The short answer
You can pay arrears to the UIF for the years you did not contribute.
The whole question
My domestic worker is 66 and has worked for us for 13 years. Unfortunately, she has been drunk at work a few times and agreed to leave as I have three children at home while I work. I never paid UIF as I assumed she would draw a state pension and wouldn't be able to claim both. Now, she wants to claim UIF and I'm not sure what to do.
The long answer
There are three issues here:
Unless a domestic worker works less than 24 hours a month, the employer is legally obliged to register the worker for UIF and make monthly payments to UIF, or yearly, by arrangement. These payments are a 1% contribution from the employer plus a 1% deduction from the employee’s wages.
Because the Labour Department’s communications have been minimal at best and because employers of domestic workers are often ignorant of the law, a great many domestic workers have not been registered for UIF. This has only become apparent now in this time of Covid-19 because so many domestic workers have lost their jobs due to lockdown.
It is possible to register your domestic worker and pay arrears to the UIF for the years that you have not paid over the UIF contributions and deductions. But as non-payment is an offence, the UIF will levy a 10% penalty on these back contributions (which you can work out yourself), and their finance department will also calculate a daily amount of interest owing (which will vary as there are fluctuations).
The process of back paying the UIF contributions, according to a company called Payroll4SA, is:
Register yourself and your employee for UIF
Get a UIF reference number
Submit the information to the UIF for the periods you did not submit or pay UIF (only one form per year is needed for backlog periods; thereafter, you need to submit a form every month).
Only after you have submitted the salary information for the backlog periods can the finance department of the UIF calculate what the amount for interest will be.
There are a number of companies who assist employers with UIF registration and it can also be done free through the UIF online at uFiling. This is what UIF says about uFiling:
“To register your Domestic uFiling account you need to have the following documents and information available:
The Domestic employers valid 13 Digit South African ID.
Your e-mail address where all correspondence will be emailed.
If a practitioner is registering a domestic employer, the domestic employers details are required.
Your banking details and valid branch code that you will nominate to be used to securely pay your UIF contributions.
The employees valid 13 Digit South African ID number.
The employee's employment details.
All of your outstanding returns can be submitted via uFiling for the past five years. The Act requires an Employer to submit monthly returns, you may have to do multiple return submissions and payments.
uFiling does not allow for the payment of penalties and Interest. Please contact the UIF directly to obtain the correct amounts for penalties and Interest. The UIF will then provide you with the correct reference numbers and account number to use when paying penalties and Interest.”
The issue of whether your domestic worker is eligible for UIF:
If a domestic worker is dismissed or retrenched, or if the employer dies, the worker is eligible. But, if she resigns, she is not eligible. If she agrees to the termination of her work – i.e., if the termination was not involuntary – she also does not qualify.
Whether she could claim UIF and SASSA pension:
She could certainly claim UIF and apply for a SASSA pension at the same time, but as the old-age pension is a means-tested grant, the UIF money would be taken as income, thus decreasing the amount of pension money. For this reason, it is generally better to claim any UIF benefits due before applying for the state pension.
Answered on Nov. 24, 2020, 11:30 a.m.
Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.