Stay abreast of COVID-19 information and developments here
Provided by the South African National Department of Health
Domestic workers
and your estate
South Africans who employ domestic workers are often unaware that if they die and their staff members aren’t registered with the Unemployment Insurance Fund (UIF), it will be up to the executor of their deceased estate to ensure registration takes place – often resulting in potentially costly delays in winding up the estate.
According to Statistics South Africa, more than 300 000 (around a third of) domestic workers aren’t registered with the UIF and will therefore not be entitled to any benefits in the case of retrenchment, illness, maternity leave or death.
Employers often don’t grasp that they’re obliged to ensure not only that minimum wage criteria are adhered to, but also that their domestic staff are registered for UIF purposes. A domestic worker must be registered:
The consequences of not registering employees can be illustrated by the following example:
Peter employed Christina as a domestic worker. She worked for him for three days a week, which equated to a minimum of 24 hours per month for the past nine years. Peter didn’t register Christina for UIF benefits. He then passed away, and as a result, Christina’s employment was terminated.
Christina was under the impression that she would receive some form of compensation from Peter’s estate. However, Peter made no provision in his will for her. In terms of the Basic Conditions of Employment Act, an employer is not obliged to provide a domestic worker with a retirement benefit, so there was no pension or provident fund Christina could fall back on.
If Peter had registered Christina for UIF purposes before he died, she would have been able to claim benefits soon after his death. It was now up to the executor of Peter’s estate to register her and get all the paperwork done – a costly and time-consuming exercise, which not only led to delays in winding up the estate, but resulted in Christina being out of pocket for a considerable length of time.
When an executor has to register a domestic worker for UIF purposes after the death of the employer, all arrear contributions will first need to be paid from the deceased estate before it can be finalised. To prevent unnecessary delays at this stage, it’s crucial that registration takes place as soon as the worker is employed, and is not left until after the death of the employer.
Employers can register their employees by:
For further information about domestic workers and your estate, please contact Linky Sodi at linkys@privatewealth.sanlam.co.za.
The formation and registration of trusts, and the provision of independent trusteeships – both local and offshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
Expert advice is crucial in dealing with cross-border estate and tax planning.
Stanley Broun has spent 10 years in Fiduciary And Tax.
Have a question for Stanley?
