Does the failure to register employees for UIF constitute unfair labour practice and if so, can the employees enforce obligations against the employer?

Section 23 of the Constitution guarantees the right to fair labour practice in the workplace. In the best interests of both employers and employees, the government has promulgated the Basic Conditions of Employment Act 75 of 1997 (BCEA) to give effect to the right to fair labour practices referred to in s 23(1) of the Constitution by establishing and making provision for the regulation of basic conditions of employment, and thereby, to comply with the obligations of South Africa (SA) as a member state of the International Labour Organisation.

This right protects employees to ‘enjoy decent and safe working conditions’ by requiring ‘at a minimum, the regulation of working time, the appropriate payment of wages, and effective oversight of occupational safety and health’ (Bureau of International Labor Affairs ‘What are workers’ rights?’ (www.dol.gov, accessed 17-8-2021)).

One of the important duties of the employee is to register domestic workers with the Unemployment Insurance Fund (UIF). The UIF was implemented by the South African Revenue Services (Sars) from 1 April 2002.  The UIF ‘is responsible for collecting and distributing funds to unemployed workers across the country to assist with lightening the economic burden imposed on these individuals for a short time after their official unemployment’ (MBS Accounting Services ‘What is the purpose of the UIF and why is it important to pay it’ (https://mbservices.co.za, accessed 17-8-2021).

‘The purpose of the UIF is to provide short-term relief to workers if they become unemployed or cannot work because of maternity, adoption leave, or illness. The UIF, which is governed by the Unemployment Insurance Act [63 of 2001 (the Act)] and the Unemployment Insurance Contributions Act [4 of  2002], also support those who are dependents of a deceased contributor. The abovementioned Acts guide the distribution of benefits to contributors who claim from the UIF, as well as the enforcement and collection of contributions to the UIF’ (https://mbservices.co.za, accessed 17-8-2021).

The employer and employee have the reciprocal duty to contribute an amount equal to 1% of the employee’s monthly wage, which means that the employee must pay the same amount.

However, since the global COVID-19 pandemic, which has led to the retrenchments of employees and the terminations of contracts due to operational requirements, many cases have re-surfaced indicating the omission by some of the employers who did not register their employees for UIF.

This omission by employers has as a result re-created uncertainties for the employees, as to whether they have the right to enforce obligations by the employers.

Section 17 of the Act bestowed the right on employees to have their claims investigated or processed.

But every employee who alleges that a right or protection conferred by this Act has been infringed, must prove the facts of the conduct said to constitute such an infringement; and the employee who allegedly engaged in the conduct in question must then prove that the conduct did not infringe any provision of the Act.

According to s 78 of the BCEA, every employee is entitled to the following
legal rights, which includes the right to –

‘(e) inspect any record kept in terms of this Act … that relates to the employment of that employee;

…

(g) request a trade union representative or a labour inspector to inspect any record kept in terms of this Act and that relates to the employment of that employee’.

By not registering and paying UIF the employer is committing an offence and the employer is not likely to put up their hand to be counted when people ask if they are committing an offence by not paying UIF.

When the employer terminates an employee’s service, the employee has the right to apply to the UIF for benefits. In SAPU obo Louw & Others v South African Police Services [2005] 1 BALR 22 (SSSBC), it was held that a ‘benefit constitutes a material benefit such as pensions, medical aid, housing subsidies, insurance, social security or membership of a club or society’. This view implies that the employer is also a contributor (in whole or in part) to the pensions, provident, or medical aid funds. It was further held that there must be some monetary value for the recipient and, therefore, if the employer did not contribute in whole or in part on behalf of the employee, there would be no benefit to the employee. It was also held that a benefit is something extra, or apart from, remuneration. The concept would seem to include discretionary and performance related bonuses.

Although employees have the rights to refer the matter to the Department of Labour or if necessary to the UIF fund itself, drastic action for unfair labour practice must be taken against employers who fail to register with the UIF or pay toward the fund. The Department of Labour needs to increase oversight over employers of domestic workers to ensure that they are complying with the requirements. If employers in SA can still get away with not registering domestic workers, they will do it. The Minister of Labour also has the duty as the arm of the state to create awareness among domestic workers to inform them of their rights.

Sipho Tumelo Mdhluli LLB (University of Limpopo) is
a legal practitioner at Lekhu Pilson Attorneys in Middelburg.

This article was first published in De Rebus in 2021 (Sept) DR 4.