Employer

An Employer is any person who pays any other person an amount by way of remuneration.  The Employer must register with SARS within 21 business days of becoming an employer.  

The Employer is required to withhold tax from the remuneration paid to employees and must pay the amounts so deducted or withheld to SARS monthly.  An EMP201 return is to be completed and submitted monthly within seven days after the end of the month, during which the amount was deducted or withheld.  Failing to do so will result in the imposition of a 10% late payment penalty and interest charged at the prescribed rates.

The Employer is also required to submit bi-annual EMP501 reconciliations, which are due annually by 31 October and 31 May. Every employer must issue an IT3/IRP5 to an employee and which is to be submitted with their annual income tax return as it confirms the total remuneration received and the employee’s tax withheld.  

What is UIF?

The Unemployment Insurance Fund (UIF) is a fund to which both employees and employers must contribute monthly.  The employer is required to register and submit a monthly declaration with the Department of Labour and can do so online via uFiling.    

There are certain exclusions, such as if the employee is employed for less than 24 hours a month or if the employee is employed in the national or provisional sphere of Government.  It is a fund that provides short-term relief to employees when they become unemployed due to certain occurrences such as maternity, adoption, or illness.  

Both the employee and the employer must each contribute 1% of the remuneration paid by the employer to the employee.  With effect from 1 June 2021, the monthly contribution is capped at R177,12, meaning that if the monthly remuneration of the employee exceeds R17,712, the total contribution will not exceed R177,12. 

Furthermore, the Employer is also required to attend to a COIDA (Compensation for Occupational Injuries and Diseases Act) registration within seven days after the first employee is employed.  This application can be done online via the Department of Labour.  This fund provides compensation for employees who are injured or who contract diseases during their employment.              

What is SDL?

Where the total remuneration paid by the employer to employees annually exceeds R500,000 the employer must also register for SDL (Skill Development Levy).  Certain exemptions do apply.  SDL is a levy imposed which is used to develop and improve the skills of employees.  The monthly contribution is calculated at 1% of the remuneration paid to the employees and is declared as part of the monthly EMP201 return.

We advise that employers take note of their obligations and the requirements to avoid any default penalties.