UIF Overview of The Unemployment Insurance Contributions Act
The Unemployment Insurance Contributions Act, No. 4 of 2092, provides for the imposition and collection of UIF contributions, and its administration is the responsibility of SARS. This Act was gazetted on 28th March 2002, a few days before the implementation date of 1st April 2002.
For the sake of brevity, this document will refer to:
• The Unemployment Insurance Act, No. 63 of 2001 as the 'Main Act9,
• The Unemployment Insurance Contributions Act, No. 4 of 2002 as the 'Contributions Act'.
Definition of an Employer
An employer is defined in exactly the same way as in the Fourth Schedule to the Income Tax Act, and includes a representative employer. That definition is effectively "any person who pays remuneration to any other person ".
Definition of an Employee
The main UIF Act defines an employee as"... any natural person who receives remuneration, or to whom remuneration accrues, in respect of services rendered or to be rendered by that person, but excludes an independent contractor.
You will notice that the above definition applies to everybody who is a worker in South Africa and receives remuneration, whether resident or non-resident, citizen or non citizen.
The first exclusion from the above definition are non-natural persons, or all corporate entities. In practice, this means that incorporated labour brokers, personal service companies and personal service trusts, although classified as employees in terms of the Income Tax Act, are not employees for unemployment insurance purposes.
The second exclusion from the above definition are independent contractors, who are not defined in the main UIF Act. One has to use the common law (or common sense) interpretation to decide whether the person is independent, or an employee. Because UIF falls under the Department of Labour, it is safe to use exactly the considerations that we discussed when looking at independent contractors in terms of the BCEA.
It is important to note that persons who are not independent (ie. 'deemed' employees in terms of the definition in the Income Tax Act), could well be independent (ie. Not employees) in terms of labour law, and thus excluded from unemployment insurance.
This means that the person can be on the payroll as an employee for PAYE purposes, but must be excluded from the UIF legislation completely because in practical terms, he is a 'labour law' independent contractor.
Domestic workers are defined as 'an employee who performs domestic work in the home of his or her employer, and includes a:
• Person employed by a household as a driver of a motor vehicle
• Person who takes care of any person in that home but does not include a farm worker.
'Seasonal worker' means any person who is employed by an employer for an aggregate period of at least three months over a 12 month period with the same employer, and whose work is interrupted by reason of a seasonal variation in the availability of work.