UIF Overview Unemployment Insurance fund
Background of the UNEMPLOYMENT INSURANCE ACT, No. 63 of 2001
The purpose of the Unemployment Insurance Fund is to provide short-term relief to workers when they become unemployed or are unable to work due to illness, maternity or adoption leave, and also to provide support to the dependants of a deceased contributor.
Unemployment insurance was introduced into South Africa as far back as 1946. The previous Unemployment Insurance Act, which was replaced on 31st March 2002, was originally promulgated in 1966, and despite many revisions since then, needed a major overhaul to align it with modem practices, and to allow better control of its funds.
The Unemployment Insurance Act was completely rewritten by the Department of Labour and along with the brand new Unemployment Insurance Contributions Bill (written by SARS), was presented to parliament early in 2001.
The Unemployment Insurance Act establishes the fund, defines the basic concept of contributions, and deals in detail with benefits. It also empowers and instructs the UIF commissioner to collect personal details of each and every employee covered by the Act, in order to create and maintain a database of employees.
It refers, in many places, to the Unemployment Insurance Contributions Act for the definition of critical elements such as the remuneration on which the UIF contribution must be calculated.
The Unemployment Insurance Act, No. 63 of 2001 was passed by parliament, and gazetted on 28th January 2002. This Act replaces the 1966 Act in it’s entirety, and became effective on 1st April 2002, and is administered by the Department of Labour. The early implementation of the new Act took everybody by surprise, but the financial pressure from an overdraft which had snowballed into mammoth proportions, left the government with no option but to put the new systems and controls into place as quickly as possible.