UIF For Domestic Workers:
Index:
Who is a Domestic Worker?
A Domestic Worker is a person who performs household chores in the home of their employers:
- landscapers,
- drivers,
- house cleaners
- people who take care of children (caretakers), elderly, debilitated, handicapped persons in a private family,
If any Domestic Worker has been working for you for more than 24 hours a month, you have a responsibility to enroll them into a UIF plan – UIF (Unemployment Insurance Fund) will help your domestic worker go through tough times, especially during COVID.
Payroll SA has written you a manual to help Domestic Workers and their employers walk through the ins and outs of the UIF plan that you need to set up.
What is the Unemployment Insurance Fund(UIF)?
The Unemployment Insurance Fund(UIF) offers temporary monetary help to Domestic Workers when they become unemployed or can’t work due to disease, maternity, or allocated leave. The UIF also helps the dependents of a contributing party who has passed on – this will be a great help in ensuring that the changes and the difficult time the family goes through are easier by the removal of financial hardship.
The Unemployment Insurance Act (No 32 of 2003) and the Unemployment Insurance Contributions Act (No. 4 of 2002) apply to all businesses and employees – including low maintenance and full-time Domestic Workers.
As a business, you’re responsible for making sure that all workers are enrolled with the UIF. In the event that your worker has been enrolled and the fees are paid, your worker will greatly benefit from the UIF.
How does UIF Fund Help Domestic Workers?
Workers who are enlisted with the UIF, and have been paid to the fund, can guarantee in the event that they lose their job or can’t work. The fund gives the following advantages:
- Jobless benefits – A worker who added to the fund and whose work has been ended can benefit. The worker can not use this benefit if the worker quits.
- Disease benefits – A worker who cannot work due to illness can benefit for 6 months.
- Death benefits – If a worker on the fund passes on, their dependents can benefit.
- Dependent benefits – A worker on the fund and has children under 2 years old, can benefit in the event that they take extended leave to care for the child.
- Maternity benefits – A worker who’s pregnant can use maternity benefits.
The sum of payment relies on how long you have been adding to the fund. You’ll be paid up to 58% of a day’s pay – on the normal payday while adding to the fund.
Paying month to month commitments:
The employer contributes 1% of the Domestic Workers’ wages to the UIF. The Domestic Worker also contributes 1%. It’s the employer’s obligation to guarantee that these installments are made.
The commitments should be paid before the seventh of each month consistently. Commitments can be paid ahead of time in intervals of 3 months, 6 months, or a year.
In the event that you need to pay the UIF annually, you should send a letter to the UIF giving the UIF your name and employer’s reference number. You’ll need to show that you intend to pay annually. Installment should be made before 7 March each year.
Businesses enrolled for payment purposes should pay their commitment toward the South African Revenue Service (SARS). Those businesses that are not enrolled for payment purposes should pay their commitments to the UIF directly.
If a Domestic Worker works over 24 hours every month, the business is legally obligated to enroll the worker for UIF and make advance or regularly scheduled installments to UIF. These installments are a 1% commitment from the business, in addition to a 1% deducted from the employee’s wages.
Since the Labor Department has not made significant changes, and that Domestic Workers are frequently uninformed of the law, a large number of Domestic Workers have not been enrolled for UIF. This is clearly shown in recent events such as the outbreak of Covid-19, that countless Domestic Workers have lost their jobs because of lockdowns. Having a UIF plan setup for your Domestic Worker would have been highly beneficial during this time. The UIF removes a lot of the stresses that come with difficult times. Financial stress does not need to happen if you plan properly.
It is smart to enroll your Domestic Workers and pay back payments to the UIF for the years that you have not paid the UIF commitments and allowances. As non-installment is an offense, the UIF will require a 10% late fee on these back commitments (which you can work out yourself), and their accounting division will likewise figure a day-by-day measure of revenue owing (which will change as there are variances).
The entirety of your returns can be submitted through uFiling for up to five years. The Act requires an Employer to submit month-to-month returns, you may need to do numerous return entries and installments.
The issue of whether your Domestic Worker qualifies for UIF benefits:
In the event that a Domestic Worker is excused or has passed on or if the business falls, the Worker is qualified. If they choose to leave the position, they are not qualified. If they quit, they likewise don’t qualify.
Bosses may not:
- Deduct more than 1%.
- Deduct exceptional sums when they fall behind with installments.
- May not request a charge deducting the cash.
- If the business/employer deducts extra money, they should repay the additional cash to laborers.
COIDA (Compensation for Occupational Injuries and Disease Act.).
The Constitutional Court as of late affirmed that Domestic Workers need to be covered by COIDA or the Compensation for Occupational Injuries and Disease Act. This implies that they may now benefit from wounds, handicaps or sickness gained while at work – something that beforehand explicitly barred this area.
This implies that all businesses of Domestic Workers (counting landscapers) – regardless of whether low maintenance, part-time or full-time – should enroll themselves and their representatives with the Compensation Commissioner.
What kind of insurance does this coverage offer your worker?
If they become sick or endure a physical injury caused by their work, they will want to be guaranteed pay for transitory or perpetual inability, help with doctor’s visit expenses, orthotic or assistive gadgets, and recovery administrations.
In case of death, their dependents can be guaranteed payment from the fund for memorial service costs and support as a widower/widow’s annuity or singular amount, the child’s benefits, or extra reliance grant to cover guardians, kin, and other relatives who may have been subject to the worker.
By when must I enlist?
- Within 7 days of starting a work contract with another worker
- For existing representatives – at the earliest opportunity. No exacting cut-off time has been set at this point, yet businesses are encouraged to enroll as soon as possible. It appears to be reasonable that punishments for non-enrollment will kick start after March 2022.
- If you neglect to enroll by the cut-off time (whenever it starts), you will expose yourself up to significant punishments and potential cases in the event your employee is harmed while working.
What happens after I have registered?
You will be required to submit an annual Return of Earnings for your domestic worker, confirming their income and other benefits over the past year. This will need to be done between 1 April and 31 May each year.
The Compensation Fund will use this statement of earnings as the basis for its calculation of how much is due as the annual fee. It is calculated based on earnings and the risk profile of the job. At present, domestic workers fall under Class M, sub-class 2500, with a risk assessment rate of 1.04
The levy will be calculated using this formula:
Annual earnings / 100 x the assessed risk rate = annual assessment payable.
For example, for an employee earning R6000 per month – or R72 000 per year – the calculation would be as follows:
R72 000 /100 x 1.04 = R748.80
Once the amount due has been calculated, the Compensation Fund will email you an invoice. This invoice must be settled with 30 days, or interest penalties will kick in.
Here at Payroll SA, we make this entire process easier for you. We will help you to register your Domestic Worker as quickly and efficiently as possible!
If you would like to learn more, you can go ahead and apply here: