UIF levy

The UIF levy, or Unemployment Insurance Fund levy, is essentially a South African payroll levy administered by the Department of Labour.

The fund and its benefits are in terms of the Unemployment Insurance Act, No. 63 of 2001. Contributions are in terms of the Unemployment Insurance Contributions Act, No. 4 of 2002.

Currently the UIF levy is based on 2% of the regular salary or wages of the employee.

Returns must be submitted to the UIF department of the Department of Labour, but payments may be made either directly to the fund, or made as part of the EMP201 payment to S A Revenue Services. Returns and payments must be made on or before the last business weekday within 7 days after the end of the month under revue.

Benefits

The unemployment insurance fund was established to provide short-term relief to workers when they become unemployed, or are unable to work because of illness, maternity or adoption leave. It also provides relief to the dependants of a deceased contributor.

Contributions

Contributions to the UIF are the compulsory in terms of the Unemployment Insurance Contributions Act. The bulk of the contributions are collected by SARS with effect from 1 April 2002 and are transferred to the Unemployment Insurance Fund that is administered by the Unemployment Insurance Commissioner.

Contribution payments

Employers registered with S A Revenue Services (SARS) for the payment of employee's tax (PAYE) are required to pay the UIF contributions to SARS.

Employers not registered with SARS for PAYE purposes are required to pay the UIF contributions to the UIF commissioner directly.

Calculation of contributions

Calculation of contributions is based on remuneration as defined for the calculation of PAYE, but excludes any commission payment. The remuneration amount used to calculate the UIF contribution is also subject to a maximum ceiling. Any additional remuneration over and above this ceiling is not used to calculate the UIF levy.

The employer must deduct the employee's contribution of 1% of the applicable remuneration amount from the salary (or wages) of the employee. The employer also contributes 1% of the applicable remuneration, thus paying over a total of 2% of the applicable remuneration to either SARS or the UIF Commisioner.

Exclusions

Detailed exclusions from the calculation of remuneration are any amount paid or payable in respect of:

• Any amounts paid or payable to common law independent contractors (which does not include contractors who are subject to the control or supervision of any person as to the manner in which their duties are performed or as to the hours of work or if the amounts paid or payable to them are payable at regular daily, weekly, monthly or other intervals).
• Any pension or allowance in terms of any of the following Acts:
  • Aged Persons Act
  • Blind Persons Act
  • Disability Grants Act
  • Children’s Act
• Amounts paid to an employee to reimburse the employee for actual business expenses incurred (i.e. expenses incurred on behalf of the employer on an agency basis), in the course of employment.
• Any allowance or advance in terms of an order of divorce or decree of judicial separation or agreement of separation.
• Commission.
• Pension, superannuation allowance or retiring allowance;
  • which constitutes an amount contemplated in the following paragraphs of the definition of gross income:

(a) - by way of annuity,

(cA) - as compensation for any restraint of trade,

(d) - including any voluntary award received or accrued in respect of the relinquishment, termination, loss, repudiation, cancellation or variation of any office or employment or of any appointment,

(e) - lump sum benefits from any pension fund, provident fund or retirement annuity fund,

(eA) - lump sum benefits from a pension fund (where the rules provide that on retirement a portion of the benefit has to be taken in the form of an annuity, etc.)

Applicable remuneration ceiling

With effect from 1st October 2007 the earnings ceiling for the calculation of the UIF levy is R12 478.00 per month.

With effect from 1st October 2012 the earnings ceiling for the calculation of the UIF levy is R178 464.00 per annum. This translates to:

R14 872.00 per month

R6 864 per fortnight

R3 432 per week

Contributors

Every employer and employee to whom the Unemployment Inurance Contributions Act applies must, on a monthly basis, contribute to the Unemployment Insurance Fund.

Contributions must be made for all employees, other than:

• employees employed for less than 24 hours a month with a particular employer;
• employees who receive remuneration under a learnership agreement registered in terms of the Skills Development Act,1998 (Act No. 97 of 1998);
• employers and employees in the national and provincial spheres of government; and
• employees who enter the Republic for the purpose of carrying out a contract of service, apprenticeship or learnership if upon the termination thereof the employer is required by law, contract or agreement to repatriate that person.

Filing UIF returns

UIF returns are required to be filed monthly unless you are a private individual who only employs a domestic worker. In that instance you may elect to only file a UIF return and make UIF contribution payments annually.

The easiest method to submit UIF returns is to use the online UIF filing service at uFiliing. The uFiling service can also be used to pay over contributions, although this method must not be used if the employer is registered for PAYE. In that instance payments must be paid to SARS.