Unemployment Insurance Amendment Bill: Department of Labour on amendments proposed

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Employment and Labour

30 October 2015
Chairperson: Ms L Yengeni (ANC)
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Meeting Summary

The Department of Labour took the Committee through the amendments being proposed to the Unemployment Insurance Fund (UIF) Act, by the UIF Amendment Bill. The need to amend the Act had been suggested by the UIF Board, as it was clear that there needed to be alignment with current market conditions and realities. The Bill aimed to be worker friendly and at the same time would not prejudice employers. By way of background it was outlined that the Unemployment Insurance Fund had grown well since inception and currently had over R120 billion in total assets. It had been able to assist companies facing economic distress, mitigating their conditions and helping to avoid the lay-off of workers, and it had recently been involved, with the Bafokeng community, in building almost 300 houses close to Marikana. The amendments would help to conform with current international labour standards, improve payment of benefits and extend periods within which they were payable. It would also include civil servants, previously excluded under the Act.

The presenters took the Committee through the Bill. Some of the highlights and major changes were described. The Bill would include employees under contract, as contemplated in the Skills Development Act, and would include public servants. Clause 2 would allow for refinancing of the unemployment insurance beneficiaries, facilitating re-entry into the labour market. Clause 5 would allow for benefits for those who had lost part of their income due to reduced working time and this would particularly help domestic employees working for more than one employer, who had previously been unable to recover if some days of employment had been lost. Clause 6 was being brought in line with the schedule, and the maximum accrual would be 365 days. In addition, contributors could claim benefits if they had credits, notwithstanding claims within the four-year cycle. Clause 8 would increase the period within which to apply for unemployment benefits to twelve months. By virtue of clause 9, a contributor would be entitled to claim for less than seven days illness. Clause 10 would allow a claim for maternity benefits where the woman suffered a miscarriage. Clause 12 would allow dependents to apply for benefits for a deceased for 18 months instead of the previous six months. In addition, a new provision to section 30 allowed contributors to nominate beneficiaries for death benefits. Section 33 was to be amended to prohibit charging of fees by agents. Clause 14 allowed the Board to appoint regional committees, once the Minister had determined a region. Clause 18 allowed the Minister to vary the Income Replacement Rate and benefit period through regulations. It was noted that the Bill had been presented to regional representatives of the Board, NEDLAC and had been published for public comment.

Members asked for clarity on whether voluntary termination of pregnancy was covered, under whatever circumstances, but only up to the periods allowed under the applicable Termination of Pregnancy legislation. They questioned whether clause 14 meant “in” or “after” consultation with the Minister, but it was explained that the power was essentially moving from Minister to Board. The public participation steps were explained and the Committee requested sight of the public comments.

Meeting report

Unemployment Insurance Amendment Bill: Department of Labour briefing

Mr Virgil Seafield, Deputy Director-General: Labour Policy and Industrial Relations, Department of Labour, took the Committee through the proposed amendments to the Unemployment Insurance Act, 2001 (the Act), which were contained in the Unemployment Insurance Amendment Bill (the Bill). He noted that the Bill was worker friendly and did not prejudice the employer. It was in this light that the benefits that would be derived for the workers through the proposed Amendments of the Bill should be viewed.

He noted the progress of the Unemployment Insurance Fund (UIF) over the years, which had increased to its current value of over R120 billion in total assets. The UIF had responded to the current realties of the economic crisis byhelping companies that were facing economic distress, in this way it helped mitigate the laying off of employees and instead helped companies retain the workers.

Together with the Bafokeng community, the UIF had invested in the building of almost 300 houses close to Marikana, to address the crisis that had emerged in the North West Province.

The main purpose of the Bill was to address the realities and emerging issues in the marketplace. The  Unemployment Insurance Board had recommended that the Act, dating back to 2001, should be amended.  These amendments were aimed at ensuring that the Act conformed to international labour standards, would improve the payment of benefits to contributors and extend the period within which benefits are payable. There was also a need to comply with the South African Constitution to address the exclusion of civil servants in the current legislation.

Description of clauses
Mr Seafield then presented the clauses of the Amendment Bill.

Clause 1 seeks to amend section 3 of the Act so as to include employees who are under contract of employment contemplated in section18 (2) of the Skills Development Act 1998 (Act No.97 of 1998),  where the employees referred to in the latter Act were learners who are not in employment.

Clause 1 also addressed section 1 of the Public Service Act, 1994 (Proclamation No.103 of 1994) to addressthe new inclusion of public servants within the context and protection of the UIF.

Clause 2 seeks to amend section 5 of the Act,to allow for the provision of refinancing of the unemployment insurance beneficiaries, facilitating re-entry into the labour market.

Clause 5 seeks to amend section 12 of the Act by providing for the payment of benefits to contributors who had lost part of their income due to reduced working times, and to provide for a 66% fixed rate of the payment of maternity benefits. An example given was domestic workers who worked for two or three employers. If they lost their employment from 1 employer, thereby experiencing a decrease in their income, they would now be able to claim for that portion from the UIF.

Clause 6 seeks to amend section 13(3) of the Act which states that “a contributor’s entitlement to benefits accrues at a rate of one day’s benefit for every completed six days of employment as a contributor subject to a maximum accrual of 238 days”. This maximum number of days was not in line with Schedule 2 as proposed in the Act. Clause 6 is now seeking to amend the maximum number of days from 238 days to 365 days.

Clause 6 further amends section 13 of the Act by the insertion of a new provision that allows contributors to claim benefits even if they have credits, regardless of whether or not they have claimed within that four year cycle. This had not previously been possible.

Clause 8 seeks to amend section 17 so as to increase the period within which to apply for unemployment benefits, from six months to twelve months.

Clause 9 seeks to amend section 20 of the Act,so as to allow for a contributor to be entitled to claim illness benefits if the days of illness were less than seven days.

Clause 10 seeks to amend section 24 of the Act to provide for a period when a contributor is entitled for maternity benefits, in case of miscarriage. This would be determined by the period for which the contributor was unable to work.

Clause 12 seeks to amend section 30 of the Act to allow for dependents to be able to apply for benefits on behalf of the deceased, for 18 months. This was an increase on the Act’s previous allowance for six months.

Section 30 is being amended further through the insertion of a new provision that allows for contributors to now nominate beneficiaries in cases of death benefits. The 3 main beneficiaries still remained: the spouse, the life partner and the children. However, this new provision will allow for the contributor to nominate other beneficiaries in addition to the main three.

Clause 13 seeks to amend section 33 of the Act by prohibiting any agency or person claiming to be acting on behalf of the applicant to charge any fee against the applicant.

Clause 14 seeks to empower the Board to appoint regional committees for each region after the Minister determines the region. He explained that the Minister may determine the Western Cape as region, or may determine an economic zone as a region. Once this was done, the Board could then appoint a regional committee.

Clause 18 seeks to amend Schedule 2 of the Act so as to empower the Minister to vary the Income Replacement Rate and the benefit period through regulations. This currently can only be amended through legislation. This clause allows the Minister to do so, by expediting the response to current economic realities in a much easier and more efficient way.

Mr Seafield noted that the Cabinet had approved the UIF Amendment Bill and it was published for public comment three weeks ago. The comments on the Bill were tabled at National Economic Development and Labour Council (NEDLAC) for thesocial partners to deliberate on the Bill and those deliberations were concluded in November 2013. On 6 October 2015 the Office of the Chief State Law Advisor certified the Bill


Ms S Van Schalkwyk (ANC) asked for clarity on clause 10. Section 24 of the Act stated that voluntary termination of pregnancy was not covered. She questioned what might happen in instances when women had been raped and were given the option to terminate the pregnancy, and asked how the Act provided for women in these positions.

The Chairperson asked Ms Van Schalkwyk if her question related to whether or not voluntary termination was covered in the Act, regardless of circumstances.

Mr Malixole Ntleki, Director in the Office of the Director General, Department of Labour, responded that the Act covered the voluntary termination of pregnancy only in the period covered by the law, which was the first trimester. It would also cover the situation where a doctor certified that as a result of medical complications there was a need to terminate the pregnancy after the first trimester. Where there were no medical complications and a person chose to voluntarily terminate a pregnancy after the first trimester,no benefits could be claimed.

The Chairperson stated there could be times when a person may be unaware of her pregnancy and a doctor may also only have picked this up late yet was willing to support a termination. She wondered if this had been taken into consideration.

Mr TembaMkalipi, Chief Director: Labour Relations, Department of Labour responded that if a doctor had certified that there was an issue that had been picked up beyond the first trimester and there was a need to terminate the pregnancy, then that would be covered. Only if there was nothing medically wrong and the termination was wholly voluntary would this be an issue. To cover these circumstances could create a conundrum where the Labour legislation undermined health laws on legal termination of pregnancy.

The Chairperson asked for clarification on clause 14, in regard to the word “consultation”, asking if that meant “in consultation” or “after consultation” with the Minister.

Mr Seafield responded that the current wording stated that it was the Minister’s prerogative to appoint members of the committee,after consultation with the Board. The Amendment Bill sought to empower the Board to appoint a regional appeals committee themselves,but only once the Minister had designated a region. The amendment did not give the Minister the power to challenge the decision. The responsibilitywould therefore be on the board to appoint and remove an appeals committee for that region that had been declared by the Minister. The power had essentially been moved from the Minister to the Board.

The Chairperson asked for clarity on the extent of public participation on this Bill

Mr Mkalipi stated that the Bill was published for public comment and that although the Department of Labour had not gone to individual provinces for hearings, the Bill was discussed on the UIF Board which was made up of representatives of different provinces. The Bill had been engaged with at Board level, and then at the public comment level.

The Chairperson requested copies of the comments made to the Department.

The meeting was adjourned. 

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