Thursday, April 17, 2014

 

Unemployment Insurance Fund (UIF)


For further information on the Unemployment Insurance Fund including Acts & Amendments, Basic Guides & Sample Documents......

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DOMESTICS & UIF

 

 

 

Frequently asked Questions

 

 

Some background on UIF for Domestic Workers

Do I need to have a formal Contract of Employment with my Domestic Workers?

What must be contained in the Domestic Worker contract?

By when do my Domestic Workers need to be registered?

How do I know if I must register my Domestic Workers for UIF?

How do I register my Domestic Workers for UIF?

How do I complete the Registration Forms?

How do I calculate the UIF amount I need to deduct?

How do I pay the money over to the UIF?

Must my Domestic Workers be given a payslip each month/week and if so, what must it contain?

How often must I give my Domestic Workers an increase?

What is the minimum wage that I can pay my Domestic Workers?

Can I deduct anything other than UIF and/or Tax from my Domestic Workers?

What are the working hours applicable to Domestic Workers?

What records must I keep and for how long?

What if my Domestic Worker works for other households?

What happens to the old “Blue Card”?

What happens if I don’t register my Domestic Workers?

What must my Domestic Workers do if they need to claim UIF benefits? When are my Domestic Workers eligible for UIF benefits?

What benefits can my Domestic Workers expect from the UIF?

 What has changed with regards to dismissing a Domestic Worker?

How can I get further information?

 

Some background on UIF for Domestic Workers.

 

Unemployment Insurance Fund (UIF) is a Government managed fund, which provides short-term relief for workers and / or their families if and when these workers become unemployed or unable to work due to illness, injury or death. The fund was initially started in the late 1930’s and during the past 70 odd years has seen many changes and additions being made to its membership reach as well as the rules regarding the benefits it offers to its members. Some of these changes include allowing benefits to be granted to mothers who have adopted children (legally), extending benefits to dependants of contributors, providing benefits to contributors who are ill as opposed to being unemployed, and many others.

 

In 2002 it was announced that the Department of Labour would increase the UIF benefits to include Domestic Workers (which includes gardeners, drivers etc) who work more than 24 hours per month. This means firstly, that all employers (that’s you!) of Domestic Workers (that’s your employee) as well the Domestic Worker themselves, will have to pay 2 percent (1% by you and 1% by your employee) of their wages over to the Department of Labour each month, and secondly, that should these Domestics Workers become unemployed or partially unemployed, they will as from April 2003, be able to claim from the UIF fund as any other unemployed worker currently does.

 

Do I need to have a formal Contract of Employment with my Domestic Worker?

 

No. None of the Labour related Acts make it mandatory that you provide your Domestic Workers with a formal Contract of Employment. It is however advisable to have a formal contract in place but should you decide not to, then you should at least give your Domestic Workers a letter confirming their duties, wage rate, leave rules etc. This letter should at minimum, contain the following information:

 

1.                    The full name and address of employer

2.                    The name and occupation of domestic worker

3.                    Date of employment

4.                    Description of duties

5.                    Place of work

6.                    Hours of work

7.                    Wage

8.                    Method of payment

9.                    Overtime rate

10.                 Deductions to be made from wages

11.                 Leave entitlement

12.                 Regulations regarding termination of employment

 

 

What must be contained in the Domestic Worker’s contract?

 

The Contract of Employment must contain such items as the personal details of your employee (i.e. Name, ID Number, Emergency Contact, Home Address etc). It also needs to contain items such as their basic wage, their working hours, lunch and tea breaks,  overtime rules, “work on weekend” rules and rates as well as all leave rules (i.e. annual leave, sick leave, etc). If your employee, particularly in the case of live-in domestics, is required to pay you for accommodation, lights and water etc, either in cash or as a sacrifice on their wages, then all this detail must be clearly defined in this Employment Contract.

 

By when do my Domestic Workers need to be registered?

 

Domestic Workers must have been registered by 1st of April 2003. Pre-Registrations of Domestic Workers started on the 24th of February this 2003 and live registrations will started on the 20th of March 2003. Contributions to UIF had to commence as from the April 2003.

 

How do I know if I must register my Domestic Workers for UIF?

 

If your Domestic Worker works for you for more than 24 hours in a month then you are obliged to register that Domestic Worker for UIF purposes. This could mean that many employers could end up registering the same Domestic Worker. No problem – the UIF database will know your Domestic Worker by his/her ID Number and as such there will simply be multiple employment records and multiple UIF payments against his/her ID number.

 

How do I register my Domestic Workers for UIF?

 

Firstly you must complete a UI-8D and register as an employer of a Domestic Worker and fax through the form to either of the fax numbers stated on the form. Once you have received your UIF reference number, then register your Domestic Worker by completing the UI-19D and fax it to either of the fax numbers stated on the form.  Should you have any queries, kindly contact the UIF department on (011) 337 1700.

 

Remember: You will need to complete and submit the UI-19D form each time you make a payment to the UIF.

 

The forms are available from the UIF website as well as the Department of Labour website at www.labour.gov.za. 

 

How do I complete the Registration Forms?

 

The items on the UI-8D form are self-explanatory.

 

When filling in line 6 on the form remember that as this is new legislation the date you must fill in will be “1st April 2003” if the Domestic joined you before the 1st April 2003. If the Domestic joined you after the 1st April 2003 then you must put in the Domestic Workers actual joining date.

 

Some offices may provide you with the old employer registration form namely the UI-8 form. If so, the paragraph below offers detail on how to complete this form.

 

On the UI-8D form the following information is required:

 

Ø        Date on which you employed the Domestic Worker. As this is new legislation the date you must fill in will be “1st April 2003” if the Domestic joined you before the 1st April 2003. If the Domestic joined you after the 1st April 2003 then you must put in the Domestic Workers actual joining date.

Ø        “Postal Address” – this is self-explanatory.

Ø        Telephone/Cell Phone Number – this is in case they need to contact you.

Ø        Under “Language Preference” fill what your language preference is when you receive correspondence from the UIF.

Ø        Under “Nature of Business” fill in “Domestic” and under the “Industrial Classification Code” fill in “1000” (this means that he/she is a Domestic Worker).

Ø        Under “Ownership” fill in “Other”.

Ø        Put in your email address if you have one.

Ø        Under “Household Address” – fill in your home address.

Ø        “Magisterial District”  - fill in Johannesburg, Durban, etc .

Ø        Under “Personal Details of Employer” fill in your full names (i.e. not just your initials).

 

On the UI-19D form the following information is required:

 

                Top section (employer details):

 

Ø        Under “UIF Reference Number” fill the number that the UIF have allocated to you as your UIF Reference Number. You won’t know this the first time you submit this form so leave it blank. Once your form has been processed for the first time the UIF computer system will allocate you with a number and this number will be detailed on the very first letter you get from the UIF confirming your registration as an employer. For every other time you submit the form you will need to fill in this UIF Reference Number in the block.

 

The rest of the UI-19D form is self-explanatory

 

Bottom section (employee i.e. Domestic Worker details):

 

Ø        Surnames, initials and ID Numbers for each Domestic Workers must be entered.

Ø        Under “Remuneration” fill in what the Domestic Worker was paid (only by you and not by their other employers) including any payments in kind.

Ø        The bottom of the form explains what is required in the next three blocks.

Ø        “Commencement Date as a Contributor”. Fill in 1st April 2003 for any Domestic Worker who started before 1st April 2003 and the actual start date for any Domestic Worker who started after 1st April 2003.

Ø        If in the future any of your Domestic Workers terminate their employment with you the next two blocks need to be completed.

 

How do I calculate the UIF amount I need to deduct?

 

The calculation of the amount of UIF due is simple. It is 1% of whatever gross wages are due to the Domestic Worker in the period (i.e. either weekly or monthly) and you, as the employer, must also contribute the same amount.

 

For example if you pay your Domestic Worker R 800.00 per month then the UIF contribution will be:

 

1% of the R 800.00 being R 8.00 - which your Domestic Worker is liable for.

1% of the R 800.00 being R 8.00 - which you as the employer are liable for.

Therefore the total amount due to the UIF for that month is R 16.00.

 

Remember that you are only entitled to deduct R 8.00 from your Domestic Workers wages and not the full R 16.00, the other R 8.00 must be paid by you. 

 

How do I pay the money over to the UIF?

 

The total amount that you have deducted from your Domestic Workers together with your portion must be paid over to the UIF by the 7th of the following month. You can pay this amount to the UIF either by sending them a cheque, by direct deposit into their bank account or by Electronic Funds Transfer (EFT). 

 

To deposit such a small amount (i.e. the R 16.00 as mentioned previously) into the UIF bank account every month is ultimately going to become a bit of a hassle for most employers. So, to avoid this frustration the UIF will allow you to pay your UIF contribution to the UIF every three months. They also offer a facility where you can pay the UIF contribution on an annual or six-monthly basis. In all of these cases you have to pay the full amount in advance.

 

So, using the example previously given, you can pay the UIF R 48.00 (i.e. R 16.00 X 3) every three months, which will be the total UIF contribution due for the upcoming three month period. Similarly, you can pay R 192.00 (i.e. R16.00 X 12) in advance.

 

If you opt for any of the advance payments of UIF you are not allowed to deduct the full UIF contribution due by the Domestic Worker for the period (i.e. R 8.00 X 12 in the case of an annual payment) in one lump sum. In short, you can “lend” the Domestic Worker his/her portion for that period and then deduct it monthly as if he/she were paying it normally and obviously keep the contribution as a repayment of the “loan”.  

 

Very Important: When submitting the UIF form to the UIF each month please ensure that you always write your Domestic Workers details on the form. If you don’t, the payment you make may well not be allocated to your Domestic Workers file at the UIF.

 

If you are paying by cheque then firmly attach your cheque to the form and even go to the extra trouble of writing your UIF Reference Number on the back of the cheque. Also, if you are paying by EFT then type in your UIF Reference Number on the Reference Field that most internet banking facilities offer, alternatively if you are making a manual deposit at a bank then write your UIF Reference Number on the actual deposit slip when making the deposit. Why go to all this trouble you may ask - well very simply, you must bear in mind that there are going to be literally hundreds of thousands of people, just like yourself, who will be making UIF payments and submitting forms each month Imagine the chaos if nobody fills in their UIF Reference Number or the Domestic Workers details on the form. If there ever is a query you will want to get it sorted out as quickly as possible.

 

Must my Domestic Workers be given a payslip each month/week and if so, what must it contain?

 

Your employee must receive a written notice (usually called a payslip!), which details all earnings, overtime paid, deductions (such as UIF) and the resultant Net Pay for the period – a period being either weekly or monthly. In other words each time you pay your Domestic Worker.

 

You are required to retain a signed copy of each payslip given to your Domestic Worker for future reference and possible queries from either SARS or the Department of Labour. You may also be required to submit declarations to these bodies from time to time. 

 

How often must I give my Domestic Workers an increase?

 

The new wages table applies from 1 November 2002 and must be increased annually by 8% at least. The Department of Labour is empowered to adjust this percentage on an annual basis should it feel that it is necessary.

 

What is the minimum wage that I can pay my Domestic Workers?

 

With effect from 1 November 2002, an employer must pay a domestic worker in accordance with the following table :

 

Urban Area :

 

More than 27 hours

per week

Less than 27 hours

per week

Hourly Rate

R     4.10

R     4.51

Weekly Rate

R 150.00

R 212.77

Monthly Rate

R 800.00

R 527.67

 

 

Rural Area :

 

More than 27 hours

per week

Less than 27 hours

per week

Hourly Rate

R     3.33

R     3.66

Weekly Rate

R 150.00

R   98.82

Monthly Rate

R 650.00

R 428.22

 

 

Wages must be paid at least monthly or weekly, or by agreement, at the hourly rate.

 

NB: The Department of Labour advises all employers that it is an offence to pay less than the minimum wage and furthermore an employer may not reduce the current wages of Domestic Workers if the Domestic Worker is being paid more than the prescribed minimum wage.

 

 

Can I deduct anything other than UIF and/or Tax from my Domestic Workers?

 

No. The following deductions from an employee’s wages are prohibited: breakages, damages, meals which employer provides, compulsory clothing for the employee and/or work equipment.

 

For live-in Domestic Workers deductions for accommodation may not exceed 10% of the total wages paid.

 

What are the working hours applicable to Domestic Workers?

 

It is important to note that Domestic Workers are allowed to work for a maximum of forty-five ordinary hours per week, being nine hours per day for a five day work week, or eight hours a day over a work week of more than five days. Overtime must be remunerated at a minimum of one and a half times the hourly wage.

 

What records must I keep and for how long?

 

You must keep records of all your Contracts of Employment, any amendments to the contract and of course, the payslips you hand to your Domestic Workers. The new UIF system will keep an ongoing record of all your contributions as well as any contributions made by other employers of your Domestic Workers.

 

It is common business practice to keep employee related records for 10 years. We don’t know at this stage what the legal requirement will be I.R.O. Domestic Workers, but we assume it will be similar. We therefore suggest that to be safe, you should keep everything indefinitely as you never know when you might need it.

 

What if my Domestic Worker works for other households?

 

This is simple – you don’t have to worry about what anyone else pays your Domestic Worker. Your obligation is to deduct and pay UIF in accordance to what you have paid your Domestic Worker only. So once again using the previous example if your Domestic Worker only works for you for half the month then UIF (i.e. the 2%) is only due on the R400.00 wages you pay your Domestic Worker. You will only be liable for UIF on the R400.00 and the other employer will be liable for the 2% of whatever that other employer pays your Domestic Worker.

 

What happens to the old “Blue Card”?

 

For those of you that have never been exposed to UIF and as such not heard of a “Blue Card” we offer a brief introduction as to what it was all about.

 

Until recently every person who was employed with a company had to register for UIF. This was generally done on behalf of the employee by the company that the employee  had been employed by. Once registered the UIF would issue the employee with a Blue Card, which contained information about the employees name, a unique UIF Reference Number and a few other things. This unique UIF Reference Number was allocated to the employee throughout his/her working career (that was the theory!) and was used to keep track of UIF payments made on behalf of that employee from all his/her employers. It also kept records of any benefits claimed from the UIF during the employees working life. This card was usually kept in safekeeping by each employer throughout that employee’s period of employment with the company and only handed back to the employee on termination. On termination of the employee the company would be required to update the Blue Card with the employee’s start and end dates and sign or stamp the card accordingly.

 

When the employee then joined a new company he/she was usually asked to hand over the Blue Card for safekeeping by the new employer. This caused all sorts of problems particularly for individuals who went for long periods of time without employment – cards were destroyed, lost, stolen, forged etc. The whole Blue Card system became rife with fraud and corruption and it was decided that the only way to solve the problem was to introduce an electronic register of UIF members and do away with the old Blue Cards.  

 

As such with the new electronic database created by the UIF there is no further need for the Blue Card to be carried around by employees and employers. When you go through the new registration process, your Domestic Worker will be registered automatically on this new system. That is, once you have completed the registration form and either returned it by fax or online via the UIF website.

 

What happens if I don’t register my Domestic Workers?

 

Firstly, they will never be able to claim UIF benefits and secondly you could be in for a R5000.00 fine or a jail term (not exceeding five years).

 

What must my Domestic Workers do if they need to claim UIF benefits?

 

If your Domestic Workers become unemployed, ill or are due to give birth they must visit their nearest labour centre and take along the following items:

                                Bar coded ID document (and a copy),

Proof of most recent employment – Letter from their Employer or a   Certificate of Service,

                                Copy of last two payslips if monthly paid and last four if weekly paid,

                                A completed application form – available at all labour centre,

                                Copy of form UI-19D: – this is proof of that fact that they and you have

                                contributed to the UIF.

 

Application for maternity benefits must be made at least eight weeks before confinement or within six months of the birth of the child.

                               

When are my Domestic Workers eligible for UIF benefits?

 

Firstly, you must remember that only once your Domestic Worker has been registered with the UIF is he/she eligible to claim UIF benefits – and only from 1 April 2003 will claims be accepted.

 

Secondly, benefits are only paid to the Domestic Worker if they have been unemployed or have been ill for more than 14 days, or are on maternity leave.

 

What benefits can my Domestic Workers expect from the UIF?

 

It is important that you understand that the UIF system of benefits due works on a credit accumulation system. For example if a contributor has worked for four years that contributor would have earned 238 days credit (i.e. 1 day credit for every six days worked). In the case of Domestic Workers it’s exactly the same - they will accumulate credits at a rate of 1 days credit for every six days worked.

 

 

As such, Domestic Workers will only be granted benefits up to the amount of credit days they have accumulated and the Rand value will be based upon their most recent wage rate. 

 

What has changed with regards to dismissing a Domestic Worker?

Nothing, the normal regulations regarding dismissal of an employee/domestic still applies, and the relevant notice periods in terms of the Basic Conditions of Employment and Labour Relations Acts also still apply.

 

For further information regarding dismissal, disciplinary management and other Labour Relations type information visit www.ccma.co.za

 

How can I get further information?

 

Visit the Department of Labour’s website at www.labour.gov.za, alternatively you can go to the UIF website at www.uif.gov.za

 


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Domestic Workers Registration Forms & Sample Documents