There is a R126-billion surplus in the Unemployment Insurance Fund (UIF), and if changes before Parliament are approved, this money will be used to your benefit.
The Unemployment Insurance Amendment Bill is under consideration by the National Assembly, where it is before Parliament’s labour portfolio committee. Itstill has to go before the National Council of Provinces before the President can sign it, passing it into law.
The main aims of the amendment bill are to:
• Extend the scope of maternity benefits;
• Increase the period over which unemployment benefits are paid from eight to 12 months; and
• Extend benefits to people in learnership training in terms of the Skills Development Act and public servants at all three levels of government. At present, provincialand national public servants – including the police – are not entitled to UIF benefits.
Makhosonke Buthelezi, the fund’s director of communication and marketing, says the huge surplus in the fund has made it possible to increase the benefits.
UIF Commissioner Boas Serume says the UIF had a surplus of R20 billion last year, because revenue and investment returns exceeded the benefits paid. “UIF pays out R30 million daily,” he says. It pays, on average, just over R7 billion a year; in the 2014/15 financial year, it paid out R7.2 billion.
Buthelezi says the surplus is urrently used to fund poverty-alleviation schemes and socially responsible investments, such as housing, hospitals and student accommodation, and other investments that result in job preservation and job creation.
The amendment bill proposes the following changes:
• Contributors will be able to claim unemployment benefits for up to 365 days, instead of 238 days, if they have worked for a continuous four-year period.
• Contributors will be able to claim benefits if they have built up credits, regardless of whether or not they have claimed within a four-year cycle (see below for an explanation of the four-year cycle).
• Maternity benefits will be paid at a fixed rate (see below).
• Public servants at national, provincial and local government level will be entitled to unemployment benefits.
• People undergoing learnership training in terms of the Skills Development Act will be eligible for unemployment benefits once their learnership contract ends.
• Benefits will be paid to employees who lose income as a result of reduced working times.
• Excess cash in the UIF will be invested in job-creation schemes as envisioned in terms of the Employment Services Act, and in other schemes aimed at keeping workers at risk of losing their jobs in employment.
• Contributors will be entitled to benefits even though they receive a monthly pension from the state, a benefit from the Compensation Fund, or a benefit from any unemployment fund or scheme established under the Labour Relations Act.
• You will have 12 months, instead of six months, from the date on which you were last employed to submit an application for unemployment benefits.
• You will be able to claim illness benefits if you have been sick for seven consecutive days, instead of 14 days.
• You will be entitled to full maternity benefits for 121 days, instead of six weeks, in the event of a miscarriage during the third trimester or a stillbirth.
• You will be able to apply for maternity benefits from eight weeks before the child is due to be born to 12 months after the child’s birth and not, as is currently the case, four weeks before childbirth.
• You will be able to apply for a dependant benefit within eight months, instead of six months, of the breadwinner’s death.
• Contributors will be allowed to nominate their beneficiaries in the case of death benefits.
• No agency or person who purports to act on behalf of an applicant will be allowed to charge a fee for submitting an application for benefits.
• The Minister of Labour, after consultation with Parliament, will be empowered to issue regulations that change the income replacement rate and the period over which benefits are paid.
Maternity benefits
At present, maternity benefits are paid for a maximum of 121 days. The benefit is the equivalent of your normal pay or the maximum benefit of R14 872 a month. If you earn more than the threshold and your employer does not pay you while you are on maternity leave, UIF will pay you the maximum of R14 872. If you normally earn, for example, R8 000 and your employer pays you R4 000 a month during your maternity leave, UIF will top that up by R4 000 a month so that you receive your normal full salary of R8 000.
The amendments propose that a flat rate of 66 percent of the earnings of the beneficiary be paid for the first 238 days, and that a flat rate of 20 percent is paid for the remainder of the credits in the four-year period, also subject to the maximum payment of R14 872.
Unemployment benefits
Every person who works for more than 24 hours at any point in a month must contribute to the UIF at a rate of two percent of the employee’s gross remuneration, with one percent contributed by the employer and one percent contributed by the employee. There is no minimum salary below which you don’t have to contribute, Buthelezi says.
Self-employed people may contribute if they want to, if their business is a registered legal entity.
At present, for every six calendar days worked, you earn one day’s credit, up to 238 days. To build up the maximum number of credits, you have to be employed for four years, and then you can claim the maximum number of days of benefits. The amendments propose changing this to you accruing one day’s benefit for every five days worked, to a maximum of 365 days in a four-year cycle.
If you have been employed for less than four years, you can still claim from the UIF, but you qualify for benefits only up to the number of days’ credit you have accumulated. Credits are based on calendar days and not the actual days you worked.
The benefit amount is determined by the income replacement rate, which ranges from 38 percent to 60 percent, based on gross remuneration. Lower salaries are paid at the maximum percentage and higher salaries at a lower percentage. However, the benefit is capped at R14 872 for the maximum period you can claim, which means this is the most you will receive, for four months.
If you earn more than the threshold, you will pay contributions as if your earnings were in line with the threshold, and should you become unemployed, benefits will be calculated based on the threshold.
The Act explains that the benefit is calculated in one of two ways, depending on a contributor’s income before becoming unemployed:
1. Contributors who earned less than a particular amount (known as the “benefit transition income level”) are entitled to a percentage of their previous pay.
2. Contributors who earned more than the benefit transition income level are entitled to a flat benefit, equal to the entitlement of a contributor who was previously paid at the benefit transition income level.
To calculate the benefits payable to you by the UIF, your daily rate of remuneration, subject to the prescribed maximum, is arrived at:
(a) if paid monthly, by multiplying the monthly remuneration by 12 and dividing it by 365; or
(b) if paid weekly, by multiplying the weekly remuneration by 52 and dividing it by 365.
There is no ceiling for claiming UIF – even a chief executive on a six-figure salary can claim benefits – but given the income replacement rate and the maximum payment the UIF will make, based on the threshold, that executive would not receive more than R14 872 a month.
It is fraudulent to claim benefits once you have found work. You need to inform the UIF immediately so it can stop the payments. “We are able to pick up from the system that you have found employment once the new employer declares you to the fund,” Buthelezi says.
Freelance, temporary or casual work is counted as work. If you work for more than 24 hours in a month, you can’t claim unemployment benefits.
“If someone is found to be claiming fraudulent benefits, the UIF will demand a refund and if the client fails to repay the money, it may catch up with them when they have to claim for unemployment benefits in future.”
In the 2014/15 financial year, 14 fraud cases were received and investigated; the fraud value was around R7.4 million and the fund was able to recover R1 034 536, he says.
UIF staff involved in fraud face internal disciplinary processes; in most cases they get dismissed and the fund tries to recover the money. “For external cases, we open a criminal case with the police and then they investigate further, and if people are found guilty they may end up in jail,” Buthelezi says.
TYPES OF BENEFITS
There are five different types of benefits you can claim from the UIF: unemployment benefits, illness benefits, maternity benefits, adoption benefits and dependant benefits.
The value of the benefit you are claiming depends on how much you were earning when you were contributing to the fund and how long you were a contributor. You do not pay tax on UIF benefits.
The benefits, as they stand currently, are as follows:
Unemployment
You must apply to the Department of Labour for unemployment benefits within six months of becoming unemployed. You can claim benefits for a maximum of 34 weeks (238 days), depending on how long you contributed to the UIF.
You cannot claim if you resign or abscond, but you can claim if you were on a contract that ended, as long as the employer – not you – terminated your services, or if you were fired. In order to claim benefits, you have to register as a work-seeker with the Department of Labour.
Registering as a work-seeker means that suitable employment, where available, will be offered to you. The department will contact you should suitable employment become available.
Staff at the labour centre may ask unemployed workers to go for training or advice or to visit the labour centre at certain times.
If you refuse any employment offered and your refusal is regarded as unreasonable, or you refuse to go for training, or you refuse to go for advice, you may lose your benefits or they may be suspended.
Domestic workers can claim if:
• You work for more than one employer and you lose one of your jobs; or
• Your employer dies.
Illness
If you are ill and are unable to work for 14 consecutive days or more and you are not receiving a salary or are receiving only part of your salary, you can claim illness benefits for a maximum of 34 weeks, or 238 days.
Maternity
When you take maternity leave, you are entitled to claim maternity benefits for a maximum of 121 days. If you have a miscarriage in the third trimester, you can claim for six weeks (42 days).
You are also entitled to claim if your employer pays you only a portion of your normal wages or salary while you are on maternity leave. You should apply for maternity benefits when your employer stops paying your full wages or salary.
If you do not apply within six months of the birth of your child, the benefits will lapse.
The benefit is based on the period for which you were employed and contributed to the fund, and the income you were earning when you went on maternity leave.
Adoption
You can claim adoption benefits when you adopt a child under the age of two and take unpaid leave or receive only part of your salary while you are at home caring for the child. Only one partner or spouse may claim if a couple adopts.
You must apply within six months of the adoption order being issued. You are entitled to receive benefits for a maximum of 238 days. You can claim from the day the court orders the adoption until your benefits are used up, or you go back to work.
Dependant benefits
If your spouse or life partner who contributed to the UIF dies, you can claim a dependant benefit, even if you are employed. You must apply for the benefit within six months of your spouse or life partner’s death.
A child dependant of the deceased who is under 21, or a child of the deceased who is under 25 and who is a learner and who was wholly or mainly dependent on the deceased, can claim dependant benefits if the spouse or life partner does not claim within six months of the death.
Dependant benefits are payable for a maximum of 238 days; the benefit is based on the income the breadwinner was earning when he or she died.
Who’s not entitled to benefits
You are disqualified from receiving UIF benefits if:
• You receive payments from the Compensation Fund;
• You receive benefits from any other scheme established by the Labour Relations Act;
• You resign from your job;
• You fail to comply with the provisions of the UIF Act;
• You refuse training or advice;
• You are suspended from receiving benefits; or
• You claim benefits fraudulently.
HOW TO CLAIM
The necessary forms are available on the Department of Labour’s website, www.labour.gov.za > Documents. Look under “Forms”.
Unemployment benefits
You must apply for benefits at your nearest labour centre in person. You must register as a work-seeker and must have the following documents:
• 13-digit bar-coded ID or passport;
• Form UI-2.8 (application to pay UIF benefits into bank account);
• Form UI-19 (to show that you are no longer working for your employer); and
• Proof of registration as a work-seeker.
Illness benefits
You must apply at your nearest labour centre or arrange for someone to go in your place, taking the following documents:
• 13-digit bar-coded ID or passport;
• Form UI-2.8;
• Form UI-2.2 (application for illness benefits);
• Form UI-2.7 (record of remuneration received while in employment);
• Medical certificate from a doctor;
• Amplifying medical report; and
• Form UI-3 (follow-up form).
Maternity benefits
Pregnant women may take up to four months’ maternity leave under the Basic Conditions of Employment Act, starting one month before the date on which the baby is due. When you go on maternity leave, you must apply for benefits at your nearest labour centre or arrange for someone to go in your place. You need:
• 13-digit bar-coded ID or passport;
• Form UI-2.8 for banking details;
• Form UI-2.7;
• Form UI-2.3 (application form);
• Medical certificate from a doctor or birth certificate of the baby; and
• Form UI-4 (follow-up form).
Adoption benefits
You need:
• 13-digit bar-coded ID or passport;
• Form UI-2.8;
• Form UI-2.7;
• Form UI-2.4 (application form for adoption benefits)
• Certified copy of the adopted baby’s birth certificate; and
• Certified copy of the adoption order.
Dependant benefits
You need to take:
• Dependant’s 13-digit bar-coded ID or passport;
• Deceased’s 13-digit bar-coded ID or passport;
• Form UI-19;
• Marriage certificate (for spouses)
• Lobola letter (for traditional marriages)
• Affidavit (for life partners)
• Birth certificates (for children)
• Proof of schooling (for children between 21 and 25);
• Death certificate of the deceased; and
• Completed dependant-specific UIF form. This is either:
- Form UI-2.5 (application for dependant’s benefits by surviving spouse or life partner); or
- Form UI-2.6 (application for dependant’s benefits by child or children of deceased).
CHECK YOU ARE REGISTERED
To check whether your employer has registered you with the UIF, you can contact your nearest Labour Centre. Have your identity number at hand. Alternatively, you can phone the UIF call centre on 012 337 1680 or 0800 843 843.
Address: The UIF, Pretoria, 0052
Email: [email protected]