The short answer
Domestic workers are eligible for UIF and state pension.
The whole question
Our domestic worker has resigned after nine-and-a-half-years' full-time work. She is 65 and has arthritis and diabetes. We haven't been contributing to her UIF because we thought she would get a state pension and couldn't get both. What do we do? Should we backpay her UIF and give her severance pay? Are we responsible for her pension? We want to do right by her.
The long answer
There are a number of issues here. Let’s take the UIF deduction issue first:
As an employer, you are actually legally obliged to register your full-time domestic worker for UIF if she works more than 24 hours a month, and make monthly or yearly payments to UIF by arrangement, which are a 1% contribution from the employer plus a 1% deduction from the employee’s wages.
It would be possible to register her and pay arrears to the UIF for the years that you had not paid over the UIF contributions and deductions. But as non-payment is an offence, the UIF would levy a 10% penalty on these back contributions and their finance department would also calculate a daily amount of interest owing.
Is she eligible to claim UIF after resigning?
If a domestic worker is dismissed or retrenched, or if the employer dies, the worker is eligible. But if she has resigned, she is not eligible to claim UIF. Equally, if she agreed to the termination of her work – in other words, if the termination was not involuntary – she also would not qualify.
Could she claim both UIF and SASSA pension?
If she were eligible to claim UIF, she could certainly claim it 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.
Severance pay (also known as retrenchment pay):
This is calculated at one week’s wages for every completed year of service.
Are you responsible for her pension?
No, there is no legal onus on you to give her a pension, but as the SASSA pension is very small (currently R1,985 per month), you might consider supplementing it, if you were able to do so.
If you have further questions about UIF, you call them at their Call Centre:
012 337 1680 / 080 084 3843 / 080 084 0800
Wishing you the best,
Answered on July 15, 2022, 1:55 p.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.