UIF crackdown on companies in South Africa
As South Africa’s unemployment rate continues to tick higher, the Unemployment Insurance Fund (UIF) is looking to crack down on non-compliant companies.
UIF commissioner Teboho Maruping told Newzroom Afrika that the fund is continuing to visit companies that have registered and deducted contributions but not paid to the fund.
The UIF is designed to give short-term financial relief to workers when they become unemployed or are unable to work because of maternity, adoption and parental leave, or illness. It also provides relief to the dependants of a deceased contributor.
Legislation outlines that an employer must pay the UIF for an employee who works more than 27 hours a month.
Employers must register as a contributor to UIF and register all employees as beneficiaries. Upon registration, the employer will receive a contributor number and must use it when paying the contributions.
Maruping said that the UIF will continue to penalise employers who fail to meet these requirements.
According to the commissioner, in the past month, over R100 million has been recovered from various companies that have not been contributing to the fund.
The fund currently has over 2.4 million employers registered, accounting for 4.6 million employees.
With runaway unemployment in the country, Maruping said that it is crucial to crack the whip on non-compliant employers who have either not registered or not paid their beneficiaries’ (employees’) share.
Between April and June 2024, an estimated 158,000 people lost their jobs, bringing the number of unemployed (according to the official unemployment rate) to 8.4 million – or 33.5%.
The expanded unemployment rate, which includes those who have given up on finding work or dropped off the grid, is now 42.6%.
“Looking at just July, we received between 80,000 and 100,000 applications in one month alone,” which they said they have paid around R1.4 billion for.
Maruping said that while the UIF “has the funds for the people that are contributing,” it will likely not be able to stomach the increasing dependents as a result of South Africa’s worsening unemployment.
Invictus Capital Management said, “ensuring compliance with UIF regulations is crucial for South African businesses, not only as a legal requirement but also to safeguard employees’ well-being.”
“Failure to meet UIF obligations can lead to penalties, legal repercussions, and company reputation damage,” added the group.
They added that not paying can lead to personal liability, a 10% penalty, and interest, as determined by the finance committee.
While the UIF has said that it can fund its paying beneficiaries, many beg to differ.
One person who has been unsuccessfully trying to claim told BusinessTech that “you are at your most vulnerable when you lose your job and need money urgently – [we] have paid UIF and are entitled to the money [but] I’ve been trying since last September to claim [but to no success].”
This is just one of numerous UIF woe stories, which has also seen its fair share of allegations of corruption.
In hopes of improving efficiencies, the Department of Employment and Labour recently announced that it is unbundling the UIF and the Compensation Fund (CF) to make the two entities independent of the department.
Minister Nomakhosazana Meth said this was to ensure that the UIF and CF were stabilised, modernised and repurposed.
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