The aim of the UIF Contribution is to protect employees if they are dismissed, become seriously ill and/or go on maternity / parental / adoptive leave. It also protects dependants in the event of the death of the domestic worker.
Employers of domestic workers are required to make a UIF contribution on a monthly basis which is comprised of the following: [i]
The UIF Contributions Act refers to ‘remuneration’ and consequently the employee contribution and employer contribution must be calculated with reference to the total amount that the domestic worker receives in money or in kind and not simply the domestic worker’s wage per hour / month.[ii]
The calculation of the UIF contribution also excludes amounts paid to domestic workers by way of pension, superannuation allowances or retiring allowances.[iii]
There is a ceiling to remuneration for the purposes of calculating the UIF contribution which is amended from time to time. The ceiling is currently set at R14 872.00 and consequently the maximum employee contribution and the employer contribution would be capped at R148.72 respectively (or R297.44 for the combined contribution).
The vast majority of domestic workers do not receive remuneration which reaches the ceiling amount and consequently most employers do not need to worry about reaching the ceiling or having to cap the UIF contribution accordingly.
The following table constitutes a useful example in respect of calculating the amount of UIF payable (in this case to a part time domestic worker): [iv]
DETERMINATION OF UIF CONTRIBUTION – EXAMPLE
| Step one: | Determination of Total Monthly Remuneration (inclusive of benefits such as food allowances, travel allowances and the like) | R,3000.00 (monthly wage) + R200.00 (food allowance) = R3,200.00 (total remuneration) | ||
| Step two: | LESS: Exclusions Pension, superannuation allowance or retiring allowance; That constitute an amount contemplated in paragraphs (a), (cA), (d), (e) or (eA) of the definition of gross income in terms of the income tax act (i.e. life annuities, retirement annuities, retirement lump sum benefits, etc.)By way of commission | R3,200.00 Less exclusions R0.00 (i.e. no retiring allowance) | ||
| = | Remuneration for UIF purposes | R3,200.00 | ||
| Step three: | Employee contribution = Employee Monthly Remuneration x 1% (deducted from Employee’s remuneration) · Cannot exceed R148.72 | R3,200.00 X 1% = R32.00 | ||
| + | Employer contribution = Employee Monthly Remuneration x 1% (paid by Employer) · Cannot exceed R148.72 | R3,200.00 X 1% = R32.00 | ||
| = | Amount payable as UIF · Cannot exceed R297.44 | R64.00 |
Where a domestic worker is paid monthly, the employee contribution must be withheld from the employee’s pay at the end of the month and both the employee contribution (1%) and employer contribution (1%) must be paid within seven days after the expiry of that month.
Where a domestic worker is paid in intervals other than on a monthly basis (i.e. weekly), the employee deduction must be made on dates that coincide with the payment but only paid over to the UIF within seven days after the expiry of each calendar month.
In order to avoid any dispute, statutory deductions such as UIF should be set out in simple terms in the employment contract and discussed with the domestic worker upon his/her appointment (click to see contract of employment). UIF deductions must also be reflected on the payslip of a domestic worker (click to see sample payslip).
For a guide on registering new or existing domestic workers for UIF and effecting monthly UIF payments by way of ‘uFiling’ please click to see Chapter 7. For a guide in respect of UIF deductions in general click here.
[i] See section 5(1) of the Unemployment Insurance Contributions Act 4 of 2002, as amended
[ii] See paragraph 1 to the Fourth Schedule of the Income Tax Act.
[iii] See definition of remuneration in section 1 of the Unemployment Insurance Contributions Act 4 of 2002, as amended
[iv] For a more comprehensive guide see SARS Guide for Employers in respect of the Unemployment Insurance Fund (UIF-GEN-01-G01)
