How to avoid UIF Arrears with the Unemployment Insurance Fund?
If you have employees working 24 hours or more in a month, it is your responsibility as employer to register yourself and your employee/s with the UIF in order to avoid UIF arrears at a later stage.
When an employee becomes unemployed or are unable to work due to illness, maternity or adoption leave, they can claim for a few months from the fund, if their previous employer contributed to the fund and if their reason for leaving is not “resigned” or “absconded” and if it is still in the period of months which the Department of Labour has set out for a claim to be submitted after the last working day.
If the employer did not contribute UIF they are facing UIF arrears to be settled. The employee can start their claim but if the employee information has not been updated onto the system, normally the employee will not be able to proceed with the UIF claim.
When the employer update the employee’s information on the main system (this is not U-filing), a letter from the Department of Labour will follow with the outstanding UIF amount due, which will include penalties and interest.
The employer needs to contribute 1% of the employee’s salary and the employee also needs to contribute 1% of their salary. It is the responsibility of the employer to deduct the employee’s contribution and pay it over together with the employer’s contribution to the fund to avoid any UIF arrears. Always aim to be up to date with your payments!
Domestic employers and their workers are included in the Unemployment Insurance Act and Unemployment Insurance Contributions Act since the 1st of April 2003.
These acts apply to all employers and workers, with the exception to the following:
workers working less than 24 hours a month for an employer;
foreigners working on contract;
workers who get a monthly State (old age) pension; or
workers who only earn commission.
If you have a domestic worker working for you from before 1st of April 2003 and you did not pay UIF ever, you are liable to pay UIF from 1 April 2003.
If you as the employer did not pay UIF for a few years, you cannot deduct the 1% employee’s contribution now from the employee’s salary. You will have to pay your 1%, the employee’s 1% plus penalties and interests. Once the backlog has been settled you can now start paying over every month your and your employee’s contributions to the fund.