In February, the Finance Minister announced a proposed reform that would see the UIF earnings cap reduced to R1000. This essentially means that no matter how much anyone earns, UIF deductions would only be calculated from a maximum amount of R1000.
In other words only 1% of R1000 would be deducted from an individual’s salary – R10! Added to that, should anyone earn below R1000 then only 1% of that pay would be reserved. Whereas currently for a person earning R5000, the UIF deducted would be R50. It is clear to see that this proposed plan would be favourable to every employee and employer. Employers are also required to put up an equivalent UIF amount for each worker, thereby making the overall contribution 2%.
The minister faced opposition and a result this reform has now been postponed to provide time for further public consultation.
A new effective date has not been specified but it is unlikely to be any sooner than a year’s time.
As always, please contact us if you have any questions.