, LSB2605 – Legal Aspects of Small Businesses
Assignment 1 – Semester 2 (2025)
Due Date: 28 August 2025
Total: 20 Marks
Question 1: UIF Contributions
The Unemployment Insurance Fund (UIF) is a statutory scheme designed to provide short-
term financial relief to employees who become unemployed, or who are unable to work due
to maternity, adoption leave, or illness. The obligation to contribute arises from the
Unemployment Insurance Contributions Act 4 of 2002, which requires that both
employer and employee contribute equally to the Fund. Each contributes 1% of the
employee’s remuneration, which ensures that the financial burden is shared. However, the
law imposes a statutory earnings ceiling to prevent excessive contributions from higher-
income earners. This ceiling currently limits the maximum salary subject to UIF contributions
to R17,712 per month (LSB2605 Study Guide, 2025:45). Even if the employee earns more,
contributions are calculated only up to this ceiling.
In Zanele’s case, she earns R30,000 per month on a fixed-term contract. While her gross
salary exceeds the statutory threshold, UIF calculations cannot be based on her full earnings
but are capped at R17,712 per month. The calculation proceeds as follows:
• Monthly remuneration considered for UIF purposes: R17,712
• Employee’s monthly contribution: 1% of R17,712 = R177.12
• Employer’s monthly contribution: 1% of R17,712 = R177.12
• Total UIF contribution per month: R354.24
• UIF contribution for 12 months: R354.24 × 12 = R4,250.88
Thus, the total UIF contributions payable during the contract amount to R4,250.88, of which
Zanele contributes R2,125.44 and ABC (Pty) Ltd contributes an equal amount. This statutory
scheme illustrates a policy balance: employees are guaranteed a form of social insurance
regardless of salary level, while employers remain accountable for compliance. Importantly,
failure to deduct and pay these contributions does not remove the employee’s rights, but
rather creates liability on the employer’s part.
Assignment 1 – Semester 2 (2025)
Due Date: 28 August 2025
Total: 20 Marks
Question 1: UIF Contributions
The Unemployment Insurance Fund (UIF) is a statutory scheme designed to provide short-
term financial relief to employees who become unemployed, or who are unable to work due
to maternity, adoption leave, or illness. The obligation to contribute arises from the
Unemployment Insurance Contributions Act 4 of 2002, which requires that both
employer and employee contribute equally to the Fund. Each contributes 1% of the
employee’s remuneration, which ensures that the financial burden is shared. However, the
law imposes a statutory earnings ceiling to prevent excessive contributions from higher-
income earners. This ceiling currently limits the maximum salary subject to UIF contributions
to R17,712 per month (LSB2605 Study Guide, 2025:45). Even if the employee earns more,
contributions are calculated only up to this ceiling.
In Zanele’s case, she earns R30,000 per month on a fixed-term contract. While her gross
salary exceeds the statutory threshold, UIF calculations cannot be based on her full earnings
but are capped at R17,712 per month. The calculation proceeds as follows:
• Monthly remuneration considered for UIF purposes: R17,712
• Employee’s monthly contribution: 1% of R17,712 = R177.12
• Employer’s monthly contribution: 1% of R17,712 = R177.12
• Total UIF contribution per month: R354.24
• UIF contribution for 12 months: R354.24 × 12 = R4,250.88
Thus, the total UIF contributions payable during the contract amount to R4,250.88, of which
Zanele contributes R2,125.44 and ABC (Pty) Ltd contributes an equal amount. This statutory
scheme illustrates a policy balance: employees are guaranteed a form of social insurance
regardless of salary level, while employers remain accountable for compliance. Importantly,
failure to deduct and pay these contributions does not remove the employee’s rights, but
rather creates liability on the employer’s part.
