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Chapter 8 - Labour Law

Worker Social Welfare and Benefits

Unemployment Insurance Fund

The government has established the Unemployment Insurance Fund (UIF) in terms of the Unemployment Insurance Contributions Act (No 63 of 2001). This Act came into effect on 1April 2002. The aim of the Fund is to provide short-term relief to workers 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 a worker becomes unemployed, the UIF will pay the worker for a maximum period of 6 months while that worker is unemployed. But if the worker is never unemployed, that worker will never get any of the money back. Of course, if a worker does not pay unemployment insurance, the worker will not be able to claim UIF. So if a worker was never employed, they cannot ever claim UIF.

The Unemployment Insurance Act provides for the Unemployment Insurance Fund (UIF). Most workers and companies pay money into this fund. The state also pays money in to the fund but this is less than 1% of the total money paid into the fund every year.

There are five kinds of benefits covered by UIF:

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

This section deals with who is covered by UIF, what the different benefits are, and how to claim.

For more information on the UIF look up the UIF website: www.uif.gov.za

Who is a contributor to the UIF?

All workers 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 worker’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. All workers who earn above the ceiling will only contribute up to the ceiling and if they become unemployed they will receive benefits at the level of the ceiling. This means that every worker from the lowest level to the company director must contribute to the Fund. The ceiling that has been set for the year from from 1 April 2003 the ceiling is R106032 per year which is R8836 per month.

Example
Vernon is a company administrator and he earns R15 000 per month. The current ceiling amount for UIF is R8836 so Vernon will pay 1% of R8836 and the company will pay 1% of R8836 on his behalf to the UIF. If Vernon becomes ill and wants to claim Illness Benefits, he will only be paid a percentage of R8099 (not of his current salary). The actual amount he will be paid will depend on the number of days he has been contributing to the Fund.

At the moment the Fund does not apply to domestic workers and public servants. However, it is expected that this will change in the future.

Certain categories of workers are specifically excluded from the Fund. They are listed below under Who is not covered by UIF? If they are specifically excluded from the Fund in terms of the Act then they are not contributors to the Fund.

Every week (or month, if the worker is monthly paid), the employer takes money from the worker's wages for UIF. According to the law, the amount taken off must be 1% of the worker's wage. This works out to 1c for every R1 the worker earns.

Companies must also pay in to UIF. The amount the company pays is the same as the worker. So, for every cent the worker pays to UIF, the company must pay the same.

The company then sends all the money it has taken off all the worker’s wages, plus the money it has to pay, 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 Chapter Small Business law

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.

Who is not covered by UIF?

Not all workers pay UIF. Workers who don’t contribute to the Fund can’t claim from the Fund. The following people are not covered by UIF:

• workers who work less than 24 hours per month (or 8 hours per week)
• In November 2002, the government announced that by April 2003, employers of domestic workers will have to register their employees with the UIF and start contributing to the Fund.
• seasonal workers (but recommendations have been made for seasonal workers to be included in the future)
• workers who receive payment under a learnership agreement negotiated under the Skills Development Act (No 97 of 1998)
• government workers (public servants) (but recommendations have been made for them to be included in the future)
• people whose earnings are calculated on a commission basis
• foreign contract workers (unless they have permanent residence)

See CITIZENSHIP, Legal entry and stay in South Africa

How do workers become contributors to UIF?

The current blue card system will be replaced during 2002 with an electronic database of employees. In other words, the blue cards will not be used in the future and benefits will in future only be paid to unemployed workers whose details appear on the database.

Under the Unemployment Insurance Contributors Act of 2002, all employers have to make a once-off declaration of all their employees to the Fund. The Fund will put all this information on an employer/worker database. After this employers must update the database monthly whenever there is a change of staff, for example, new appointments or workers whose services have been terminated.

Workers who have the blue cards must hand them back to their employers and ask that the information be sent to the Fund, to be included onto the database.

So, there are two very important things an employer must do when employing a worker:

• Send details of the worker to the Fund’s employer/worker database
• Deduct UIF contributions form the worker’s wage and sent these contributions to SARS.

PROBLEM 13: Employer does not register worker with the Unemployment Insurance Fund

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 workers who lose their jobs because they have been dismissed or retrenched, or when the workers;’ 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 worker must satisfy the following conditions:

• the worker 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 worker has been unemployed for more than 14 days
• the services of the worker were terminated (dismissal or retrenchment) by the employer and the worker did not resign (unless they can prove it was constructive dismissal)
• the worker is registered as a work seeker in terms of the Skills Development Act, 1998 (the worker must be capable of and available for work)

If the company becomes insolvent (goes bankrupt) the worker can also claim benefits.

The worker must report at times and at places that the claims officer determines in order to sign the unemployment register.

The worker must also 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.

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

Workers who leave to go and study or to go on pension cannot claim UIF, because they are not available for work. Workers 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. A worker who receives a state pension grant cannot claim UIF.

Illness benefits

Workers 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 worker stopped working because of illness.

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

• the worker has been contributing to the Fund and money has been deducted from his or her salary for UIF every month
• the worker 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 worker 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 worker 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 a worker has earned.

See Compensation Fund

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 a worker 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 worker 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 worker 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 worker would have been entitled to.

Adoption benefits

A person who legally adopts a child less than 2 years 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 worker must satisfy the following conditions:

• the worker 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 worker 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 worker would have been entitled to.

Death benefits

Dependant’s benefits

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

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

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

• the worker 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 worker
• 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 a worker has earned.

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

See Compensation Fund

How much money do workers get?

Schedule 3 of the Act says how benefits will be paid.

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 (accrued) during the 4 years leading up to the application. Credits are given to workers as they work and contribute to the Fund. Workers can earn credits in the following way: for every 6 days that a worker works and contributes to the Fund, they receive 1 day’s credit. So, to qualify for the full 238 days credits the worker must work 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 worker 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 the highly paid workers to 58 % for the lowest paid workers. This means not everyone gets the same rate of benefits. There is a sliding scale of benefits to ensure that the poorest workers get the biggest amount of relief because of the difficulties caused by unemployment.

A worker 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 form 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

How do workers claim unemployment benefits?

Claiming unemployment benefits

1. Register for UIF 14 days after becoming unemployed at the Department of Labour offices closest to where the worker lives.

See PROBLEM 12: Application for UIF benefits is too late

2. Sign the unemployment register (this is called 'signing on').

Usually the worker must sign this register at the Labour office every 4 weeks. The worker is given a list of dates when you must sign on. These dates are 4 weeks apart. This is to make sure that the worker has not found any other work.

The Labour office will give the worker a white check card. The worker must keep this card. Every time he or she signs the unemployment register, the UIF clerk will sign the white card.

It is very important to make a note of the dates given to the worker for signing on. And it is important for the worker to return to the Labour offices to sign the Register when he or she is told to do so. If the worker misses signing, the benefits could be delayed for a long time, as the worker will have to re-register. If the worker is ill on one of the signing dates, they must bring a doctor's letter the next time.

See PROBLEM 14: Failing to sign the Unemployment register

If the claims officer tells the worker to go for training or vocational counselling, then the worker must do this otherwise he or she will not be entitled to benefits.

The worker must say that he or she is available to work, or else benefits will not be paid out. If work is offered to the worker, then the worker must be ready to work.

Sometimes workers are told to go to different companies and to ask for work. They get a form that the companies fill in showing that they have no jobs available.

4. The worker should start getting money within 8 weeks after applying for benefits. After that the worker gets money every 4 weeks or so, until all the benefits are used up.

When the worker is paid money, a slip comes with the money. This slip shows from which date to which date the money is for. The worker can use this slip to work out how much money is still owing.

For unemployment benefits the worker must go the Labour office on the date they said the money will be there to collect the money. Nobody else can collect the money for the worker. The worker should always take the card and their ID book with.

Sometimes there are long delays in getting money. If a worker has waited more than 8 weeks, you can telephone the Department of Labour office, giving the worker's name and identity number, and ask them to find out what is happening to the claim. The worker can also ask for an enquiry.

Claiming illness benefits

A worker will not get illness benefits:

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

To apply for illness benefits, the worker must also register at the Department of Labour office closest to where the worker lives. If the worker is too ill to go to the office, a friend or family member can take the form to the worker to sign.

Illness benefits are claimed on FORM UF86. The doctor who is treating the worker must complete paragraph 15 of this form. This is a medical certificate. The rest of the form is completed by the Department of Labour. If the worker is also unemployed, in other words, he or she has lost the job as well, then the worker must tell the claims officer that he or she is also unemployed. But if the worker still has a job and is on unpaid sick leave, then he or she only needs FORM UF86.

Once the application for illness benefits is approved, the Department of Labour will post FORM UF87 to the worker. This form must as soon as possible be signed by the doctor. The worker then fills in the rest of the form and returns it to the Department. No illness benefits will be paid until the worker has returned the completed FORM UF87. The worker will only be paid for the period the doctor puts him or her off work.

If a worker is dismissed when they are ill and the doctor has laid them 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 the worker will receive benefits for any period in the first 2 weeks for which she or he did not get normal wages.

Illness benefits are usually paid in one lump sum, by cheque and posted to the worker. For this reason, it is important that the worker gives the Labour office a reliable address where the money can be sent.

See SOCIAL WELFARE, Social grants

Claiming maternity benefits

A worker applies for maternity benefits in the same way as for illness benefits.

When a worker registers for maternity benefits she gets FORM UF92. This form must be filled in by a doctor. The worker must take the form back to the Labour office or post it to them.

Money for maternity benefits is sent to the worker in the post.

The worker can apply for further benefits after the baby is born on FORM UF95. This form must be signed by the doctor who delivered the baby. A worker can get these benefits even if the baby was stillborn. If the worker is also unemployed, then she must tell the claims officer. But if she is on unpaid maternity leave, then she only needs 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 worker 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.

A worker should take these documents to the Labour office to apply for adoption benefits:

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

Adoption benefits are paid by cheque through the post. A form will accompany the payment. This form must be filled in and sent back to the office. Payments are paid out until all the benefits are used up.

See Adoption benefits

Claiming dependants benefits

Dependants benefits can be claimed by the husband or wife of the deceased worker and any minor children of the worker.

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 UIF death benefits. He or she must take these 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 worker must complete FORM UF127 when applying for benefits. Any dependant who wants to claim benefits must take these 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

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 death benefits. The wife or husband of the worker who died is given preference.

The money for death benefits is paid in one lump sum. The amount that is paid will be the same as the total unemployment benefits that the worker could have drawn at the time of the death.

See How much do workers get paid?
See Claiming dependants benefits

If a worker dies after claiming all the UIF that is owed to them, there will be no money left for death 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?

The worker can apply for an extension of unemployment benefits. For an extension of ordinary benefits, the worker must apply on form UF139. On this form the worker must write details of where he or she has tried to find work. The form is given to the Department of Labour.

A worker can apply for extension of illness benefits on form UF140. This includes a medical certificate to be completed by the doctor.

The Department of Labour treats all applications for extension of benefits on merit. This means they see whether they think the worker has 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:

• the worker is still actively seeking work (show letters of refusal by employers).
• the worker depends 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.
• the worker has been working for more than 4 years and has gained the maximum number of credits for which normal benefits are paid out.
  3 years is the maximum time for which normal benefits are paid out.

What if the application for normal benefits is refused?

The worker will get a registered letter if the application is refused. The letter sets out the reasons for the refusal. The worker can appeal against the refusal.

UIF appeals

The worker (or advice office paralegal on behalf of the worker) 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 worker wants to complain
• the reasons for the appeal

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

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

See Resources, for addresses

Further appeals

If the Unemployment Benefit Committee again refuses the worker's application, then the worker can appeal again to:

        The Secretary
        Unemployment Insurance Board
        PO Box 1851
        Pretoria
        0001

Termination of benefits

Benefits stop if:

• the full amount has been paid out
• the person stops signing the register
• the person receiving the benefits finds work. Labour must be told immediately and the person must stop signing the register. If the person carries on accepting benefit payments, he or she will have to pay back the amount received to the Department of Labour. This is called fraud.