Unemployment Insurance Act 63 of 2001

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Unemployment Insurance - Act 63 of 2001

• Presentation DEAN PADAYACHEE

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1. Purpose of Act

• To establish an unemployment insurance fund to
  which -
• - employers and employees contribute
  and
• - from which employees who become unemployed
  or
• their beneficiaries as the case may be
• - are entitled to benefits
• - to alleviate harmful economic and social
  effects of unemployment

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2. Application of Act

• Act applies to all employers and employees,
  except -
• - employees employed for less than 24 hours
  a month.
• - employees who receive remuneration under
  registered learnership agreements.
• - employers and employees in National and
  Provincial Government.
• - foreigners who enter RSA for specific
  contract and leave after completion of
• contract.
• - Act will only apply to Domestic and
  Seasonal Workers and their employers 12
• months after Act takes effect.

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3. Right to benefits.

• Contributor or dependant entitled to -
• - Unemployment benefits
• - Illness benefits
• - Maternity benefits
• - Adoption benefits
• - Dependants benefits

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4. Scale of benefits

• Scale of benefits range from 38 to 60
• 4.1 Calculation of benefits.
• For purpose of calculating benefits -
  daily income will be used
• If paid -
• monthly multiply monthly remuneration by
  12 divide by 365
• weekly multiply weekly remuneration by
  52 divide by 365
• 2- weekly divide 2- weekly remuneration
  by 2 multiply by 52 divide by 365
• e.g. Contributor earns R8,000-00 per
  month.
• - R8,000-00 X 12 divide by 365 R263-01
  per day

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• contributor earns R2.000-00 per week
• - R2,000-00 X 52 divide by 365 R284-93
  per day.
• 4.2 Income replacement rate (IRR)
• IRR is a sliding scale (38 - 60)
• - decreases with increase in income
  
• - increases with decrease in
  income
• Formula to calculate daily income
  -
• IRR 29.2 (3280.2 / (106.5 Daily
  Income))

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• e.g.
• Contributor earns R263.01 per day
• 29.2 (3280.2 / (106.5
  R263-01))
• 29.2 (3280.2 / 369.51)
• 29.2 8.88
• 38.08

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• 4.3 Benefit
• Contributor who earns R8,000.00 per month
  (R263.01 per day)
• - 38.08 divided by 100 X R263.01
• R100.15 per day benefit
• 4.4 Credits
• Every six days worked one day
  credit.
• . Total number days worked divided by 6
  credits (discard fractions)
• e.g.
• 365 days worked 365 divided by 6 60
  days credit.

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• 4.4.1 Accumulation of credits.
• Contributor can only accumulate a
  maximum of 238 days credit in any four
  year
• period.
• e.g.
• Contributor applies for benefits
• - From date of application go back 4
  years.
• - In the 4 year period -
• - calculate number of days credits
  (period employed)
• - minus (deduct) any days benefits
  paid from the credits.
• - balance of credits (maximum 238
  days) will be payable to contributor
• from date of application provided
  all qualifying criteria are met and
• contributor remains
  unemployed.

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• 4.5 Contributor earning above ceiling.
• Flat benefit ceiling X minimum IRR
  (38)
• - Present ceiling R8,099-00 per month,
  R1,869-00 per week, R97,188-00
• per annum.
• - Contributions will also be paid on
  ceiling amount.
• 4.6 Fluctuating salary
• average remuneration over last six
  months
• e.g.
• Total salary over six months divided by 6
  average salary.

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• 4.7 Definition of remuneration.
• Contributions Act. (chapter 1, section
  1.)
• Defined in par. 1 of the fourth schedule
  to Income Tax Act.
• Examples included
• - Salary
• - Overtime
• - fees
• - bonus
• - allowances
• - wages
• - stipend
• - voluntary awards
• - fringe benefits, etc. (many
  more)

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• Examples excluded
• - Commission
• - Annuity
• - Gratuity
• - Pension
• - Retrenchment
• - Lump sum payments, etc.

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5. Contributor not entitled to
benefits.

• Contributor is not entitled to benefits when
  -
• - receiving monthly pension or disability
  grant from State
• - receiving payment from Compensation
  Commissioner - total or temporary
  disablement
• - receiving benefits from unemployment
  scheme - Labour Relations Act.
• - fails to comply with provisions of this
  Act.
• - suspended from receiving benefits -
  penalty work and draw, etc.

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• 6. Right to unemployment benefits.
• 6.1 Qualifying criteria
• - Contributor is unemployed for more than
  14 days.
• - Employer terminated contributors contract
  of employment.
• - Ending of a fixed term contract.
• - Dismissal of contributor - section 186 of
  Labour Relations Act.
• - Services ended as a result of employers
  insolvency.
• - Contributor is registered as a workseeker
  - Skills Development Act.
• - Contributor is capable and available for
  work.
• - Application is made within 6 months of
  the termination of contract - Commissioner
  
• may accept late application if good cause
  is shown.
• - Application is made on prescribed form at
  employment office in person.

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• 6.2 Contributor not entitled to benefits
• - Fails to report at dates, times and
  place determined by claims officer
• - Refuses without just reason to undergo
  training or vocational counselling.
• - Resigns from employment unless
  initiated by the employer.
• 6.3 Payment of unemployment benefits.
• - Pay benefits where applied or any other
  place determined by the applicant.
• - If contributor refuses to accept
  available work or undergo appropriate
  training
• or vocational counselling, claims
  officer may impose penalty of 13 weeks
• during which no benefits will be
  paid.

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• 7. Right to illness benefits
• 7.1 Qualifying criteria
• - Contributor is unable to perform work
  due to illness I.e. contributor must have
• been in employment when he/she became
  ill.
• - Application is made within 6 months
  from date on which contributor ceased to
• work due to illness - Commissioner may
  accept late application if good cause
• is shown.
• - Application is made on prescribed form
  at an employment office - if
• too ill claims officer can nominate
  person to complete form.

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• 7.2 Contributor not entitled to benefits.
• - If contributor has not exhausted all
  benefits claimable I.t.o.
• - Basic Conditions of Employment Act.
• - Any collective agreement
• - Any contract of employment
• - If contributor is entitled to
  unemployment benefits.
• - If without good reason refuses to
  undergo medical treatment or carry out
  instructions of medical practitioner.
• - If the period of illness is less than
  14 days.

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• 7.3 Payment of illness benefits
• - Calculation if receiving reduced salary
  from employer
• e.g.
• If person normally receives R10,000-00 per
  month -
• - would have received maximum benefit of
  R101-18 per day.
• (calculate daily rate and IRR)
• If the contributor is in receipt of any
  renumeration from the employer during any
  periods on sick leave the Unemployment Benefits
  will be paid according to the benefits as
  prescribed in schedule 3 of the Act.
• In the event of the renumeration and the
  prescribed benefits exceeding the contributors
  normal renumeration then the UIF Benefits will
  be reduced accordingly.
• (Payment must not be more than what person would
  have
• received if they had been employed)
• - Pay benefits where applied or any other
  place determined by claims officer.

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• 8. Right to Maternity benefits.
• 8.1 Qualifying criteria.
• - Contributor must be pregnant.
• - Application is lodged at least 8 weeks
  before date of confinement or within 6
  months after date of birth at
• employment office on prescribed form.
• - Commissioner may accept late
  application if good cause is shown.
• - Contributor must have credits (credits
  will not be used for maternity benefits.)

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• 8.2 Payment of maternity benefits.
• - Calculation if receiving reduced salary
  from employer - same as illness benefits.
• - Maximum period for which maternity
  benefits can be paid is 17.32 weeks 121 days.
• - If applicant has miscarriage (stillborn)
  benefits can be paid for six weeks after
  miscarriage. (7 9 months period)
• - Pay benefits where applied or any other
  place determined by claims officer.

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• 9. Right to Adoption Benefits
• 9.1 Qualifying criteria.
• - Only one contributor to adopting party
  can apply for benefits.
• - Period applicant was not working spent
  caring for child.
• - Child has been adopted I.t.o. Child
  Care Act.
• - Adopted child is under 2 years old.
• - Application for adoption must be made
  on prescribed form at employment office within
  6 months from date of the order of adoption -
  Commissioner may
• accept late application if good cause is shown.
  
• 9.2 Payment of adoption benefits.
• - calculation if receiving reduced salary
  - same as illness benefits.
• - Pay benefits where applied or any other
  place determined by claims officer.

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• 10 Right to Dependants benefits.
• 10.1 Qualifying criteria
• - Surviving spouse or life partner can
  apply for benefits.
• - application must be made in person on
  the prescribed form at the employment office
  within 6 months of the date of death of the
  deceased contributor
• - Commissioner may accept a late
  application if good cause is shown.
• - If no surviving spouse/life partner a
  dependant child must apply within 14 days
  after 6 month period
• - Commissioner may accept late
  application.
• - Child means any person under 21 years
  and includes any person
• under 25 years who is a learner and who was
  wholly or mainly dependant on the deceased

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• 10.2 Payment of dependants benefits.
• - Benefit payable to the dependant is the
  unemployment benefit that would have been
  payable if the contributor had been alive.
  
• - If more than one spouse/life partner
  benefit is shared.
• - If more than one child (no surviving
  spouse/life partner) benefit is shared.
• - Claims officer must stipulate how the
  benefits are to be paid.
• - Overpayments to be recovered (if any)
  from benefits.
• - Pay benefits where applied or any other
  place determined by claims officer.

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• 11. Suspension of contributors right to benefits.
• The Commissioner may suspend any
  contributor for a period of up to five years
• if the contributor -
• - made a false statement in an
  application for benefits
• - submitted a fraudulent application
• - works and draws benefits.
• - fails to pay any amount overpaid.
• 12. Disputes relating to payment or non-payment
  of benefits.
• An appeal against the decision of the
  Commissioner or a claims officer must be
• made as follows by a contributor -
• - appeal must be handed to the Appeals
  Committee in writing (by hand or
• registered post) within 90 days.
• - Appeals Committee must advise appellant
  within 30 days of its decision.
• - If still not satisfied appellant can
  refer matter to CCMA for arbitration.

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• 13. Enforcement.
• 13.1 Securing undertakings.
• - Labour Inspector to secure written
  undertaking from employer to comply with
• provisions of law.
• 13.2 Compliance Order.
• Labour Inspector to issue compliance
  order if an employer -
• - does not comply with written
  undertaking.
• - does not comply with any provision of
  this Act.
• - fails to pay contributions.
• - fails to take any steps required to
  be taken.
• Labour Inspector must deliver copy of
  compliance order to employer
• - employer must comply with order
  within period stated
• - if employer fails to comply
  application to be made to Labour Court to make
• compliance order, order of court.
• 13.3 Objections to compliance order.
• Employer may object to compliance order
  to Director General.

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• 14. Information to be supplied by employer.
• Every employer must provide the
  Commissioner with the following information
  irrespective of the earnings of the employees
• - Street address of business and any
  branches.
• - If employer outside RSA, particulars of
  authorised person in RSA.
• - The names, ID numbers and monthly
  remuneration of each of its employees and
• address where each of the employees are
  employed.
• Employers must ensure that all
  information and statements supplied are correct.

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• 15. Unemployment Insurance Board.
• The Minister must establish the UI Board
• 15.1 Composition of Board.
• - Chairperson - deliberative and casting
  vote.
• - 12 voting members
• - Commissioner who has a vote.
• - Nedlac nominates 9 members
• - 3 represent organized labour
• - 3 represent organised business.
• - 3 represent community and
  development interests.
• - The Minister appoints 3 members to
  represent interest of state.

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• 15.2 Powers and duties of Board.
• Board must advise Minister on -
• - Unemployment Insurance policy.
• - Policies arising out of application of
  Act.
• - Make recommendations on changes to
  legislation.
• - Minister can request Board to perform
  any other function to give effect to the
• Act.
• 16. Creation and Maintenance of Database
• Commissioner must create and maintain a
  database of contributors, beneficiaries and
  employers
• - Payment of any benefit must be based on
  information contained in database.
• - Commissioner may access any information
  on a database of the State that
• contains information regarding social
  security.

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• 17. Regulations.
• 17.1 Proof of identity.
• Applicant must produce proof of identity
  when applying for and receiving benefits.
• 17.2 Identity document.
• means a 13-digit bar-coded RSA identity
  document or a Bar coded RSA passport
• 17.3 Certificate of service.
• means a certificate of service in terms
  of section 42 of the Basic Conditions of
• Employment Act, (Act 75 of 1997)
• 17.4 Claiming Benefits.
• When claiming for benefits the
  following documents must be produced -
• - an identify document
• - a certificate of service
• - details of a valid bank account.
  (Presently not necessary for unemployment
• benefits.)
• - six payslips (minimum of two plus
  certificate of service)

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• The following additional documentation is
  required for the following benefits
• - Illness benefits
• - medical certificate
• - declaration covering each period
  benefits are claimed
• - Maternity benefits
• - medical certificate (medical
  practitioner /midwife)
• - If applying before birth a
  declaration of expected birth date.
• - Adoption benefits
• - certified copy of birth
  certificate of child
• - certified copy of order of
  adoption.

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• - Dependants benefits
• - Both identity documents of
  deceased and applicant 13 digit bar coded
  RSA ID or passport.
• - certified copy of death
  certificate, postmortem certificate or
  burial order of deceased.
• - Life partner - proof that
  applicant is surviving life partner.
• - child under 21 - certified copy
  of birth certificate and documentary
  proof of relationship to deceased.
• - child under 25 - certified copy
  of birth certificate, proof of
  relationship to deceased, proof that person is a
  learner and proof that person was wholly
  or
• mainly dependant on deceased.

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• 18. Unemployment Contributions Act.
• 18.1 Payment of contributions to
  Commissioner.
• Every employer who is required to
  register as an employer in terms of the
  Fourth Schedule of the Income Tax Act must -
  
• - on a monthly basis pay contributions
  for all employees to SARS by the 7th
• of each month I.r.o. the previous
  months contributions.
• 18.2 Payment of contributions to Unemployment
  Insurance Commissioner
• All employers who are not required to register
  in terms of Income Tax Act and are
• not liable for payment of the Skills
  Development Act levy must pay monthly
• contributions to the Unemployment Insurance
  Commissioner.

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• 18.3 Duty to register as employer and duty to
  provide particulars.
• - All employers to register as employers
  with the Unemployment
  Insurance Commissioner whether they pay
  contributions to SARS or UI
• Commissioner.
• - All employers to provide the
  following information to the UI
  Commissioner I.r.o. each employee.
• - date of employment.
• - date of termination
• - any other information required by
  regulation.