Breaking News: Amendments to Unemployment Insurance Act
Last week President Jacob Zuma signed a number of acts into law. One was the Employment Tax Incentive Act (see related article) and the other related to amendments made to the Unemployment Insurance Act.
This article serves to outline the changes related to the Amended Unemployment Insurance Act.
Watch this video
For starters, watch this video — an interview with Minister of Labour, Mildred Oliphant:
Download this document
For in-depth details, download your own copy of the Unemployment Insurance Amendment Bill:
The important changes are
The Unemployment Insurance Fund (UIF) has an enormous surplus of financial reserves. Ways are being sought to pay-out benefits to those who have contributed. There is also an ongoing discussion surrounding the use of UIF funds for skills development. For now the following changes have been made official:
- The scope of the act has been extended to include all employees who work more than 24 hours a month. This includes:
- employees engaged in learnerships and ‘practicals’ (as part of their study programme)
- government (public service) officials.
- Employees who work short time—where the payment for working short time is less than what they could claim should they claim unemployment—will only be able to claim if they have the credits to cover the payment.
- Maternity benefits will be paid out at 66% of the earnings of the beneficiary. The following also applies:
- Covers miscarriages or still-births during the third trimester. The contributor is entitled to benefits for 17-32 weeks. To claim, the contributor must have been employed for 13 weeks prior to claiming the maternity-related UIF benefit.
- Application for benefits can now be made before or after the birth of a child — but not later than 12 months after the birth of the child.
- The UIF benefit period is now calculated as one day’s benefit for every 5 days worked — up to a maximum of 365 days for every 4 years worked.
- The application must be made within one year of termination.
- Where the principle UIF contributor dies, beneficiaries of the contributor will have up to 18 months to lodge their claim for UIF compensation.
NOTE — two important points (i.e. possible future amendments) remain under discussion. No final outcome has been agreed upon — these are:
- A possible increase of the contribution rate to 1.5%
- Possible benefits to be paid to employees who have resigned
So what does that mean for your payroll department?
The following does not change:
- The UIF deduction (i.e. rate) remains at 1% for both employers and employees
- The definition of earnings remains the same. Therefore, no changes have been made to the way in which the UIF contribution is calculated.
The Minister of Labour has emphasised that no employee would be paid his/her benefits if:
- Their UIF contributions were not paid over to SARS
- The UIF records of employees have not been submitted to the Department of Labour (every month).