‘The employer must give reasons for termination of employment by inserting the applicable code at the bottom of the UI-19 Form.
- Code 11: Retrenched/staff reduction
- Code 16: Voluntary severance package.
The reason for this differentiation is that if the employer selects Code 11, the employee will qualify for UIF benefits, as it is deemed to be a dismissal, and if Code 16 is selected, the employee will not qualify for UIF, as it is deemed to be a resignation.
Requests to state dismissal as reason for termination of employment:
It is important that employers complete the UI-19 form honestly or truthfully and accurately by using the correct codes for termination of employment. In other words, voluntary severance packages or mutual separation agreements should not be dressed up as dismissals. In many instances, employees may request that the employer reflect the reason for termination of employment as a dismissal to enable them to claim unemployment insurance benefits. This, however, may be regarded as a fraud by the employer on the South African Revenue Service and may amount to a criminal offence in terms of the UIA. (and open the door for fresh claims against the company based on dismissal)
So, normally, an employee will not qualify for UIF if the termination of employment is due to a voluntary severance package or separation agreement.
However, if it can be shown or verified that the employer has initiated the process for a voluntary severance package, and not the employee, the employee will qualify for UIF. In order to achieve this, the employer must complete and submit a UI-2.11 form together with the UI-19 form which must still indicate code 16 – voluntary severance package.
When does an employee qualify to claim UIF?
If UIF contributions are paid up-to-date and they have been dismissed, retrenched or their contract expired, they qualify to claim unemployment benefits.
When does an employee NOT qualify to claim UIF?
They cannot claim UIF if they resigned voluntarily, have been suspended or absconded from work.
Source: Wallace Albertyn at LabourMan Consultants