UIF SCALE OF BENEFITS DISTINGUISHED FROM INCOME THRESHOLD

Tuesday, May 16, 2017
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On 17 March 2017, the Minister of Labour gazetted an increase in the scale of benefits under section 12(3)(a) of the Unemployment Insurance Act, 2001 (the UIA). With effect from 1 April 2017, the scale of benefits increased from ZAR 178 464 per annum to ZAR 212 539 per annum for purposes of the UIA.

Our previous newsletter mistakenly referred to an increase from 1 April 2017 in the “income” threshold instead of the “benefit” threshold. The “income” threshold has not been increased and remains at ZAR 178 464 per annum for the time being.

The increase in the scale of benefits has led to confusion about whether this impacts on the existing contribution rates and thresholds for purposes of the Unemployment Insurance Contributions Act, 2002 (the UICA). Ordinarily, the scale of benefits (for purposes of the UIA) and the income threshold (for purposes of the UICA) have been updated concurrently. It is this practice which has led to the current confusion.

By way of clarification: to date the increase to the scale of benefits has not been matched by the promulgation of a similar increase in contribution rates and thresholds by the Minister of Finance for purposes of the UICA. Until the Minister of Finance has gazetted new contribution rates and thresholds under the UICA, the existing contribution rates and thresholds apply, meaning those articulated by section 6 UICA, read with its accompanying notices.

In the light of this, employers should not adjust their contribution calculations until such time as the Minister of Finance determines and promulgates a new income threshold.
Should you require any further information or specific advice, please contact the Bowmans Employment team.