You probably have a sense that it has to do with claiming some type of compensation from the Government if you find yourself without a job? If that’s your guess, you would be correct. The Unemployment Insurance Fund (UIF) was set up 20 years ago with one purpose in mind – to make sure that employers and employees make regular monetary contributions towards the fund, so if employees find themselves without a job, they can claim against the fund.
In this blog post we are going to look specifically at the roles of the employer and the employee and when exactly you can claim against UIF.
If you have a business that employs people, you should read this post, and if you clock in at an office from 9 to 5 everyday, this is also important because hopefully you will never need to claim against UIF, but what happens the day you do?
On that day it would help knowing exactly how much you can claim, right?
First off, the Act which governs UIF is the Unemployment Insurance Act and it applies to all employers and employees except for:
- Employees employed for less than 24 hours a month
- Public Servants
- Foreigners working on contract
- Employees who receive a state pension
- Commission earners
As an employer you have a legal obligation to register your business and your employees with UIF as soon as they start working. You also need to start paying your monthly UIF contributions over in the first month that your employee starts working.
How much are the UIF contributions each month?
The employer must take 2% of each employee’s monthly salary and pay it over to the fund (company picks up 1% and the employee pays 1%)
The good news is that there is a ceiling when it comes to UIF contributions. That ceiling is R14,872 per month. If you earn more than R14,827 per month, your UIF contributions will not be more than R148.72 per month.
Now that you know why the fund was set up and what you can claim for, let’s answer the big question.
What can you claim for?
As an employee, you can claim for the five events listed below:
- Unemployment benefits
- Illness benefits
- Maternity benefits
- Adoption benefits
- Dependent’s benefits
How much you can you claim?
To work out how much you can claim against UIF, you need to understand how the calculations work. The first step is working out what your daily rate of remuneration is:
- If you are paid monthly, multiply your monthly salary by 12 and divide by 365
Here is a quick example:
Joseph earns R15,000 per month. What is his daily rate of remuneration?
R15,000 (monthly remuneration) x 12 (months in the year) / 365 (days in the year) = R493 per day
- If you are paid weekly, multiply your weekly remuneration by 52 and divide by 365
Here is a quick example:
Nthabi earns R3,000 per week. What is her daily rate of remuneration?
R3,000 (weekly remuneration) x 52 (weeks in the year) / 365 (days in the year) = R427 per day.
Now that we have worked out what your daily rate of remuneration is, let’s find out why that step is important.
As an employee you are entitled to benefits which accrue at one day’s benefit for every six completed days of employment (limited to a maximum accrual of 238 days benefit in the four-year period preceding the date of application)
Yip we know that’s a bit of a mouthful, so let’s break that down into bite size pieces.
- For every six days of employment you are entitled to a day’s compensation.
Let’s use another example to simplify this calculation.
Earlier in the post we mentioned that Joseph earns R15,000 a month and we established that his daily rate of remuneration was calculated back at R493 per day. For the sake of simplicity, let’s assume that Joseph has been working at his company for 200 days on the dot before falling ill and losing his job.
To work out his UIF claim, we need to divide the amount of days he has been employed by 6. Remember that you are entitled to one day’s benefit for every six days of completed employment.
200 (amount of completed days of employment) / 6 (the factor to used to determine your claim) = 33
We then take 33 and multiply it by Joseph’s daily rate of remuneration which is R493 = R16,269
Joseph has a claim for R16,269.
The only other thing you need to be aware of is that your claim is limited to 238 days of benefits which have accrued in the four years preceding your date of application.
Hopefully you found this article interesting?
Until next time.
The Wise About Life Team