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UIF non-compliance denies workers their benefits

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Picture: Henk Kruger/Cape Argus – An elderly lady reacts moments before SAPS started arresting pensioners for blocking Parliament. Dozens of former railway workers from the Eastern Cape have blocked all the entrances to Parliament, causing havoc with the traffic in the Cape Town CBD. The pensioners were waiting for UIF money they claim is owed to them, to be paid out.

By Tebogo Maruping

The non-compliance to the Unemployment Insurance (UI) Act of 2016 and Unemployment Insurance Contributions Act by employers denies workers – especially those in the vulnerable sectors like domestic, security and minibus taxi drivers – crucial temporary financial benefits when they become unemployed.

This recalcitrant and unpatriotic behaviour also leaves these unemployed workers and their families destitute in the unfortunate circumstance of retrenchment, layoffs or dismissal.

Statistics South Africa’s (StatsSA) latest Quarterly Employment Statistics’ (QES) report that was released recently, showed that South Africa’s formal, non-agricultural industries, shed 119 000 jobs in the second quarter (Q2). This number, down from 10 067 000 in March 2022 to 9 948 000 in June 2022, is led largely by employment losses in the community and business services, as well as the construction industry.

The big questions:

* Are those 119,000 unemployed individuals registered and covered by the Unemployment Insurance Fund (UIF), during such tough and uncertain economic times? 

* Are employers complying with the UIF laws?

The Unemployment Insurance Act of 2016 and Unemployment Insurance Contributions are custodians of the UIF. The Fund, which is an entity of the Department of Employment and Labour (DEL), provides social security to contributors and their beneficiaries in line with section 27 (1) (c) of the Constitution, which states that “everyone has the right to access social security”.

The Unemployment Insurance Amendment Act of 2016 compels all employers to register with the UIF. This registration must be done by employers the moment they hire a person who works more than 24 hours per month. Public officials holding positions in Parliament, Cabinet, provincial executive councils and municipal councillors, are, however, exempt from this law.

Employers must also declare their workers to the Fund and pay their contributions by the 7th day of each month. However, many businesses partially comply or fail completely which is, regretfully, to the detriment of workers and by extension, their families. The non-compliance robs workers of access to the UIF’s Unemployment, Maternity, Illness, Parental, Reduced Work Time, Adoption and Dependants benefits.

Compliance with the UIF legislation enables contributing workers to also participate in the following three labour market interventions: Firstly, the training of the unemployed programme, which aims to provide (former) contributors with training opportunities to enhance their employability and enable their re-integration into the labour market.

The second relates to the labour market interventions intended to provide support to distressed companies that seek to retain their employees. An example is the normal TERS. Under this scheme, the UIF funds 75 percent of an employee’s basic salary up to a maximum amount of R17,712 per month, for a maximum period of twelve months.

Applications and more details about the normal TERS can be accessed from the Commission for Conciliation, Mediation and Arbitration (CCMA).

And lastly we also have the Business Turnaround and Recovery Programme where the UIF, through Productivity South Africa, provides turnaround solutions to companies that are trying to avoid retrenching due to financial distress.

In the recent past, during the Covid-19 pandemic and in the aftermath of the July 2021 business unrests, we introduced unplanned, temporary relief schemes in order to preserve workers’ jobs, incomes and sustain livelihoods.

In response to the two challenges, we introduced the Covid-19TERS and the Workers Affected By the Unrest (WABU). Of course, these are not standard benefits and are only introduced after a rigorous feasibility assessment is done and there are financial resources.

At the inception of Covid-19 TERS in March 2020, the UIF had a condition that only employers that are registered and contribute to the UIF will be considered for the benefit. However, the condition would have unfairly disadvantaged many workers, predominantly vulnerable sectors such as small businesses, domestic, private security and minibus taxis because many of them were not registered with the UIF. This was caused by the employers who negated their fiduciary responsibilities.

Therefore, social partners at the National Economic Development and Labour Council (NEDLAC) decided that Covid-19 TERS should cover all workers provided the employers register or are registered with the UIF. This resulted in many unregistered employers rushing to register with the Fund to access the Covid-19 TERS benefit. This flurry to register by employers with the UIF in turn, and most significantly, saw an exponential growth in the number of registered employees. To date, we have been able to disburse R64 billion to millions of workers through Covid-19 TERS.

And despite improvements in registrations and declarations by employers due to Covid-19 TERS and our proactive efforts, many employees still remain undeclared with the UIF. We know this to be true because some online claims for unemployment benefits are delayed due to non-declarations from employers.

The non-declaration of workers as required by law not only delays claims but it denies workers what it is due to them and their families as there are no financial means to put food on the table or meet their financial obligations.

The Fund has created online systems such as uFiling and EDEC to make it easy for employers to declare their employees. In addition, a digital UI-19 system was created on the Covid-19 TERS portal to allow declarations of workers.

Employers are encouraged to declare foreign nationals on uFiling, as it is the only platform that recognises other forms of identification in addition to the 13 digits by the South African identity documents.

As the Fund, we appeal to all employers to register, contribute and declare their workers. The monthly premium to be paid as a contribution to the UIF is a mere 2 percent of the employee’s salary. The 2 percent consists of the employee’s 1 percent contribution and the employer’s 1 percent. It is the responsibility of the employer to ensure that the UIF receives the combined 2 percent contribution.

As the UIF, we will redouble our efforts in partnership with stakeholders to ensure that all qualifying workers are registered and benefit from the UIF.

Equally, we will not hesitate to rope in our labour inspectors to mete out legal action against repeat offending employers.

The UIF remains in a sound financial position. The Fund’s assets have increased from R115 billion to R124 billion by 31 December 2021, and this should enable us to pay future claims and cover our administrative costs.

Maruping is the UIF Commissioner in South Africa.