INCREASED UIF CONTRIBUTION CEILING FINALLY TAKES EFFECT
After a false start earlier this year, the increase to R17,712 in the Unemployment Insurance Fund (UIF) contribution ceiling has now taken effect.
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In the 2021 Budget Speech, the Minister of Finance announced that the increase would take effect from 1 March 2021. Due to noncompliance with the prescribed procedure, the draft notice confirming the increase was withdrawn two days later. A new notice has now been published confirming the new effective date as 1 June 2021.
UIF contribution ceiling
In terms of the Unemployment Insurance Contributions Act, 2002, both employers and employees must make monthly contributions to the UIF. The contributions must be equal to one percent of the employee’s monthly remuneration. This only applies up to a certain threshold (UIF contribution ceiling), as determined by the Minister of Finance by notice in the Gazette.
The Minister has now announced that the contributions must be determined on so much of an employee’s monthly remuneration as does not exceed R17,712. This is an increase from the previous amount of R14,782. The increase is appropriate as the UIF contribution ceiling now reflects the increase in the UIF benefit ceiling.
What does this mean for employers and employees?
The increased UIF contribution ceiling means that the maximum contributions of employers and employees will increase. Previously, the respective monthly contributions were capped at R147.82. From 1 June 2021, the maximum monthly contributions move up to R177.12.
Employers and payroll administrators should immediately implement the increased UIF contribution ceiling. Failing to do so will result in incorrect UIF contributions for June 2021, unnecessary administrative overhaul, and non-compliance with fiscal obligations.
Due to COVID-19, UIF claims increased owing to “reduced work time” and several South Africans having lost their jobs. This may even continue to increase as the consequences of the pandemic will not necessarily disappear any time soon. The increased UIF contribution ceiling provides relief as it increases the pool from which these claims can be funded.
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