If you employ a domestic worker (regardless of the hours) you are an employer and therefore legally compelled to register with and contribute to certain funds.
1. Compensation Fund
All employers of domestic workers must register with the Compensation Fund.
The term “domestic worker”includes a worker, a gardener, a driver of a vehicle, and a caretaker in a private household.
Despite the majority of domestic workers not having a written contract of employment, they remain formal employees and their employers must adhere to the relevant labour and employment laws.
We suggest that you have a formal contract for your employee.
Registering with the Compensation Fund will serve as a type of “insurance”, should your domestic worker suffer any injuries or diseases on your premises.
Employers of domestic workers must pay 1.04% of their domestic worker(s) annual earnings to the Compensation Fund.
If the return on earnings (1.04%) of the domestic worker is less than the minimum assessment amount charged by the Compensation Fund, the minimum assessment amount will apply.
The proposed minimum assessment amount for 2024 is R528, but this has not been gazetted yet and may be subject to change.
If a domestic worker is injured, contracts a disease, or passes away due to an injury or disease contracted at their workplace, and the employer is not registered with the Compensation Fund, that employer will be held liable for all expenses emanating from the injury, disease, or death.
This could financially ruin an employer.
For assistance with the registration with the Compensation Fund, send an email to admin@ctlgroup.co.za
2. Unemployment Insurance Fund (UIF)
Registering your domestic worker with the UIF is compulsory if he/she works for you for more than 24 hours a month.
1% of the employee’s monthly wages must be deducted and paid over to the UIF, together with another 1% contributed by the employer.
This is a legal requirement and failure to do so will incur financial penalties
Non-payment of UIF is an offence and the UIF will levy a 10% penalty on all the unpaid back contributions, and the finance committee at UIF will also calculate interest owing and possible other penalties
An employer who has not deducted and paid UIF can calculate the amount owing and back pay the contributions.
Employers are required to pay contributions to the Fund before or on the 7th day of every month. Employers may also choose to pay the total contributions annually provided such amount is paid up front.
3. National Minimum Wage (NMW)
All domestic employees, regardless of the number of hours worked per day, week, or month, are entitled to the National Minimum Wage, currently R27.58 per hour, and are entitled to a minimum of 4 hours pay, irrespective of the hours worked for the day.
They are entitled to annual leave and all other “normal” employee benefits
If an employer is found to be non-compliant with the NMW, a fine may be imposed upon that employer and the employer may be liable for the past three years’ shortfall i.e. the difference between the actual wage paid versus the NMW.
An employer who is found to have failed to comply with the NMW will be fined by a labour inspector an amount equal to twice the value of the underpayment or twice the monthly wage, whichever is greater for first offenders and an amount equal to thrice the value of the underpayment or thrice the monthly wage, whichever is the greater, for repeat offenders.
If you need assistance, we can help.
