The Unemployment Insurance Act (No 63 of 2001) and Unemployment Insurance Contributions Act apply to all employers and employees, but not to –

• Employees working less than 24 hours a month for an employer
• Learners
• Public servants
• Foreigners working on contract
• Employees who get a monthly old age grant or
• Employees who only earn commission or do piece work

Example:

Zama cuts patterns for dresses. He pays Trevor to sew the pieces together. Trevor works from his house. Trevor is not employed by Zama and Zama cannot deduct deduct tax or UIF from the money he pays Trevor.

Domestic employers and their employees have been included under the Act since 1 April 2003.

A working member of a close corporation or working director of a company must now pay UIF. All employees who earn above an amount of R14 872 per month (or R178 464 per year) have to pay 1% of their earnings to UIF, but only up to this ceiling amount. For example, if Fred earns R16 000 per month, he will have to pay 1% of R14 872 and not 1% of R16 000. If Fred wants to claim UIF in the future he will only be paid a percentage of R14 872 and not a percentage of his salary.

The employer cannot claim money from the UIF if the business fails and has to close down.