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South Africa: FAQs clarify unemployment insurance issues (COVID-19)

South Africa: FAQs on unemployment insurance issues

South Africa’s unemployment insurance fund (UIF) on 29 April 2020 issued a set of new “frequently asked questions” (FAQs) with regard to relief measures provided in response to the coronavirus (COVD-19) pandemic.

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The FAQs were issued following two directives that aimed to implement the UIF C19-TERS programme. To address some initial confusion about the programme, the UIF issued the new FAQ publication to answer some questions for employers wishing to claim from the UIF.


Clarifications provided by FAQs

Since the COVID-19 pandemic, the UIF landscape has been “very fluid.” The FAQs provide:

  • The employer does not require a dedicated bank account for sole use of the management of UIF benefits received from the UIF, but must be in a position to track the payments and report to the UIF on these if requested. 
  • The employer must register and apply online; email applications will no longer be accepted.
  • UIF benefits will be paid to all qualifying employees, ranging from the minimum amount of R3,500, to the maximum amount of R6,638.40 per month.
  • To the extent that the employer continues to pay a portion of the employee’s remuneration, the calculated UIF benefit entitlement will only be further limited to the extent that the total payment would exceed the employee’s normal remuneration prior to lockdown.
    • Example 1: When the employee’s monthly salary was R20,000, and the employer paid the employee an amount of R10,000, the UIF would pay R6,638.40 for the month of April. [R17,712 x 12/365 = R 582.31 x 38% = R221,28 per day x 30 days] The employee would receive a combined total payment of R16,638.40
    • Example 2:  When the employee’s monthly salary was R20,000, and the employer paid the employee an amount of R15,000. The UIF calculated benefit would again be R6,638.40. [R17,712 x 12/365 = R 582.31 x 38% = R221.28 per day x 30 days] As the UIF benefit and the amount from the employer cannot exceed the employee’s normal remuneration value, the UIF benefit would be limited to R5,000 in this example.


KPMG observation

There has been some confusion in relation to the situation when employers continue to pay a portion of their employee’s remuneration. Employers have reported that the UIF claims have been significantly limited and that the above examples have not been their experience. Employers are now able to access the UIF benefit calculations applied to their claims, and need to determine that the correct method has been applied. If this is not the case, employers need to consider approaching the UIF for clarification.


Read an April 2020 report [PDF 123 KB] prepared by the KPMG member firm in South Africa

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