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Lack of compliance to Unemployment Insurance Act robs workers of deserved UIF benefits

Two unemployed South African men hold self-made advertising board offering their services at a traffic intersection in Cape Town, South Africa. Unemployment in African countries is one of the major issues facing governments. EPA/NIC BOTHMA

Two unemployed South African men hold self-made advertising board offering their services at a traffic intersection in Cape Town, South Africa. Unemployment in African countries is one of the major issues facing governments. EPA/NIC BOTHMA

Published Sep 16, 2021


OPINION: The Covid-19 TERS benefit has exposed large-scale non-compliance by many employers.

by Advocate Mzie Yawa

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The lack of compliance by employers to the country’s labour laws, particularly the Unemployment Insurance Act, robs millions of workers of unemployment benefits, which leaves them and their families destitute in the event of their jobs being lost.

According to the recently released Stats SA’s Quarterly Labour Force Survey, the unemployment numbers have climbed to an unacceptable 34.4% with 8 000 more people joining the ranks of the unemployed in the first quarter of 2021. The big question is: Are those 8 000 unemployed individuals registered and covered by the UIF and therefore have a fallback position?

The Unemployment Insurance Amendment Act of 2016 enjoins all employers to register with the UIF once they employ a person who works more than 24 hours per month, except public officials holding positions in Parliament, provincial executive councils and municipal councillors.

According to the Basic Conditions of Employment Act, an employer must issue employment terms for an employee and in addition register themselves and their employees for UIF, Pay As You Earn, and the Compensation Fund, among other statutory requirements.

For UIF, it is critical that a relationship between an employer and a worker is confirmed through registration first. Thereafter contributions and declarations must follow. The confirmation of the relationship is critical to the eyes of the UIF because the status of a worker immediately changes and the employer/employee relationship then exists for UIF purposes.

Workers who are uninsured are deprived of the traditional UIF benefits. These include benefits such as short work time, maternity, illness, adoption, death, and the recently established emergency relief benefits of Covid -19 Temporary Employer/Employee Relief Scheme (Covid-19 TERS), as well as Workers Affected By the Unrest (WABU): Temporary Financial Relief Scheme.

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Beyond these benefits, the UIF also offers various training initiatives under the Labour Activation Programmes that provide training and re-skilling opportunities to unemployed former UIF contributors.

Usually, any worker who tries to access UIF benefits must be registered and contribute to the fund every month. The Act also requires employers to declare employees by the seventh day of every month. However, many employers fall short. For example, some register their employees but fail to pay monthly contributions; those who have registered them and make monthly contributions fail to declare them every month; and employers such as taxi operators, domestic employers and those operating small businesses simply fail to register their employees completely.

And this is to the detriment of workers as they are unable to access UIF benefits when they lose their jobs, go on maternity leave or parental leave, or lose a bread winner.

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The Covid-19 TERS benefit has exposed large-scale non-compliance by many employers. When the benefit was introduced in March 2020, the condition was that only registered and contributing employers will be considered for the benefit.

However, this condition was removed as anecdotal information showed that many workers, particularly in medium to small businesses, were not registered for UIF and their places of employment would not afford to pay them due to closure of business activities under the hard level 5 lockdown restrictions.

Therefore, social partners at NEDLAC and the Department of Employment and Labour agreed that Covid-19 TERS should cover all workers affected by the lockdown, as long as their employers register or are registered with the UIF. This resulted in many unregistered employers rushing to register with the Fund to access the Covid-19 TERS benefit and, most significantly, the number of registered employees also grew quite exponentially.

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Before the Covid-19 TERS scheme, on average we were registering 5 000 employers per month and the figures rose sharply to 7 700 and 6 000 in April and May 2020 respectively, immediately after the announcement of Covid-19 TERS. There was also significant increase in the number of employees registered with UIF between April and June 2020. On average UIF would register 66 000 employees per month, however, in April 2020 the number rose to 85 000 and it shot up to 125 000 in May and dropped to 100 000 in June 2020.

During the same period, declarations significantly increased from 54 203 in April to 72 076 in June 2020. The sudden increase in both employer registration and employee declarations was due to a pre-condition that Covid-19 TERS claims would only be processed and paid upon verification of registration and declarations with the UIF. The same pre-condition will also be applied in the verification of claims for the newly introduced WABU relief scheme targeting the provinces of KwaZulu-Natal and Gauteng.

Despite improvements in registrations and declarations, many employees still remain undeclared with the UIF because many online claims for unemployment benefit are stuck in the system, waiting for declarations from employers. This has also been the problem with Covid-19 TERS where about 419 claims are not finalised due to outstanding declarations by employers.

The lack of declaration of workers as required by law robs them of benefits due to them, and by extension their families as there is no financial means to provide for their needs.

The fund has created online platforms such as uFiling and EDEC systems to make it easy for employers to declare their employees. In addition, a digital UI 19 system was created on the Covid-19 TERS portal to allow declarations from one to 1 000 employees. Employers are encouraged to declare foreign nationals on uFiling as it is the only platform that recognises other forms of identification in addition to the 13 digits by the South African identity documents.

As the fund, we appeal to all employers to register, contribute and declare their employees every month as required by law. The monthly premium to be paid as contribution to the UIF is a mere 2% split from the employer and employee.

Through Covid-19 TERS, the UIF has been able to pay more than R62.3 billion rand to 267 493 compliant employers, covering more than 5.4 million employees. The fund has also started processing claims for the WABU relief scheme, and again we would like to see more employees benefit without being prejudiced by lack of compliance to the Unemployment Insurance Act as well as the Unemployment Insurance Contributions Act.

*Yawa is the Unemployment Insurance Fund’s acting commissioner

** The views expressed here are not necessarily those of IOL.