THE UNEMPLOYMENT INSURANCE AMENDMENT ACT 10 OF 2016

Thursday, May 04, 2017
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The Unemployment Insurance Act 63 of 2001(the Act) establishes the Unemployment Insurance Fund (the UIF). The UIF gives short-term relief to workers when they become unemployed or are unable to work because of maternity, adoption leave, or illness. It also provides relief to the dependants of a deceased contributor.  

With effect from 1 April 2017, the maximum income threshold for UIF purposes has increased from ZAR 178 464 per annum (ZAR14 872 per month) to ZAR 212 539 per annum (ZAR17 712 per month).

On 19 January 2017, the Unemployment Insurance Amendment Act (the Amendment Act) came into force and effect. The Amendment Act amends certain aspects of the Act pertaining to, among others, the scope, extent and accrual rate of benefit entitlements, the process of applying for maternity benefits, the financing of employment services and the functions of regional appeals committees under the Unemployment Insurance Board’s constitution.
 
The following amendments to the Act are noteworthy for employers:

  • Unemployment insurance benefits have been extended to additional categories of employees such as learners undergoing learnership programmes and civil servants. Previously, the Act did not apply to persons who entered the Republic of South Africa for the purpose of carrying out a contract of service, apprenticeship or learnership if, upon termination thereof, the employer was required by law or by contract to repatriate the person, or the person was required to leave the Republic. With effect from
    19 January 2017, employers are now required to register the abovementioned persons for UIF.
  • Employees who lose part of their income due to reduced working time are now entitled to benefits under the Act if the contributing employee’s total income falls below the benefit level that he/ she would have received if he/she had become wholly unemployed, and provided the contributing employee has enough credits.
  • Maternity benefits are to be paid at a rate of 66% of the earnings of the beneficiary at the date of application, subject to the maximum income threshold of ZAR 212 539 per annum (ZAR17 712 per month) that increased with effect from 1 April 2017.
  • A beneficiary who miscarries during the third trimester of her pregnancy or who bears a still born child is now entitled to a full maternity benefit of 17 to 32 weeks. A beneficiary is not, however, entitled to benefits unless she is employed for at least 13 weeks (whether as a contributor or not) before applying for the maternity benefits.
  • The application period for maternity benefits has been extended from 8 weeks before child birth to any time before or after child birth, provided that the application is made within a period of 12 months after the date of child birth.
  • For purposes of calculating the benefits payable to a contributor (referred to as “credits”), a contributor accrues 1 credit for every completed 5 (previously 6) days of employment, subject to a maximum accrual of 365 (previously 238) credits in the four year period immediately preceding the day after the date of ending of the period of employment.
  • Unemployment benefits must be paid to the unemployed contributor regardless of whether or not the contributor has received benefits within that four year cycle, if the contributor has credits remaining.
  • An application for unemployment benefits must be made within 12 months (previously 6 months) of the termination of the contract of employment.
  • A surviving spouse or life partner has a right to dependant’s benefits if application is made within 18 months (previously 6 months) of the death of the contributor. A nominated beneficiary of a deceased contributor may claim dependant’s benefits if there is no surviving spouse, life partner, or dependent children of the deceased contributor.
  • When processing applications for benefits neither the Fund nor any agency or person purporting to act on behalf of the applicant may charge a fee against the applicant.

The key changes outlined above illustrate how the ambit of the Act has been extended. Importantly, an employer must not forget to register all employees, including expatriate employees, for UIF purposes. The only categories of employees who remain excluded from the ambit of the Act are employees who work for fewer than 24 hours in any given month, members of parliament, cabinet ministers, deputy ministers, members of provincial executive councils, members of provincial legislatures and municipal councillors. 

Should you require any further information or specific advice, please contact the Bowmans Employment team.