Understanding UIF in South Africa

Understanding UIF in South Africa

What is UIF in South Africa?

UIF in South Africa

The Unemployment Insurance Fund (UIF) offers workers short-term compensation when they are unemployed or are unable to work due to maternity leave, adoption leave, or sickness. It also provides relief to a deceased contributor’s dependents.

UIF offers short-term financial aid and benefits to any person who is employed (an employee) and makes monthly UIF contributions. The employee has to be working for more than 24 hours a month. It is the employer’s responsibility to register his/her employee(s) with UIF and make monthly contributions as well.

What does UIF stand for

UIF stands for the Unemployment Insurance Fund.

How does the UIF work in South Africa?

The UIF measures an employee’s compensation claim using a specific formula. Prior to being unemployed and using a scale, a claim would depend on its wages, according to the maximum income level.

An employee earning less than the maximum threshold of income is entitled to a percentage of his/her salary (revenue). Employees who earn more than the statutory salary level (minimum wage) are entitled to only one UIF claim per annum.

UIF contributions are divided equally between the employee and employer. The contribution to be deducted from a worker’s pay by employers is 1 percent of the total earnings of the worker, excluding commission. Besides the 1 percent deducted from the worker, the employer also contributes 1 percent to each worker they employ. Therefore, the minimum contribution paid to the UIF is 2 percent. UIF contribution (employee + employer) must be paid monthly based on the amounts contained in the EMP201 (a payment declaration in which the employer declares the total payment together with the allocations for the UIF etc.) and UI-19 form (the declaration of information of commercial employees and workers employed in a private household).

An employee will be able to claim one day’s income for every five days of work, which can build up to a maximum of 365 days over a four-year period of continued employment. In other words, if an employee has contributed to the UIF for a four-year period, he/she is entitled to receive benefits for 365 days.

If the employee has contributed for a shorter period to the UIF he/she will only be entitled to claim one day for every five working days. An employee may claim maternity benefits over a 17.32-week period. An employee may claim benefits only for the period during which he/she is unemployed; however, if an employee receives benefits from the Compensation Fund, receives a pension, or earns income, he/she may not claim UIF benefits. A profit can not be paid to an employee, this is more than his / her regular salary. 

Contributions are made to the South African Revenue Services (SARS) or to the Unemployment Insurance Fund (UIF). The Unemployment Insurance Act and the Unemployment Insurance Contributions Act apply to all employers and workers but not to workers who work less than 24 hours a month for employers, apprentices, public servants, contract workers employees receiving an old-age pension are, since 07/02/2007 no longer excluded from contributing towards UIF; or workers who only earn a commission. Domestic employers and their workers are included under the Act since 1 April 2003.

How to register UIF online?

You can register for UIF online on the Labour Department website.


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