Johannesburg - The Department of Employment and Labour has opened hundreds of fraud cases against companies that listed ghost employees for the Unemployment Insurance Fund (UIF).
These companies would illegally obtain their victims’ information to make fraudulent claims. Some victims found out through the South African Revenue Service (Sars), others when they applied for the Covid-19 social relief grant that they were victims of the scam.
Twenty-five-year-old Ntokozo Siza, from Soweto, discovered that he was a victim of the fraud when he received numerous letters from Sars from 2020 until last year.
At first, Siza brushed off the letters thinking it was a Sars error. However, he continued to receive the letters until he decided to go to Sars to find out why he was receiving letters of demand when he was unemployed.
What he discovered next took him by surprise. Two companies he had never heard of had listed him as an employee and were supposedly contributing to the fund.
“I managed to contact one of the two companies that registered me for UIF. I spoke to their three representatives and they sent me UIF forms to fill out and to return to the labour department. They encouraged me to claim the R600 in UIF, which I have not. I think they advised me to do that because they were scared I would have them arrested,” Siza said.
Siza had no clue how and where these companies obtained his private information.
In another part of Johannesburg, 27-year-old Xolani Ndlovu met the same fate. Ndlovu found out that he was listed for the UIF when his application for the R350 grant was denied.
“I cannot apply for the grant because of this issue. When the grant was introduced, I thought I would at least have a steady source of income. Due to being UIF registered, I no longer qualify for the grant. This is such a nightmare to experience, considering I am currently unemployed,” said Ndlovu.
Another victim of the scam is 28-year-old Thabang Moupi from Vanderbijlpark who said he found out about the fraud when applying for a bursary to further his studies early this year.
The prospective bursar asked Moupi why he needed funding when he was already employed and contributing toward UIF. Initially, Moupi thought his former employer did not remove his particulars from their system after losing his job due to the Covid-19 lockdown in early 2020. But that was not the case.
“It seems that one of the companies that listed me for UIF was the one I once applied for a learnership with, but I did not get the learnership. However, they used my details to claim the Covid-19 TERS (Temporary Employer and Employee Relief Scheme).
“I’m unsure how much they made a claim. When I first reported this issue, the department of labour thought I wanted to defraud it. They had to ascertain that I was not an employee of that company. The department started its investigation shortly after they confirmed that I was being truthful,” Moupi said.
Moupi’s case is still under investigation, as he only found that the company registered him for UIF three weeks ago. On the other hand, Siza’s case did not take long to resolve. Ndlovu’s case, however, is still pending.
Moupi said he is yet to contact the department of labour to lay a formal complaint.
The three young men wondered if the fraudulent UIF registrations were why they were not getting any calls from prospective employers, since their UIF status suggests that they are employed.
Labour lawyer Michael Bagraim said the issue of bogus UIF registration is rife in the country.
Bagraim said he has a suspicion, though never proven, that in some cases, these companies make fraudulent registration to up their BEE quota or to disguise foreign employees as locals.
The directors of these companies, said Bagraim, should be the first to be investigated, followed by the employees whose UIF contributions are being deducted and then a closer look at the department's representatives to uncover the identities of the fraudsters.
Additionally, Bagraim said if no loss is proven, victims have no recourse in this instance, but they can get a court order to stop the perpetrators from using their details.
“You have to be able to prove the loss. For instance, if you have not had Sassa for months and were expecting it, you can lodge a claim. Once the department of labour prosecutes the individuals, you can take your documentation, including the court ruling to Sassa offices. They would have to back-pay the funds,” said Bagraim.
The Department of Employment and Labour acknowledged that UIF fraud is an ongoing problem, and that it is working with law enforcement agencies to eradicate the scam.
Makhosonke Buthelezi of the UIF said at least three of the employers involved in these cases had been arrested. Furthermore, 700 cases are currently being investigated.
Buthelezi said that some of these companies were linked to the Expanded Public Works Programme (EPWP) or other training programmes.
“Since the previous employer would have had their ID numbers in their systems, they would use them (ID numbers) to claim for Covid 19 TERS,” said Buthelezi.