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How does UIF work?

My husband has been employed by Portnet for about 30 years. He wants to retire early - will he qualify for UIF?

My husband has been employed by Portnet for about 30 years. He’s 62 years of age and would like to go on early retirement at the end of this year. Will he qualify for the Unemployment Insurance Fund (UIF)? How does UIF work generally?

Mark Swanepoel of Axiomatic Consultants answers:

The UIF was set up to provide relief to employees who are between jobs and women who are on maternity leave (in this case, neither are applicable). If you do qualify, the UIF will pay unemployment benefits, illness benefits, and death benefits.

You must apply to the Department of Labour for unemployment benefits within six months of becoming unemployed if you want to claim unemployment benefits. You can then claim benefits for a maximum of 238 days), depending on how long you have contributed to the UIF.

You cannot claim if you resign from your job, but you can claim if you were on a contract that ended – as long as the employer terminated your services.

In order to claim benefits, you also have to register as a work seeker with the Department of Labour. Registering with the Department of Labour as a work seeker means that suitable employment, where available, will be offered to you. The department will contact you should suitable employment become available. If you refuse any employment offered and your refusal is regarded as unreasonable, you may lose your benefits, or they may be suspended.

You cannot claim UIF under the following circumstances:

  • If you were suspended from your job because you committed fraud;
  • If you quit your job;
  • If you refused training or advice;
  • If you already qualify for a benefit from an unemployment fund under the Labour Relations Act; and
  • If you are receiving benefits from any other scheme established by the Labour Relations Act.

In simple terms, UIF is available to employees who have involuntarily lost their job and income.

There is a difference between being unemployed and being retired. In the case of early retirement, it is important to remember that you voluntarily left your job and will, presumably, receive retirement benefits by way of an annuity, whether a guaranteed or living annuity, unless you elect to defer your retirement from the fund until a later date.

The fact that you voluntarily leave your job, will mean that no UIF benefit will be available to you.

If, during your working life you never claim for UIF – either because you’ve not elected to do so, or because you have never qualified for UIF benefits in terms of the principles of the Unemployment Insurance Act – then no benefit will be due to you and the contributions made during your period(s) of employment will not be due to you either.

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