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Chapter 6 - Labour Law

Social Welfare and Benefits in the workplace

Unemployment Insurance Fund

The government has established the Unemployment Insurance Fund (UIF) with the aim of providing short-term relief to employees when they become unemployed, or are unable to work because of illness, maternity or adoption leave and also to provide relief to the dependants of a contributor who has died. If an employee becomes unemployed, the UIF will pay the employee for a maximum period of 6 months while that employee is unemployed. Employees, companies and the state contribute to this fund.

There are five kinds of benefits covered by UIF:

• unemployment benefits
  
• sick benefits
  
• maternity benefits
  
• adoption benefits
  
• death benefits

For more information on the UIF look up the Department of Labour website: www.labour.gov.za

Who is a contributor to the UIF?

All employees that work for more than 24 hours per month must contribute to the Fund. It is illegal for employers not to make the deductions from the employee’s earnings. Even people earning high salaries (unless they are earning commission only) must contribute to the Fund, regardless of how much they earn. The Fund sets a ceiling amount of R149 736 per year (or R12 478 per month, or R2879 per week). Any employee who earns above this threshold will only contribute up to this amount. If they become unemployed they will receive benefits at the level of the ceiling.

Example
Vernon is a company administrator and he earns R15 000 per month. The current threshold for UIF is R12 478 per month so Vernon will pay 1% of R12 478 and the company will pay 1% of R12 478 every month on his behalf to the UIF. If Vernon becomes ill and wants to claim Illness Benefits, the UIF will only pay him a percentage of R12 478 (not of his current salary of R15 000). The actual amount he will be paid will depend on the number of days he has been contributing to the Fund.

Who is not covered by UIF?

Certain employees do not contribute to the Fund and they therefore cannot claim from the Fund if they are unemployed. The following people are not covered by UIF:

• employees who work less than 24 hours per month (or 8 hours per week)
  
• seasonal employees
  
• employees who receive payment under a learnership agreement negotiated under the Skills Development Act (No 97 of 1998)
  
• government employees (public servants)
  
• people whose earnings are calculated on a commission basis
  
• foreign contract employees (unless they have permanent residence)

See Immigrants and migrants.

How do employees become contributors to UIF?

In terms of the Act all employers have to become registered with the UIF and make a declaration of all their employees to the UIF. Whenever there is a change of staff, for example, new appointments made or contracts terminated, employers must inform the UIF of these changes. So, there are two very important things an employer must do when employing an employee:

• Send details of the employee to the UIF
  
• Deduct UIF contributions form the employee’s wage and sent these plus the employer’s own contributions to SARS (or the UIF if not registered with SARS for PAYE).
  

See Problem 13: Employer does not register employee with the UIF.

How much do employees contribute to the Fund?

Every week (or month, if the employee is monthly paid), the employer deducts 1% of each employee’s wages for UIF. This works out to 1c for every R1 the employee earns. The employer also pays 1% of the employee’s wage. So, for every cent the employee pays to UIF, the employer pays the same. The company then sends all these contributions to the South African Revenue Services (SARS) (if the company is registered with SARS for tax purposes (PAYE) or for Skills Development Levies (SDL)). The Unemployment Insurance Contributor’s Act says all employers have to submit their UIF payments together with their payments of PAYE and SDL before the 7th of each month. This is all written on one form called the EMP 201 return form (the form used to submit returns to SARS).

See Small Business Law, UIF.

Where employers are not required to register with SARS for PAYE or SDL purposes they must pay the UIF contributions to the Unemployment Insurance Fund using the UF 3 return form.

How much do people get paid when applying for benefits?

In the case of unemployment, illness, adoption and dependents benefits, benefits will be paid for a maximum of 238 days (34 weeks) or for the number of days credits that the person has built up during the 4 years leading up to the application for benefits. Credits are given to employees as they work and contribute to the Fund. Employees can earn credits in the following way: for every 6 days that an employee works and contributes to the Fund, they receive 1 day’s credit. So, to qualify for the full 238 days credits the employee must work and have been contributing to the Fund for at least 4 years.

In the case of maternity benefits, a total of 121 days will be paid if there are enough credits available.

The employee is regarded as having contributed to the Fund from the first day of employment to the day that the services are terminated. A notice period worked before termination of service, is also regarded as a period employed

The rate at which benefits are paid shifts from 38% for highly paid employees to 58% for lowest paid employees.

When is a contributor not entitled to receive benefits?

An employee who has been a contributor to the Fund is not entitled to receive benefits if the contributor:

- is receiving a monthly state pension
- is receiving payment from the Compensation Fund for illnesses or injuries that caused the temporary or total unemployment of the contributor
- is receiving benefits from any other scheme established by the Labour Relations Act
- fails to comply with the provisions of the law
- has been caught working and collecting benefits or has committed fraud

Types of UIF benefits

UIF pays five kinds of benefits:

• Unemployment benefits
• Illness benefits
• Maternity benefits
• Adoption benefits
• Dependent’s benefits

Unemployment benefits

These benefits are for employees who lose their jobs because they have been dismissed or retrenched, or when the employees’ contract expires. If a worker resigns from the job then they will not qualify for benefits unless the worker can prove it was a constructive dismissal.

To get unemployment benefits the employee must satisfy the following conditions:

• the employee has been contributing to the Fund and money has been deducted from his or her salary for UIF every month
• the claim must be made within 6 months of becoming unemployed
• the claim must be made on the proper form
• the employee has been unemployed for more than 14 days
• the services of the employee were terminated (dismissal or retrenchment) by the employer and the employee did not resign (unless they can prove it was constructive dismissal)
• the employee is registered as a work seeker in terms of the Skills Development Act, 1998 (the employee must be capable of and available for work)

Benefits will be paid for a maximum of 238 days (34 weeks) or for the number of days credits that the person has built up during the 4 years leading up to the application for benefits. The employee must report at times and at places that the claims officer determines in order to sign the unemployment register and he/she must undergo training and vocational counselling if the claims officer tells him or her to do this. If the contributor refuses to do this without a good reason, he/she will not be entitled to benefits. Employees who leave to go and study or to go on pension cannot claim UIF, because they are not available for work. Employees who go on a company, Bargaining Council or civil pension can claim UIF, as long as they say they are still available, able and willing to work.

Illness benefits

Employee can claim illness benefits if they are off work because of illness for more than two weeks. Benefits are paid from the date on which the employee stopped working because of illness.

To get illness benefits the employee must satisfy the following conditions:

• the employee has been contributing to the Fund and money has been deducted from his or her salary for UIF every month
• the employee must have been sick for more than 14 days
• the claim must be made within 6 months of the illness
• the claim must be made on the proper form which includes completing a medical certificate, by the doctor or recognised homeopath. A medical certificate must be completed for each period of illness that is paid.

If the employee has been paid by the employer during the period of illness, then the benefits paid by the Fund will be the difference between what the employer paid and the benefit that the employee would have been entitled to.

Benefits can be paid up to maximum of 238 days in any period of 4 years, depending on the number of credits an employee has earned.

Maternity benefits

Maternity benefits can be paid to a contributor who is pregnant. Section 25 of the Basic Conditions of Employment Act says a pregnant woman can take maternity leave at any time from 4 weeks before the expected date of birth and she may not work for six weeks after the birth.

Benefits can be paid to a maximum of 121 days or 17.32 weeks in any period of 4 years.

If an employee has applied for maternity benefits this does not affect her right to claim unemployment benefits.

To get maternity benefits the worker must satisfy the following conditions:

• the employee has been contributing to the Fund and money has been deducted from her salary for UIF every month
• the claim must be made within 8 weeks of confinement or within 6 months of the birth of the child.
• the claim must be made on the proper form.

If there is a miscarriage or a stillborn child, then benefits are paid for a maximum of 6 weeks after the miscarriage/stillbirth.

If the employee has been paid by the employer during the maternity period, then the benefits paid by the Fund will be the difference between what the employer paid and the benefit that the employee would have been entitled to.

Adoption benefits

A person who legally adopts a child less than 2 years old and who leaves work to look after that child, can now claim adoption benefits from the Fund from the date of adoption.

Only one of the adopting parents can apply for benefits.

Benefits are paid from the date on which the Court grants an order for adoption.

To get adoption benefits the employee must satisfy the following conditions:

• the employee has been contributing to the Fund and money has been deducted from his/ her salary for UIF every month
• the child must be adopted in terms of the Child Care Act of 1983
• the period not working must be spent caring for the child
• the adopted child must be below 2 years old
• the claim for benefits must be made within 6 months of the order of adoption being issued
• the claim must be made on the proper form.

If the employee has been paid by the employer during the maternity period, then the benefits paid by the Fund will be the difference between what the employer paid and the benefit that the employee would have been entitled to.

Dependant’s benefits

If a employee dies while working, the dependants can claim dependant’s benefits from the Fund. A dependant can be:

• the employee’s wife/husband
• any dependant child under 21 years if there is no surviving spouse (husband or wife)

To get dependant’s benefits the employee must satisfy the following conditions:

• the employee must have been contributing to the Fund and money must have been deducted from his/her salary for UIF every month
• the claim for benefits must be made within 6 months of the death of the employee
• the claim must be made on the proper form.

If the surviving spouse (husband or wife) does not make a claim within 6 months, then a dependant child can apply for the benefits, provided that the claim is made within 14 days after the 6 months has expired (during which the spouse should have applied).

Benefits can be paid up to maximum of 238 days in any period of 4 years, depending on the number of credits an employee has earned.

The benefits that are paid are equal to the unemployment benefits that would have been paid, if the person was still alive.

How do employees claim UIF benefits?

Claiming unemployment benefits

1. Register for UIF 14 days after becoming unemployed at the labour centre closest to where the employee lives.
2. Sign the unemployment register (this is called 'signing on').

Usually you must sign this register at the labour centre every 4 weeks or whenever told to do so by the UIF clerk. If you miss signing, the benefits could be delayed for a long time, as you will have to re-register. If you are ill on one of the signing dates, you must bring a doctor's letter the next time. (See Problem 14: Failing to sign the unemployment register)

You must say that you are available to work, or else benefits will not be paid out. If you are offered work, then you must be available to work. Sometimes employees are told to go to different companies and to ask for work. They get a form that the companies must fill in and sign showing that they have no jobs available.

3. You should start getting money within 8 weeks after applying for benefits. After that you should get money every 4 weeks or so, until all the benefits are used up. Only the employee who has applied for benefits can collect the money from the labour centre. When you go to collect your benefits you must take your ID book with you.

See Problem 12: Application for UIF benefits is too late.

Claiming illness benefits

An employee will not get illness benefits:

• if the claims officer decides that the employee's illness arises from his/her own misconduct
  
• for as long as the employee unreasonably refuses or neglects to undergo treatment or to carry out the doctor's instructions.

The claims officer decides whether the employee's refusal or neglect is unreasonable.
To apply for illness benefits, you must register at the labour centre closest to where you live. If you are too ill to go to the UIF office, a friend or family member can bring you the form to sign.

See Illness benefits.

Illness benefits are claimed on FORM UF86. The doctor who is treating you must complete paragraph 15 of this form. This is a medical certificate. The rest of the form is completed by people working at the labour centre. If you are also unemployed, in other words, you have also lost your job, you must tell the claims officer that you are unemployed. But if you still have a job and are on unpaid sick leave, then you only need FORM UF86.

Once the application for illness benefits is approved, the labour centre will post FORM UF87 to you. This form must be signed by the doctor as soon as possible. You then fill in the rest of the form and return it to them. No illness benefits will be paid until you have returned the completed FORM UF87. You will only be paid for the period the doctor puts you off work.

If you are dismissed when you are ill and the doctor has laid you off for less than 6 months, the balance can be claimed as unemployment benefits.

Illness benefits are not paid for the first 2 weeks off work. But if the illness lasts longer than 2 weeks and illness benefits are paid, then you will receive benefits for any period in the first 2 weeks for which you did not get normal wages.

Illness benefits are usually paid in one lump sum. The amount can be paid into a bank account or collected from the labour centre where you made the application. If you are too sick to collect the payment, someone else can collect it on your behalf.

Claiming maternity benefits

Employees apply for maternity benefits in the same way as for illness benefits.

If you are pregnant and want to apply for maternity benefits you must go to the nearest labour centre yourself and make the application. If you are too ill, you can organise for someone else to go in your place..

When you register for maternity benefits you will get FORM UF92. This form must be filled in by a doctor. You must take the form back to the Labour office.

Staff at the labour centre may ask you to go to the doctor again or to visit the labour centre at certain times. You must do what they ask, or you may not be able to claim

Maternity benefits can be paid into a bank account or collected from the labour centre where you made the application. If you are unable to collect the payment, someone else can collect it on your behalf.

You can apply for further benefits after your baby is born on FORM UF95. This form must be signed by the doctor who delivered the baby. An employee can get these benefits even if the baby was stillborn. If you are also unemployed, then you must tell the claims officer. But if you are on unpaid maternity leave, you will only need to fill in forms UF92 and UF95.

Benefits are paid for a maximum of 121 days or 17.32 weeks depending on the number of credits the employee has.

See Maternity benefits.

Claiming adoption benefits

Adoption benefits will not be paid if an application is not made within 6 months of the order of adoption being issued.

An employee should take the following documents to the Labour office to apply for adoption benefits:

• the employee's child's birth certificate
  
• the order of adoption of the child.
  

Adoption benefits can be paid into a bank account or collected from the labour centre where you made the application. Payments are paid out until all the benefits are used up.

See Adoption benefits.

Claiming dependants benefits

Dependant’s benefits can be claimed by the husband or wife of the deceased employee and any minor children of the employee.

The application for benefits must be made within 6 months of the death of the contributor.

A widow or invalid husband must complete FORM UF126 when applying for dependent’s benefits. He or she must take the following documents to the Department of Labour office when applying for benefits:

• identity document
  
• a certified copy of the death certificate
  
• a certified copy of the marriage certificate.

If these documents are lost, then the wife or husband should make a statement at the Labour office. A child or wife/husband of the deceased employee must complete FORM UF127 when applying for benefits. Any dependant who wants to claim dependent’s benefits must take the following documents to the Labour office:

• if the dependant is a child, certified copies of the birth certificate

OR
if the dependant is a husband or wife, the marriage certificate

• a certified copy of the death certificate of the contributor
  

The Labour Office will give the dependant FORM UF128. This form must be filled in by the last employer of the deceased worker. The child or dependant must then take the form back to the Labour office.

Remember that only one person can claim dependent’s benefits. The wife or husband of the employee who died is given preference.

The money for dependent’s benefits is paid in one lump sum. The amount that is paid will be the same as the total unemployment benefits that the deceased employee could have drawn at the time of the death. (See How much do employees get paid?)

If an employee dies after claiming all the UIF that is owed to them, there will be no money left for dependent’s benefits.

How to get copies of birth/marriage/death certificates

Write to:
Department of Home Affairs
Registrar of Births, Marriages and Deaths
Private Bag X114
Pretoria
0001

State in the letter:

• what type of certificate you want
• full name and identity number of person
• date and place of birth/marriage/death
• for birth certificate, full names of parents and their identity numbers
• for marriage certificates, full names of both husband and wife and identity numbers.

What if the UIF benefits are used up and the worker is still unemployed?

If you are still unemployed by the time your UIF benefits have been used up, then you can apply for an extension of unemployment benefits. For an extension of ordinary benefits, you must apply on form UF139. You must write down on this form details of where you have tried to find work. The form must be handed in at a labour centre. If you have received illness benefits you can apply for extension of illness benefits on form UF140. This includes a medical certificate to be completed by the doctor.

The UIF treats all applications for extension of benefits on merit. This means they decide whether they think you have good reasons to get more benefits. There is no automatic right to an extension. Extension benefits are not easy to get.

But it helps to prove that:

• you are still actively seeking work (show letters of refusal by employers).
  
• you depend for the necessities of life on the UIF benefits; a list of expenses such as rent receipts, food bills, water and electricity bills and schooling fees should be drawn up.
  
• you have been working for more than 4 years and have gained the maximum number of credits for which normal benefits are paid out. Three years is the maximum time for which normal benefits are paid out.

What if the application for normal benefits is refused?

If an application is refused the applicant will be sent a registered letter informing them of the decision of the UIF. The letter sets out the reasons for the refusal. You can appeal against the refusal.

UIF appeals

If your application for UIF benefits has been turned down you or your representative must write to the Unemployment Benefit Committee within 3 months (or 90 days) of being told that benefits will not be paid out.

What must be included in the appeal?

• name and address of the person appealing
• identity number
• date of applying for benefits
• the office where the application was made
• the date on which the claims officer gave the decision
• the details of the claims officer's decision and why the employee wants to complain
• the reasons for the appeal

All this information must be set out in a statement which the employee must sign.

Address the letter to the Unemployment Benefit Committee at the nearest office of the Regional Director, Department of Labour.

Further appeals

If the Unemployment Benefit Committee again refuses the application, then you can appeal to:

The Secretary
Unemployment Insurance Board
PO Box 1851
Pretoria
0001

Termination of benefits

Benefits stop if:

• the full amount has been paid out
  
• you stop signing the register
  
• you find work; you must inform staff at the labour centre immediately if you find work; if you carry on accepting benefit payments, you will have to pay back the amount received. This is called fraud.