LABOUR LAW – ARR224

Lectures 3-4The Unemployment Insurance Act, 63 of

2001

UIA

PRESCRIBED MATERIAL

Study:• PGL (Chapter 5 par 5.3 & 5.5)

Read:• PGL (Chapter 5 par 5.1-5.2, 5.4 & 5.6-5.9)

• PLL (Pp 108-127)

LEARNING OUTCOMES• Explain the purpose of the Act.• Define core concepts like

contributor, child, domestic worker, employee, employer and remuneration and life partner.

• Discuss the application of the Unemployment Insurance Act.

• Discuss the requirements that must be complied with to qualify for the different categories of benefits.

BACKGROUNDSouth Africa has of the highest unemployment

rates in the world.UIA can therefore not make a proper

contribution to alleviate poverty.UIA provides for the payment of unemployment

benefitsUICA provides for the collection of contributions.SARS is authorised to receive payment of

contributions.

WHO, IF ANYONE MAY CLAIM UIF??

SHOULD I DISMISS YOU FROM MY EMPLOY? CAN YOU CLAIM UIF?

UIA (INTRODUCTION)• UIA (1966) repealed and replaced by new UIA and UICA

(4/ 2002) Both came into operation on 1 April 2002.• Purpose of the UIA: oPayment of benefits to contributors (employees) out of UIF. Income of

fund = contributions, money by Parliament and various other sources.

oAlleviation of the harmful economic and social effects of unemployment. • Purpose of UICA is :• to provide for the payment of contributions and• the procedure for collection of such contributions.

• Benefits payable in cases of 1. unemployment, 2. illness, 3. pregnancy, 4. adoption, 5. and benefits to dependants OF DECEASED contributor

UNEMPLOYMENT: EX RETRENCHMENTS

PREGNANCY

ILLNESS> 14 DAYS

ADOPTION

DEPENDANTS OF DECEASED CONTRIBUTOR

UIA (DEFINITIONS) NB• Child Any person under the age of 18 years and includes any person under the age of 25 who is

a learner and who is wholly or mainly dependent on the deceased. • Contribution Amount payable by the employer/contributor i.t.o. UICA. • Contributor Any natural person who is/was employed; to whom this Act, in terms of sect 3

applies; who can satisfy the Commissioner that he/she has made contributions for purposes of this Act.

• Domestic worker Employee who performs domestic work in home of employer and includes a gardener, driver of a motor vehicle (chauffeur) and any person who takes care of any person in that home. Does not include a farm worker.

• Employee Natural person who receives remuneration or to whom remuneration accrues i.r.o. services rendered or to be rendered by that person, but excludes any independent contractor.

• Employer Person, including a person acting in a fiduciary capacity, who pays or is liable to pay to any person any amount by way of remuneration, and any person responsible for the payment of any amount by way of remuneration to any person under the provisions of any law or out of public funds, excluding any person who is not acting as a principal.

• Remuneration As defined in sect 1 of the UICA. (Remuneration means same as in par 1 of the

Fourth Schedule to Income Tax Act, but does not include pension and commission.) • Life partner: (see p 12 of the study guide.) “any major person who is

a party to the opposite sex or in a same sex relationship with another major person, which relationship must be intended to be permanent, exclude any other person and involve cohabitation, an obligation of mutual emotional support between parties and a reciprocal obligation to support one another financially in circumstances where the one has the means to do so and the other requires such support in order to maintain , without recourse to the Public Funds, his or her financial and social standing and standard of living”

UIA (APPLICATION)

All employers and employees. Excluded are:1. Employees employed for less than 24 hours per

month with particular employer.2. Employees entitled to remuneration under

learnership agreement registered i.t.o Skills Development Act.

3. Employers and employees in national and provincial spheres of government who are officers ito PSA .

4. Persons who enter RSA to carry out a contract or service, apprenticeship or learnership within RSA and are to be repatriated after completion thereof.

5. Persons who receive a monthly pension form the State and their employers.

6. Applicable to domestic workers from 1 April 2003.

UIA (FRAMEWORK OF ACT)- READ• Unemployment Insurance Fund For payment of benefits. Income =

contributions, monies from Parliament and various other sources. Controlled by Director-General: Labour. Benefits = of unemployment, illness, pregnancy, adoption and benefits to dependants.

• Unemployment Insurance Board Established by Minister. Members represent interests of employer and employee. Advise Minister on everything regarding unemployment and deals with appeals.

• • Unemployment Insurance Commissioner Appointed from DoL( Dept

of Labour) by Minister. Administers affairs of Board. Submit report to the Director-General on activities of the Fund.

• Claims officers DG appoints claims officers to assist Commissioner in processing applications. Employees of DoL.

• Director-General Varied powers and functions to oversee administration of Act and activities of the Fund.

UIA (BENEFITS I)Employee’s right to benefits• Regulated by Chap 3.• Employee (contributor) can qualify for the following benefits:1.Unemployment benefits 2.Illness benefits 3.Maternity benefits 4.Adoption benefits 5.Benefits for dependants

• Domestic workers employed by more than one employer and who loses job with one of employers, although still employed by other employers: Benefits will be paid as a top-up.

• Person earning in excess of ceiling amount (R12 478 p.m.) not excluded from benefits. Benefits calculated as if contributor earned ceiling amount.

• Scale of benefits to which contributor is entitled, contained in Sch 3. Calculated in accordance with Sch 2. Paid on sliding scale. Lower income contributors receive larger % of benefits than higher income contributors. (Range from 38% to 60%).

• Not entitled to benefits for any period that he/she:o Received monthly pension from the State, benefits i.t.o COIDA, benefits from fund/scheme established

by a council. o Fails to comply with provision of UIA or other law relating to unemployment. o Is suspended from receiving benefits because of a false/fraudulent claim, failure to inform claims officer

of the resumption of work or failing to repay, on demand, any benefits that were paid in error to him.

UIA (BENEFITS II)Calculation of benefits• Entitlement to benefits accrues at rate of one day’s benefit

for every completed 6 days of employment (subject to maximum accrual of 238 days’ benefit in 4-year period preceding date of application minus any days benefits already received in this 4-year period).

• Calculation must be done as follows:

oStep 1 Determine total number of days of employment as contributor in 4-year period preceding application.

oStep 2 Divide total number of days by 52, multiply by 7 and disregard any fraction of resultant figure.

oStep 3 Subtract any days received in 4-year period preceding application.

oStep 4 Resultant figure determines days of benefits contributor is entitled to.

UIA (BENEFITS III)Unemployment Benefits• Unemployment must be due to: 1. Termination of contract of employment by employer or ending of

fixed term contract. 2. Dismissal ,inclusive of retrenchments- contributor i.t.o. sect 186 of the

LRA, 1995. 3. Insolvency i.t.o. Insolvency Act, 1936. 4. Contract terminated because of death of employer (domestic

worker).• Unemployment more than 14 days.• Written application within 6 months of unemployment and must

prove prior services and remuneration received. • Registered as a work-seeker with a labour centre (established

under the Skills Development Act). • Applicant prove capability and availability for work. • Continuing unemployment must be proved if requested. • If ill while receiving unemployment benefits, remains entitled to it

if illness not prejudice chance of securing employment. • Report at all times, dates and venues stipulated by the claims

officer. • No refusal, without just reason, to undergo training and vocational

counselling for employment. (Penalty)• No refusal to accept appropriate, available work. (Penalty) • Requirements complied with = benefits determined and paid. If

not = applicant advised reasons why application is defective.

UIA (BENEFITS IV)Illness benefits

1. Must be unable to perform work on account of illness.

2. Comply with prescribed requirements (if any) i.r.o any specified illness.

3. Written application (personally) within 6 months of commencement of illness. (Other person may be authorised to lodge on behalf of applicant.)

4. Period of illness more than 14 days. 5. Must not already receive unemployment - or

adoption benefits. 6. No refusal to undergo medical treatment. 7. Difference between sick leave paid i.t.o. any other

law and maximum benefit payable in accordance with Sch 3.

8. Requirements complied with = benefits determined and paid. If not = applicant advised reasons why application is defective.

UIA (BENEFITS V)Maternity benefits

• Pregnant contributor entitled to maternity benefits - period of pregnancy/delivery and thereafter.

• Only one contributor allowed to claim!!!!• Maximum period of maternity leave is 17,32

weeks. • Miscarriage during 3rd trimester/stillborn child,

maximum benefit of 6 weeks. • Difference between maternity benefit paid

i.t.o. other law and benefit payable in accordance with Sch 3.

• Written application at least 8 weeks before childbirth. (Condonation up to 6 months after the date of childbirth)

• Requirements complied with = benefits determined and paid. If not = applicant advised reasons why application is defective.

UIA (BENEFITS VI)Adoption benefits

• Only 1 contributor of adopting parties. • Adoption i.t.o. Child Care Act, 1983. • Reason for not working = to spend time caring for

child. • Adopted child must be below the age of 2 years. • Entitled to benefits on date court grants order for

adoption. • Difference between benefits paid i.t.o. other act

and benefit payable i.t.o. Sch 2 & 3. • Benefit not > normal remuneration. • Written application within 6 months after date of

adoption-order (Condonation). • Requirements complied with = benefits

determined and paid. If not = applicant advised reasons why application is defective.

UIA (BENEFITS VII)Dependant’s benefits

• Surviving spouse/life partner = Written application within 6 months after death.

• Dependant child = Written application within 2 weeks after expiration of the 6 months (if no surviving spouse/ life partner or if surviving spouse/life did not apply).

• Benefit payable = unemployment benefit if deceased contributor had been alive.

• Requirements complied with = benefits determined and paid. If not = applicant advised reasons why application is defective.

UIA (BENEFITS VIII)• Benefits may not be assigned/attached except

by court order relating to maintenance of dependants.

• If error occurs, it must be repaid to the Fund.• With dispute: Appeals to regional appeals

committee against:odecision of the Commissioner odecision of a claims officer• Labour inspectors may call for written

undertakings or may issue compliance orders. • DG may apply to Labour Court to make

compliance order, an order of Labour Court.

DUTIES OF EMPLOYER• When commencing activities as employer,

provide info to Commissioner: oStreet address of business and any branches. oIf employer not resident in SA, particulars of authorised

person in SA. oNames, ID-numbers and monthly remuneration of

employees. oAddress at which employee is employed. • Changes in above information, notify

Commissioner before 7th day of next month.• Commissioner may request additional info.• Newly appointed employees’ info must be

registered with the Fund without delay.

UICA (INTRODUCTION)• Definitions the same as in UIA.• “Minister” in this Act refers to the Minister of Finance.• Act addresses issues of contributions by employers and

employees i.t.o. UIA. • Applies to all employers and employees, exclusions same as

UIA.

UICA (CONTRIBUTIONS)• Employers and employees must contribute

monthly to Fund. Employer (1% of employee’s monthly salary) and employee (1% of monthly salary).

• Employer must deduct from employee’s salary the 1% contribution by employee and must, together with employer’s contribution, pay to Commissioner of Inland Revenue.

• Deductions for UIF not > contribution of employee.

• CIR must inform DG regarding amount of contributions, interest and fines.

• Money is then paid over to the UIF. • Employer not required to register i.t.o

Income Tax Act or who is not liable for payment of skills development levy must pay contributions to the Unemployment Insurance Commissioner.

• Employers register with CIR/UIC. • Info of employees given to Commissioner

before 7th of each month.

UICA (INTEREST, PENALTIES & OFFENCES)• If contributions not paid on prescribed

day, employer must pay interest and a fine of 10% of unpaid amount.

• Costs incurred for collection of contributions remunerated by Commissioner from UIF. (Not > 1½% of all contributions.)

• Guilty of an offence if amount not paid on prescribed day. Also an offence if failing to lodge prescribed documents, give information, attending enquiry or hindering person in carrying out duties.

• Minister Finance may issue regulations.