 1% they have contributed, to the UIF or SARS before the 7th of every month.

Example:

Contributions due for January, must reach the UIF or SARS on or before 7 February. If the 7th day of a month is not a business day, employers must pay on or before the last business day before the 7th. “Business day” means any day that is not a Saturday, Sunday or Public Holiday. Based on Legislation in Section 8, Section 9, of the Unemployment Insurance Contribution Act


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