Small Business Owner? Here’s All You Should Know About UIF

Small Business Owner? Here’s All You Should Know About UIF

If you’re the owner of a new start-up or small business, you’re probably grappling with lots of unfamiliar acronyms right now. PAYE, COIDA, POPI, they sound confusing and may not mean much yet. But now you can add another important one to your list: UIF, which stands for Unemployment Insurance Fund. Just as you’ve registered your employees for tax with SARS (yes, another acronym!), you also need to register them for UIF in South Africa with the Department of Labour. Here’s what you need to know.

UIF: What is it and why do we need it?

In South Africa, UIF protects people financially for finite periods of time while they’re unable to work– for example if they become unemployed or sick, or if they’ve recently given birth to or adopted a child. The dependants of UIF contributors who pass away are also entitled to these payments.

If your employees are properly registered and all contributions have been paid, then they’ll be able to claim from UIF. The amount they’ll be paid depends on how long they’ve been contributing to the UIF, as well as how much they earn. If they earn more than R12 478 a month, they will earn a maximum of R4550 per month in benefits.

Your UIF responsibilities as an employer

As an employer, you need to pay a total of 2% of your employees’ remuneration to the UIF. Of this, 1% must be your own contribution, and the other 1% must come out of your employees’ salaries. This payment must be made before the seventh of every month. Payments can be made through SARS eFiling, via EFT or at the branch of an approved bank.

Employees are excused from contributing to the UIF if they:

• work for you for less than 24 hours a month

• are receiving compensation as part of a contract that falls under the Skills Development Act

• work for the government

• are a foreign national working on contract

• receive a government pension or only earn commission

Remember that UIF contributions don’t only apply to the employees who work for your business – they also apply to people who work for you on a personal basis too. If the hours that your domestic worker works for you amount to more than 24 hours a month, they must also be registered for UIF. Completing and managing this process is your responsibility as the employer.

Registering with the UIF

Feeling overwhelmed with where to start? You can find details on how to register for the Unemployment Insurance Fund by visiting the Department of Labour website. You’ll need to know the ID numbers and addresses of your employees, fill in the relevant UI-8 and UI-19 forms, and email this information to the department. You can also register by telephone, fax, post or in person at a labour centre.

It’s important to remember that UIF payouts are only intended as a short-term stopgap for your employees. For a long-term insurance solution that will help them to cope financially in any eventuality, consider Simply Insurance’s group cover. Our group policy offers life and disability cover up to R2 million, and funeral cover up to R50,000 for teams of five employees or more, so you can help protect the people who make your business what it is.

Sources:

• Department of Labour:

http://www.labour.gov.za/DOL/legislation/acts/basic-guides/basic-guides-uif-index

• Entrepreneur Mag:

https://www.entrepreneurmag.co.za/advice/starting-a-business/start-up-guide/understanding-your-responsibility-as-an-employer/3/

• SARS:

http://www.sars.gov.za/TaxTypes/UIF/Pages/default.aspx

• Solidarity:

https://regsdienste.solidariteit.co.za/en/uif-for-my-employees/

• Law for All:

https://www.lawforall.co.za/claiming-uif-south-africa/

• City Press:

https://city-press.news24.com/Personal-Finance/what-you-need-to-know-about-claiming-uif-20160122