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Resolved Question

How does UIF work?

As part of my salary deductions UIF get deducted every month. How does UIF work? Can a person only claim if he was reterenched? Or does it apply if you were fired or resigned as well? Also, what is the amount that they pay? And for how long do they pay? 66 mths ago

Best Answer

The Unemployment Insurance Act 63 of 2001 refers. 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; workers who get a monthly State (old age) pension; or workers who only earn commission. Domestic employers and their workers are included under the Act since 1 April 2003. As a contributor, benefits accrue at a rate of one day’s benefit for every completed six days of employment as a contributor. The maximum accrual is 238 days’ benefit in the 4 year period immediately preceding the date of application for the benefits. You are entitled to benefits if you are unemployed for more than 14 days, and if the unemployment is caused by: 1) termination of a contract of employment or the ending of a fixed term contract; 2) if you are dismissed (fired!); 3) your employer was declared insolvent; or 4) you are registered as a work-seeker with a labour centre. This definitely excludes voluntary resignation. Contributions are collected by the employer (1% from the employee and 1% paid by the employer) and paid over to the Commissioner for the SARS. A ceiling amount applies. The current income ceiling is R8 099 per month.

66 mths ago

Answers -

I am sure you can still if you were fired or resigned. Check up on www.labour.gov.za. As far as I know its 45% of your salary and about 6 months only.

66 mths ago

You can not claim UIF if you resigned, but for some strange reason you can if you were fired. UIF is paid out for 6 months in a 3 year period. I'm not sure what the maximum amount they pay, there is a limit.

66 mths ago

Ask me in december I am moving to payroll, for now I haven't got a clue, isn't it 1% of your salary?

66 mths ago

I think the amount you get paid out depends on how many years you have worked - the more, the higher. But follow the links given.

66 mths ago

There's a clause about resignations which you have to check out carefully! It pays out in the event of retrenchments & mutual agreements. Pays for a period of 6 months. Not sure about the amount they pay out!

66 mths ago

I believe the contribution that is made is 1% from employee and 1% from employer. There is a maximum value that the contributions are calculated from but I am not quite sure what that is. Should you, however, claim UIF and you are earning over that threshold you will only receive 45% of that threshold amount even though you have been earning much more.

66 mths ago

THanks for the info its interesting

66 mths ago

The threshhold for paying UIF is R12,478.00pm. If you earn more than that your 1% (plus employer's 1%) contribution is capped at R124.78. The UIF legislation changed a few years ago in that you can no longer claim if you resign. Your unemployment must be involuntary, ie retrenchment or dismissal. If you choose to be unemployed you are on your own. The amounts paid out also changed from 45% for everyone to a sliding scale ranging from 38% to 65% of your 'UIFable' salary depending on the level of your earnings and the period over which you had been contributing. In other words if you retrenched your domestic worker she would probably get 65% of her salary, while the proverbial 'captains of industry' would get 38% of the R12,478.00 maximum, the logic being that the more you earn, the more you should be able to look after yourself. NB: It is ESSENTIAL to keep your payslips (must be provided by law) in case you are ever asked to prove that you were contributing to UIF (or whatever other deductions are on your payslip). If you have an untrustworthy employer who has not paid over your contributions, at least you can still claim, and Labour will go after the employer.

Source: 25 years in payroll and employee benefits.

66 mths ago

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