Employee benefits in South Africa - what's required? What's not?
Not all South African organizations offer a full range of employee benefits, nor do they have to. While the government offers some social security benefits to certain members of society and employers are required to contribute to certain funds, benefits such as retirement funding and medical insurance are private matters.
Wondering which employee benefit contributions are compulsory and which aren’t? In this post, we offer you a quick breakdown. Note, as above, that retirement funding and health insurance are not compulsory unless part of public sector employer schemes or as regulated under a Bargaining Council Agreement. Such benefits are subject to regulations under the Medical Schemes Act and Pensions Fund Act, as applicable.
Legally required employee benefit contributions
1. Unemployment Insurance Fund (UIF)
All employers are required to register their employees for and contribute to the UIF. The employer is required to pay 1% of an employee’s salary to the fund, and a further 1% of the employee’s salary is to be withheld and paid over to the fund on a monthly basis.
2. Skills Development Levy (SDL)
The SDL is imposed to promote learning and development in South Africa and is driven by an employer’s salary bill. The employer must make contributions and the funds are to be used to develop and improve the skills of employees. The amount is paid by an employer on a monthly basis, has no cap, and amounts to 1% of the total salaries paid to all the employer’s employees each month (including overtime payments, leave pay, bonuses, commissions and lump sum payments).
3. Compensation for Occupation Injuries and Diseases (COIDA)
COIDA regulates the compensation of employees for occupational injuries and diseases. The fund will determine the danger of the specific industry and will apply a percentage rate to the amount of annual earnings declared to raise an assessment – this will be payable. COIDA operates on a ‘no fault’ basis in that employees who are injured at work or contract occupational diseases as a result of work are entitled to compensation regardless of whether the accident was caused by their employer or any other employee. However, compensation for injuries is based on the degree of disablement therefore employees may be entitled to increased compensation if the disablement was caused by the carelessness of their employer or a fellow employee.
At present, the government provides a number of means-tested social grants to assist the lowest income groups, from which the necessary savings and benefits are out of reach. The truth is that government struggles to meet even the most basic of living standard needs with these grants and mandated contribution so the need to offer working individuals financial security for the future and in times of crisis often falls to their employer – in the form of salaries and other benefits. To this end, some employers participate in group health and life insurance schemes, in line with company policy or collective agreement. The same is true of pension and retirement benefits.
By contributing to and offering relevant and reputable benefits, employers can help safeguard the wellbeing of their employees (thereby benefiting their organization in terms of increased retention and productivity). They will also be contributing to society at large by adding to the economy and raising the standard of living and care for income earners. Read more about the benefits of employee benefits here or to see what NKR has to offer your people, download our Services Guide here.