1. Legal Framework
Retirement funding and medical insurance in South Africa are private, unless regulated under a Bargaining Council Agreement or for public sector employers. These benefits are subject to regulation by the Pension Funds Act and the Medical Schemes Act, respectively.
2. Required Contributions
Unemployment Insurance Fund (UIF): All employers are required to register their employees for and contribute to the Unemployment Insurance Fund (UIF). In this regard, the employer is required to pay 1% of an employee’s salary to this fund, and a further 1% of the employee’s salary is to be withheld and paid over to the fund, each month.
Skills Development Levy (SDL): An employer is required to make contributions in respect of a Skills Development Levy (SDL). SDL is a levy imposed to promote learning and development in South Africa and is driven by an employer’s salary bill; the funds are to be used to develop and improve skills of employees. This amount is paid directly by an employer on a monthly basis, and amounts to 1% of the total salaries paid to all of its employees each month (including overtime payments, leave pay, bonuses, commissions and lump sum payments). There is no cap on this amount.
Compensation for Occupation Injuries and Diseases (COIDA): A further obligatory payment is in respect of the fund, which regulates the compensation of employees for occupational injuries and diseases. The Compensation Fund will determine the danger of the industry in which the particular business is involved and will apply a percentage rate to the amount of annual earnings declared to raise an assessment which will become payable. COIDA operates on a ‘no fault’ basis in that employees who are injured at work or who contract occupational diseases 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 and employees may be entitled to increased compensation if their disablement is caused by the carelessness of their employer or a fellow employee.
There is currently no general obligation on employers in South Africa to provide health insurance to their employees. Many employers voluntarily participate in medical plans to secure medical benefits for their employees. Group life insurance benefits are also commonly provided by employers, yielding death benefits that are commonly equivalent to three times the employee’s annual salary. In industries that are regulated by bargaining councils, collective agreements concluded in the council will usually provide for compulsory contributions by both employers and employees to industry medical plans designed to provide basic medical benefits.
There is similarly no general obligation on employers in South Africa to provide pension or retirement benefits to their employees. Although there is no obligation to provide pension or retirement benefits, they are commonly provided by employers through private pension or provident funds. In industries regulated by bargaining councils, collective agreements concluded in the council will usually provide for compulsory contributions by both employers and employees to industry retirement funds designed to provide basic retirement benefits and often funeral insurance.
4. Required Maternity/Sickness/Disability/Annual Leaves
Minimum benefits provisions in relation to leave apply to all employees with the exception only of employees who work for less than twenty-four hours a month.
Annual Leave: Employees who work twenty-four hours or more per month are entitled to a minimum of twenty-one consecutive days (i.e., three weeks) paid leave per annual leave cycle of twelve months. Pay for annual leave must be based on the employee’s normal remuneration.
Medical or Sick Leave: For each sick leave cycle of thirty six months of employment, an employee is entitled to paid sick leave equal to the number of days he or she would normally work during a period of six weeks. An employee is not entitled to payment for sick leave if he or she is absent from work for more than two consecutive days, or on more than two occasions during an eight-week period, unless he or she produces a medical certificate at the employer’s request.
Bereavement Leave: Employees are entitled to family responsibility leave of three days per annual leave cycle, which must be granted upon request of an employee when the employee’s child is born or is sick, or upon the death of the employee’s spouse or life partner or a parent, adoptive parent, grandparent, child, adopted child, grandchild or sibling.
Family Leave: Family leave is part of the family responsibility entitlement.
Pregnancy Leave: Statutory leave for pregnancy forms part of the BCEA maternity leave. An employee is entitled to commence statutory maternity leave any time from four weeks before the expected date of birth (unless otherwise agreed) or on another date stipulated by a medical practitioner or midwife in the interest of the employee’s health or that of her unborn child. Female employees are entitled to a minimum of four consecutive months of unpaid maternity leave. Although the BCEA does not require maternity leave to be paid by employers, many employers provide partial payment as a contractual benefit to their employees. The employee is not permitted to work for at least six weeks after giving birth unless she is declared fit to do so by a medical practitioner or midwife.