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Marius Scheepers & Company Attorneys |
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Unemployment Insurance
Contributions act, 4 of 2002 [ASSENTED TO 27 MARCH
2002] [DATE OF COMMENCEMENT: (English text signed by the
President) as amended by Taxation Laws Amendment
Act 30 of 2002 Regulations under this Act[M1] DETERMINATION OF LIMIT
ON AMOUNT OF REMUNERATION FOR PURPOSES OF DETERMINATION OF CONTRIBUTION IN
TERMS OF SECTION 6 REGULATIONS
MADE IN TERMS OF SECTION 18
ACT
To provide for the
imposition and collection of contributions for the benefit of the
Unemployment Insurance Fund; and to provide for matters connected therewith. TABLE OF CONTENTS
Sections CHAPTER 1
INTRODUCTORY PROVISIONS
1 Definitions 2 Purpose of Act 3 Administration of Act 4 Application of Act CHAPTER 2
DUTY TO CONTRIBUTE, AND RECOVERY OF
CONTRIBUTIONS
5 Duty to contribute to Fund 6 Determination of contribution 7 Employer must deduct employee’s contribution 8 Payment of contribution to Commissioner and refund 9 Payment of contribution to Unemployment Insurance Commissioner
and refund 10 Duty to register as employer and duty to provide particulars 11 Payment of amounts collected by Commissioner into National
Revenue Fund 12 Interest on late payments 13 Penalties on default 14 Application of Income Tax Act 15 Labour inspectors CHAPTER 3
GENERAL
16 Collection costs 17 Offences and penalties 18 Regulations 19 Short title and commencement CHAPTER 1
INTRODUCTORY PROVISIONS
(ss 1-4) 1 Definitions In this Act, unless
the context indicates otherwise- ‘Board’ means the
Unemployment Insurance Board established in terms of section 47 of the
Unemployment Insurance Act; ‘Commissioner’ means the
Commissioner for the South African Revenue Service established by section 2
of the South African Revenue Service Act, 1997 (Act 34 of 1997); ‘contribution’
means the contribution determined in terms of section 6; ‘Director-General’ means
the Director-General as defined in the Unemployment Insurance Act; ‘domestic worker’ means
an employee who performs domestic work in the home of his or her employer,
and includes a- (a) gardener; (b) person employed by a household as a driver of a motor vehicle; and
(c) person who takes care of any person in that home, but does not include a
farm worker; ‘employee’ means any
natural person who receives any remuneration or to whom any remuneration
accrues in respect of services rendered or to be rendered by that person, but
excludes an independent contractor; ‘employer’ means
‘employer’ as defined in paragraph 1 of the Fourth Schedule to the Income Tax
Act, and includes a ‘representative employer’ as defined in that Schedule; ‘financial year’ means
the period commencing on the first day of March in any year and ending on the
last day of February in the following year; ‘Income Tax Act’ means the Income Tax Act, 1962 (Act 58 of 1962); ‘labour inspector’ means
a labour inspector as defined in the Unemployment Insurance Act; ‘Minister’ means the Minister of Finance; ‘regulation’ means a regulation made under section 18; ‘remuneration’ means
‘remuneration’ as defined in paragraph 1 of the Fourth Schedule to the Income
Tax Act, but does not include any amount paid or payable to an employee- (a) by way of any pension, superannuation allowance or retiring
allowance; (b) which constitutes an amount contemplated in paragraphs (a), (cA),
(d), (e) or (eA) of the definition of ‘gross income’ in section 1 of the
Income Tax Act; or (c) by way of commission; ‘seasonal worker’ means
any person who is employed by an employer for an aggregate period of at least
three months over a 12 month period with the same employer and whose work is
interrupted by reason of a seasonal variation in the availability of work; ‘this Act’ includes the regulations; ‘Unemployment Insurance
Act’ means the Unemployment Insurance Act, 2001; ‘Unemployment Insurance
Commissioner’ means the Commissioner designated by the Minister of Labour in
terms of section 43 of the Unemployment Insurance Act; ‘Unemployment Insurance
Fund’ means the Fund established by section 4 of the Unemployment Insurance
Act. 2 Purpose of Act The purpose of this
Act is to provide for- (a) the payment of contributions for the benefit of the Unemployment
Insurance Fund; and (b) procedures for the collection of such contributions. 3 Administration of Act (1) This Act must be administered by the Commissioner. (2) The Commissioner may delegate any power or assign any duty which
relates to the collection of- (a) contributions payable to the Unemployment Insurance Commissioner
in terms of section 9; and (b) any information to be submitted by employers in terms of this Act, to the Unemployment Insurance Commissioner. 4 Application of Act (1) This Act applies to all employers and employees, other than- (a) an employee and his or her employer, where such employee is
employed by that employer for less than 24 hours a month; (b) an employee and his or her employer, where that employee receives
remuneration under a learnership agreement registered in terms of the Skills
Development Act, 1998 (Act 97 of 1998); (c) employers and employees in the national and provincial spheres of
government; and (d) an employee and his or her employer, where that employee has entered
the Republic for the purpose of carrying out a contract of service,
apprenticeship or learnership within the Republic if upon the termination
thereof the employer is required by law or by the contract of service,
apprenticeship or learnership, as the case may be, or by any other agreement
or undertaking, to repatriate that person, or if that person is so required
to leave the Republic. (2) Despite subsection (1), this Act will only apply to domestic and
seasonal workers and their employers 12 months after this Act takes effect. CHAPTER 2
DUTY TO CONTRIBUTE AND
RECOVERY OF CONTRIBUTIONS (ss 5-15) 5 Duty to contribute to Fund (1) Every employer and every employee to whom this Act applies must, on
a monthly basis, contribute to the Unemployment Insurance Fund. (2) The contributions must be paid by the employer either to the
Commissioner in terms of section 8 or to the Unemployment Insurance
Commissioner in terms of section 9, whichever is applicable to the particular
employer. 6 Determination of contribution (1) Subject to subsection (2), the amount of the contribution payable
in terms of section 5- (a) by an employee, must be one per cent of the remuneration paid or
payable to that employee by his or her employer during any month; and (b) by an employer in respect of any one of its employees, must be
equal to one per cent of the remuneration paid or payable by that employer to
that employee during any month. (2) Subsection (1) does not apply to so much of the remuneration paid
or payable by an employer to an employee during any month as exceeds an
amount determined from time to time by the Minister of Finance by notice in
the Gazette, after consultation with the Minister of Labour and the
Unemployment Insurance Commissioner. 7 Employer must deduct employee’s contribution (1) Subject to subsection (2), an employer must, on a monthly basis,
deduct or withhold the amount of the employee’s contribution contemplated in
section 6 (1) (a) from the remuneration paid or payable to that employee
during that month. (2) Where the remuneration of the employee is paid at intervals other
than on a monthly basis, the employer must deduct the amount of the
employee’s contributions on such other basis as coincides with the intervals
of payment of remuneration by the employer to the employee. (3) When making a deduction in terms of subsection (1) or (2), an
employer may not- (a) deduct amounts that are in excess of the amount of the
contribution due by the employee; (b) seek or receive a fee from the employee for complying with this
Act; or (c) deduct arrear contributions from the employee after the end of
the financial year during which it was payable. (4) Subject to subsection (3)©, where the employer fails to deduct the
contribution as contemplated in subsection (1) or (2), the employer is liable
for such contributions. (5) If any payment made by the employer to the Commissioner or the
Unemployment Insurance Commissioner in terms of section 8 or 9, as the case
may be, includes an amount which was deducted or withheld in terms of
subsection (1) or (2), and it subsequently becomes known to the employer that
the payment made by the employer was not due or payable in terms of this Act,
or was in excess of the amount due or payable, the employer must refund to
the employee such amount or excess amount, as the case may be, as has been
deducted or withheld and overpaid by the employer, despite the amount not
having been refunded to the employer by the Commissioner or the Unemployment
Insurance Commissioner, as the case may be. 8 Payment of contribution to Commissioner and refund (1) Every employer, other than an employer contemplated in section 9 (1)
, must on a monthly basis pay the amount of all employees’ contributions and
the employer’s contributions in respect of every employee in the employment
of that employer to the Commissioner not later than seven days, or such
longer period as the Commissioner may determine, after the end of the month
in respect of which the contributions are payable. (2) An employer must, together with the payment contemplated in
subsection (1), submit a statement in such form as the Commissioner may
require and reflecting the amount of the payment and such other particulars
as the Minister may prescribe by regulation. (3) If the amount of any contribution, interest or penalty paid by an
employer to the Commissioner was not due or payable, or is in excess of the
amount due or payable in terms of this Act, that amount, or such excess
amount, becomes refundable to that employer by the Commissioner. [Sub-s. (3)
substituted by s. 81 of Act 30 of 2002.] (4) The Commissioner must notify the Director-General, within such
period as may be agreed upon between the Commissioner and the
Director-General, of the amount of the contributions, interest and penalties
collected from, and refunds made to, employers during the previous month and
provide such further particulars as may be agreed upon by the Commissioner
and the Director-General. 9 Payment of contribution to Unemployment Insurance Commissioner
and refund (1) (a) For the purpose of this section, ‘employer’ means an employer
who- (i) is not required to register as an employer in terms of paragraph
15 of the Fourth Schedule to the Income Tax Act; (ii) has not registered voluntarily as an employer in terms of the
Fourth Schedule to the Income Tax Act; or (iii) is not liable for the payment of the skills
development levy in terms of the Skills Development Levies Act, 1999 (Act 9
of 1999). (b)
Subject to subsection (5), an employer must, on a monthly basis and in
respect of every employee in the employment of that employer, pay to the
Unemployment Insurance Commissioner not later than seven days, or such longer
period as the Unemployment Insurance Commissioner may determine, after the
end of the month in respect of which contributions are payable the amount of- (i) the employee’s contribution which
must be withheld from the remuneration of the employee during that month, as
contemplated in section 7 (1) or (2); and (ii) the employer’s contribution as
contemplated in section 6 (1) (b). (2) An employer must, together with the payment contemplated in
subsection (1), submit a statement in such form as the Unemployment Insurance
Commissioner may require and reflecting the amount of the payment and such
other particulars as the Minister may prescribe by regulation. (3) The Unemployment Insurance Commissioner must pay all contributions,
interest and penalties collected into the Unemployment Insurance Fund. (4) If the amount of any contribution, interest or penalty paid by an
employer to the Unemployment Insurance Commissioner was not due or payable, or
was in excess of the amount due or payable in terms of this Act, that amount
or such excess amount must be refunded to that employer by the Unemployment
Insurance Commissioner from the Unemployment Insurance Fund. (5) (a) Where an employer on reasonable grounds believes that the
total amount payable in terms of section 6 (1) (a) and (b) in respect of all
its employees during any financial year will not exceed such amount as the
Unemployment Insurance Commissioner may from time to time determine by notice
in the Gazette, the employer may elect to make payment of the full amount of
the total contributions in respect of that financial year in a single payment
within 7 days after the beginning of that financial year. (b)
If an employer discovers that the amount of the payment contemplated in
paragraph (a) is less than the amount payable in respect of all its employees
in terms of section 6 (1) (a) or (b), that employer must as soon as possible
but before the end of the financial year in question pay the outstanding
amount to the Unemployment Insurance Commissioner. 10 Duty to register as employer and duty to provide particulars (1) An employer to whom this Act applies must apply for registration
to the Commissioner or the Unemployment Insurance Commissioner, whichever is
applicable to such employer in terms of section 8 or 9, in such manner and
within such period as may be prescribed by the Commissioner or Unemployment
Insurance Commissioner, respectively. (2) The employer must, together with the registration contemplated in
subsection (1) provide such information as the Minister may prescribe by
regulation. (3) The employer must, before the seventh day of each month, submit to
the Commissioner or the Unemployment Insurance Commissioner, whichever is
applicable to such employer in terms of section 8 or 9, such information
relating to its employees as the Minister may prescribe by regulation,
including details relating to- (a) the termination of the employment of any employee; and (b) the appointment of any employee by the employer. (4) The Commissioner or the Unemployment Insurance Commissioner, as
the case may be, may request the employer to provide within 30 days of the
request, or such extended period as the Commissioner or Unemployment
Insurance Commissioner may allow, such additional particulars as may
reasonably be required to give effect to the purpose of this Act. 11 Payment of amounts collected by Commissioner into National
Revenue Fund (1) The contributions, interest and penalties collected by the
Commissioner in terms of this Act must, after deduction of any refunds, be
paid into the National Revenue Fund. (2) The total amount of contributions, interest and penalties paid
into the National Revenue Fund in terms of subsection (1) is a direct charge
against the National Revenue Fund for the credit of the Unemployment
Insurance Fund. (3) The Director-General must, within 14 days after receipt of the
notice from the Commissioner in terms of section 8 (4), authorise the
transfer of the amount of the contributions, interest and penalties paid into
the National Revenue Fund to the Unemployment Insurance Fund. 12 Interest on late payments An employer who
fails to pay the full amount of any contribution within the period for
payment prescribed by this Act, must pay interest on the outstanding amount
at the rate contemplated in paragraph (b) of the definition of ‘prescribed
rate’ in section 1 of the Income Tax Act, calculated from the day following
the last day for payment to the day that payment is received by the
Commissioner or Unemployment Insurance Commissioner, as the case may be. [S. 12 substituted
by s. 82 of Act 30 of 2002.] 13 Penalties on default (1) If any contribution remains unpaid after the last day for payment thereof
as contemplated in section 8 (1) or 9 (1), a penalty of 10 per cent of the
unpaid amount is payable in addition to the interest contemplated in section
12, but the Commissioner or the Unemployment Insurance Commissioner, as the
case may be, may, having due regard to the circumstances of the case, remit
the penalty or any portion thereof. (2) Subject to subsection (3), where an employer fails to perform any
duty imposed upon the employer by this Act or does, or omits to do, anything
with intent- (a) to evade the payment of any amount of contribution payable by that
employer in respect of any employee; or (b) to cause a refund to that employer by the Commissioner or the
Unemployment Insurance Commissioner of any amount of contribution, interest
or penalty which is not refundable or is in excess of the amount properly
refundable to the employer, an
additional penalty not exceeding an amount equal to double the amount of the
contribution contemplated in paragraph (a), or the amount not refundable or
the amount of the excess referred to in paragraph (b), as the case may be,
may be imposed on the employer. (3) The amount of the additional penalty contemplated in subsection
(2)- (a) must be determined by the Commissioner or the Unemployment
Insurance Commissioner, as the case may be, and must be paid by the employer
within such period as the Commissioner or Unemployment Insurance Commissioner
may determine; and (b) shall be deemed to be an amount of contribution payable in terms
of this Act, for purposes of- (i) the determination of any interest payable in terms of section
12; and (ii) the application of the provisions of the Income Tax Act, 1962, in
respect of the payment and recovery of any contribution, interest or penalty
in terms of section 14 (1) (d). [Sub-s. (3) substituted
by s. 83 (1) of Act 30 of 2002.] 14 Application of Income Tax Act (1) The provisions of the Income Tax Act contemplated in subsection
(2) apply, with the changes required by the context, to any contribution paid
or payable in terms of this Act, in respect of- (a) the administration of this Act as regards the exercise of powers
and performance of duties and the preservation of secrecy; (b) statements, the production of information, documents or things, enquiries,
searches and seizures and evidence on oath for purposes of obtaining full
information in respect of the calculation of the contributions due and
payable in terms of this Act; (c) any assessment, objection and appeal; (d) the payment, recovery or refund of any contribution, interest or
penalty; (e) representative taxpayers and representative employers; (f) any transaction, operation or scheme entered into or carried out
for the purposes of avoiding or postponing any liability for the contribution
or of reducing the amount of the contribution; (g) reporting of unprofessional conduct; and (h) the jurisdiction of the courts. (2) For purposes of subsection (1), the provisions of the Income Tax
which apply to this Act are those relating to- (a) the administration thereof as contained in Chapter 1 of the Income
Tax Act; (b) returns, the production of information, documents or things,
enquiries, searches and seizures and evidence on oath; (c) assessments; (d) objections and appeals; (e) the payment and recovery of tax, interest and penalties; (f) refunds; (g) representative taxpayers and representative employers; (h) transactions, operations or schemes for purposes of avoiding or
postponing liability for taxes on income or reducing the amount of taxes on
income; (i) the reporting of unprofessional conduct; and (j) the jurisdiction of the courts. 15 Labour inspectors The Commissioner or
Unemployment Insurance Commissioner may request a labour inspector to assist
in the investigation of any employer required to contribute in terms of
section 8 or 9, as the case may be. CHAPTER 3
GENERAL (ss 16-19) 16 Collection costs (1) Subject to subsection (2), the Director-General must, on a monthly
basis, defray the costs of collection by the Commissioner from the
Unemployment Insurance Fund. (2) The total amount of the costs contemplated in subsection (1),
excluding the start-up capital which must be defrayed from the budget of the
Department of Labour, shall be equal to one and a half per cent of the total
amount of the payments collected, or where the actual expense exceeds one and
a half per cent of that amount, such actual costs. 17 Offences and penalties (1) A person commits an offence if that person- (a) fails to pay any amount due in terms of this Act on the day
determined for payment thereof; (b) fails to- (i) submit or deliver any statement or other document or thing
required to be submitted or delivered by or under this Act; (ii) disclose any information required by or under this Act; (iii) reply to or answer truly and fully any
question put to him or her in terms of this Act; (iv) attend and give evidence at an enquiry under this Act where duly
required to do so; or (c) hinders or obstructs any person in carrying out his or her
functions in terms of this Act. (2) Any person convicted of an offence in terms of this Act is liable
on conviction to a fine or imprisonment for a period not exceeding 12 months,
or both a fine and such imprisonment. 18 Regulations The Minister may, by
notice in the Gazette and after consultation with the Minister of Labour and
the Unemployment Insurance Commissioner, make regulations about any matter which
may be prescribed by regulation in terms of this Act or which is necessary to
be prescribed for the effective administration of this Act. 19 Short title and commencement This Act is called the
Unemployment Insurance Contributions Act, 2002, and takes effect on a date to
be determined by the President by proclamation in the Gazette.
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