The maximum earnings ceiling for contributions to the Unemployment Insurance Fund will on Saturday increase from R10 966 to R11 662 per month, the labour department said.

"All workers who earn above the maximum level will only contribute up to the maximum, and when they become unemployed will then receive benefits at the rate of their contribution," the department said in a media statement.

The department warned employers that failure to comply would result in punishment.

"The offender shall be liable to a fine or imprisonment, or to both."

Employers have until June 7 to comply.

Earlier this month, Labour Minister Membathisi Mdladlana announced an increase in the remuneration ceiling to a level of R11 662 per month or R139 944 per annum or R2 691 per week to be effective from July 1 this year.

"The maximum earning level is benchmarked at the level of what an artisan is currently earning. It was also aimed at keeping pace with the inflation rate."

On a yearly basis, the UIF sets a maximum earnings ceiling, in terms of which benefits are paid and contributions are payable, the department said. - Sapa