The Minister of Finance, Nhlanhla Nene has proposed a temporary reduction in contributions by employers and employees to the Unemployment Insurance Fund (UIF), while keeping the benefits unchanged. This is according to Katlego Letlonkane, an associate in the Employment practice at Cliffe Dekker Hofmeyr who says that the public have been invited to comment on these changes before 20 March 2015.

Letlonkane explains that the proposal seeks to reduce the remuneration threshold against which the UIF contributions are calculated, from the current monthly amount of R14,872 to R1,000. This means that the portion of the employee's remuneration which exceeds R1,000 will not be taken into account for purposes of calculating monthly UIF contributions. The National Treasury has circulated an invitation for public comment on this proposed reduction, which is envisaged to take effect on 1 April 2015.

“Should such a reduction be implemented, employers will be required to pay a maximum of R10 per employee per month and, similarly, each employee will be required to contribute R10 per month. This is in vast contrast to the current maximum contribution of R148.72 per month. Interestingly enough, the proposed contribution reduction would not have the effect of reducing the benefits payable to beneficiaries. In fact, the proposed reductions aim to provide temporary support to households and employers, in an economically sustainable manner,” Letlonkane explains.

"The Minister's proposal intends to provide much needed support to the economy and inevitably, alleviates the financial burden on both the employer and employee,” Letlonkane adds.

Comments are to be submitted to the National Treasury via fax, email, or by hand to uiftreasury.gov.za, fax 086 741 8648 or c/o the Chief Directorate: Legislation, National Treasury, Old Reserve Bank Building, Room HB-02.03, Church Square, City of Tshwane.