Payroll Concepts > Frequently Asked Questions > How is the UIF cap applied to employees who are not paid monthly?

SimplePay applies the UIF cap to the cumulative earnings of the employee for the month. This means that a non-monthly paid employee will pay UIF of 1% of remuneration for that payslip, provided that the total contributions for the month do not exceed R148.72. An employee could therefore have payslips with zero UIF calculated if their total UIF contributions from prior payslips in the same month reached the cap.

For example:

Suppose that an employee is paid R5 000 weekly and a month has 4 weeks in it. The UIF per payslip will be calculated as follows:

Week Remuneration 1% of Remuneration UIF for the payslip* Cumulative UIF for the month
1 R5 000 R50 R50 R50
2 R5 000 R50 R50 R100
3 R5 000 R50 R48.72 R148.72
4 R5 000 R50 R0 R0
*The UIF for the payslip is 1% of remuneration, provided that the cumulative UIF for the month doesn’t exceed the monthly cap of R148.72

Please Note:

The above approach was implemented in December 2020.

Part of SimplePay’s mission is to keep you compliant with legislation, which outlines the general payroll rules and regulations to follow. SARS and the Department of Labour often supplement these with interpretation notes and examples on how to approach common scenarios. However, it is nearly impossible for them to cater for all possible scenarios that could occur in practice. In these instances, payroll software providers often have to use their discretion when interpreting legislation and choose an approach that best meets the requirements. One of these instances is the application of the monthly UIF cap for employees who are not paid monthly.

Prior to December 2020, SimplePay used a different approach. The monthly UIF cap was divided by the number of pay periods in a month to determine a cap per payslip. The UIF per payslip was calculated as 1% of the remuneration on the payslip, up to a maximum of the cap per payslip.

Using the same example as above, we previously calculated the UIF per payslip as follows:

Week Remuneration 1% of Remuneration UIF for the payslip* Cumulative UIF for the month
1 R5 000 R50 R37.18 R37.18
2 R5 000 R50 R37.18 R74.36
3 R5 000 R50 R37.18 R111.54
4 R5 000 R50 R37.18 R148.72
*The UIF for the payslip was limited to the weekly cap of R37.18 (R148.72 / 4)

As you can see, the total contributions for the month are the same in both instances. However, where employees have fluctuating remuneration, the contributions can differ based on the method. Although the UIF did not have any problem with the initial method that we used, we decided to change our approach as we felt that it would be more accurate to align the UIF contributions for the month with the remuneration earned over the full month, rather than looking at each payslip in isolation.

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