How to Calculate UIF Deductions In South Africa

By Felix G •  Updated: 11/08/22 •  4 min read
UIF

For most working and job-seeking South Africans, the Unemployment Insurance Fund (UIF in short) is excellent insurance against the biting realities that loss of employment can entail. 

During the COVID-era lockdowns, the UIF effectively served as a relief for employers whose businesses had struggled badly and employees whose pay had become vulnerable. 

- ADVERTISEMENT -

The UIF was described as a source of solace. With the continuously changing nature of the workplace and economic challenges, it is crucial for everyone to understand the UIF scheme. For that reason, we have decided to put together a comprehensive discussion on an issue central to the scheme: deductions. 

In this article, we will walk you through the process of calculating UIF deductions.

How to calculate UIF deductions

By virtue of its design, the Unemployment Insurance Fund relies on contributions made by employees. However, these contributions are paid out by employers on behalf of employees to the South Africa Revenue Service (SARS). 

According to the formula contained in the Unemployment Insurance Contributions Act of 2002, these contributions are made as deductions of 2% from wages payable to the employee. These deductions are comprised of equal contributions by the employee and the employer, 1% each, amounting to a total of 2%. 

For instance, if you earn 10,000 South Africa Rand, you will have to make a contribution of 100 South African Rand. Your employer will also make a contribution of 100 South Africa Rand. Consequently, a total of 200 South Africa Rand will be deducted by your employer at source for onward submission to SARS. 

Deductions are made by employers and remitted to SARS monthly. However, the total deductible amounts are subject to caps determined by SARS. Currently, employees who earn more than 17700 South Africa Rand pay no more than 177.12 South Africa Rand.

How to calculate UIF from gross salary

UIF contributions are deducted from an employee’s gross salary at a fixed rate of 2%, which is split evenly between the employee and employer. If you are an employee whose monthly gross income totals 15,000 South African Rand, your contribution is calculated at 1% of the earned income. 

Also, your employer is expected to contribute an additional 1%. In that case, the deductible amount will be as follows:

Employer Contribution @ 1% of R15000 = R150

Employee Contribution = R150 x 1% of R15000

- ADVERTISEMENT -

A total contribution of 300 South Africa Rand will be paid to the South Africa Revenue Service (SARS) or the Unemployment Insurance Fund (UIF) by your employer at the end of the month for which the deduction has occurred. 

It is useful to bear in mind that employees whose gross monthly earnings exceed a benchmark set by UIF will have their contributions capped at a certain amount. For employees whose earnings exceed the UIF’s benchmark have their deductions fixed at a specific amount.

How to calculate UIF on weekly wages

Weekly wages are subject to the same calculations as monthly wages. Accordingly, they are subject to the mandatory 2% contribution split evenly by the employee and employer. Nonetheless, it is useful to note that UIF calculations are made at the time of payment.

How is UIF deduction calculated

According to the Unemployment Insurance Contributions Act of 2002, UIF deductions are calculated as 1% of an income payable to an employee and 1% of income payable by an employer. 

In other words, contributions from an employer and an employee are required to add up to 2%.

Is UIF calculated on gross or basic salary?

UIF deductions are calculated on gross salary. In other words, the UIF deductions apply to the initial amount received from your employee without the deductions. 

The basic salary, also known as net salary, is what remains after all deductions, including UIF contributions, have been made from your salary.

Frequently Asked Questions

Who makes UIF payments?

Employers are responsible for deducting UIF contributions from the gross salary of employees using the 2% formula. 

Employers must pay these contributions to SARS or UIF within seven days of the end of the month in which the deduction was made.

Is the UIF contribution compulsory?

As an employer of labour or an employee in South Africa, you are required to make contributions to the UIF. 

Such payments are made using channels designated by SARS or UIF. However, certain classes of employees may be excluded from making UIF contributions. 

Excluded classes of employees include learners, public servants, foreigners employed on a contractual basis, workers who work less than 24 hours a month, workers who earn only commissions, etc.

- ADVERTISEMENT -

Keep Reading

How Much Does UIF Pay Per Month?

How Much Does UIF Pay Per Month?

How to Check If UIF Funds Are Processed

How to Check If UIF Funds Are Processed

Join us as we delve into the intricacies of UIF fund processing and unravel the information you need to navigate this important aspect of financial support.

UIF Toll-Free Number

UIF Toll-Free Number

In this blog post, we will look at the UIF toll-free number, the UIF WhatsApp number, the possibility of making claims via phone call, and many more.

How to Register a Foreign Worker for UIF

How to Register a Foreign Worker for UIF

We will review everything required to help foreign workers register for the UIF successfully, from determining eligibility to assembling the relevant paperwork.

How to Claim UIF For Maternity Leave

How to Claim UIF For Maternity Leave

How to Claim UIF For Maternity Leave. In this article, we will streamline our information and relate it to the issues of claiming UIF for maternity leave.

What Happens to UIF When You Resign?

What Happens to UIF When You Resign?

Today, we take a look at this sticky circumstance, and everything you need to know about the UIF and resignation.

How Much Does UIF Pay For Paternity Leave?

How Much Does UIF Pay For Paternity Leave?

Payment for UIF paternity claims differs from other benefits you can get from the fund. Keep on reading to learn how much UIF pays for paternity leave

How to Retrieve SARS eFiling Login Details

How to Retrieve SARS eFiling Login Details

If you’ve already registered for eFiling but forgot your login credentials, you can retrieve them fairly easily

How to Apply For UIF Letter Of Good Standing

How to Apply For UIF Letter Of Good Standing

This article adds to that mandate by explaining the ins and outs of applying for a UIF letter of good standing.

Are UIF TERS Payments Taxable?

Are UIF TERS Payments Taxable?

UIF Calculator For Death Benefits

UIF Calculator For Death Benefits

Calculating the amount due from a UIF death benefit can be tricky, as the department uses a variety of criteria to assess the amount due

What Are the Benefits of UIF to the Employer?

What Are the Benefits of UIF to the Employer?

It’s important for both employees and employers to understand the responsibilities regarding UIF, so we’ve compiled a handy document to help.

How to Calculate UIF Contribution On Salary

How to Calculate UIF Contribution On Salary

 What is UIF, and what is the purpose of the contribution? How can I calculate my UIF contribution from my salary? 

How to Cancel UIF And Get R350 Approval

How to Cancel UIF And Get R350 Approval

Many applicants for the R350 SRD grant have found that their application had been declined due to a 'UIF Registered' decline status. 

How to Claim Paternity Leave from UIF South Africa 

How to Claim Paternity Leave from UIF South Africa 

Following these steps, you can confidently navigate the UIF paternity leave claim process and enjoy precious moments with your newborn child.