By Euodia Stone
What is UIF?
The Unemployment Insurance Fund (UIF) is a fund to which employees and employers can make a monthly contribution for the employee to make claims against their fund in the case of unemployment.
Take note: In terms of the Income Tax Act, 58 of 1962 all UIF benefits are not subject to Income Tax.
Different Types of UIF Claims and Who May Claim
It is easy to get confused with the different types of UIF claims available with all the fuss caused by the COVID-19 TERS claims.
According to the Unemployment Insurance Act, 63 of 2001 (UIF Act), UIF claims can be made under the following circumstances:
- Unemployment – you may claim benefits for any unemployment period lasting more than 14 days. You need to apply within 12 months of termination of your employment contract. You cannot claim if you have resigned.
- Illness – you may claim if you are unable to perform your work duties for more than seven days due to illness. You need to apply within 12 months within of the commencement of your sickness.
- Maternity – you may claim if you are pregnant, had a miscarriage or stillbirth. The application may be made any time before or after childbirth, but must be made within 12 months after birth.
- Adoption – only one contributor of the adopting parents may claim. You may only claim benefits if the adopted child is younger than two years old as well as if the time spent not working was spent caring for the child. You may claim within 12 months after the date of adoption as indicated by the court.
- Death – you may claim dependant benefits if your spouse or partner has passed away in addition to them being a UIF contributor. You must claim within 18 months of your spouse’s or partner’s death. A dependent child may also claim the UIF benefits, but only if the deceased’s spouse or partner has not claimed within 18 months of the passing away of the contributor. A nominated beneficiary may also claim, but only if there is no surviving spouse or partner or child of the deceased contributor.
- UIF COVID-19 TERS – the Temporary Employer / Employee Relief Scheme (TERS) benefit may be claimed by employees or by employers on behalf of their employees. This temporary benefit exists to support employees who earn a smaller salary due to reduced working hours or who have been laid off temporarily during the national lockdown.
- Reduced working hours – according to the Unemployment Insurance Amendment Act of 2016, you may claim benefits if you lose income due to reduced working hours. The terms that need to be complied with are: “if the contributor’s total income falls below the benefit level that the contributor would have received if he or she had become wholly unemployed, subject to that contributor having enough credits.”
According to Schedule 2 of the UIF Act, the maximum Income Replacement Rate (IRR) is 60%. The minimum IRR is 38%. The IRR is used in a formula to calculate the benefit you are to receive:
Benefit = Daily Income x IRR
The IRR is calculated with another formula as set out in the UIF Act.
Limit to the Number of Claims (Having Enough Credits)
According to the Unemployment Insurance Amendment Act of 2018, you accrue one day’s benefit for every four days worked. It is subject to a maximum accrual of 365 days over a four-year period of work completed.
The COVID-19 TERS claims may be claimed regardless of the subjection to having enough credits. Unfortunately, as of 25 August 2020, the TERS claims have been temporarily suspended due to fraud. We all hope that the TERS claims will open up soon again despite all the corruption taking place because we can all do with a little extra income in these trying times.
South Africa. 2002. Unemployment Insurance Act 2001 (Act 63 of 2001) (Proclamation no. 88) Government gazette, 23064:10, 18, 22, 24, 26, 28, 30, 32, 58, 60.
South Africa. 2016. Unemployment Amendment Act, 10 of 2016.
South Africa. 2018. Unemployment Amendment Act, 10 of 2018.
Moneyweb. 26 Aug. 2020. UIF Ters benefit suspended once again. https://www.moneyweb.co.za/news/south-africa/uif-ters-benefit-suspended-once-again/ Date of access: 26 Aug. 2020.
Department of Employment & Labour. Easy-Aid Guide For Employers https://www.fasa.co.za/corona/corona-uif-info.pdf Date of access: 29 Aug. 2020.
For the necessary forms to fill in: https://www.labourwise.co.za/downloads/topical-temporary-download
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