AMENDMENTS PROPOSED
UNEMPLOYMENT INSURANCE BILL
[B3-2001]

CLAUSE I
1. On page 5, after line 11 to insert the following definition:
"Child" means any person under the age of 18 years;
2. On page 5, from line 30, to omit the definition of "employee" and to substitute:
"Employee" means any natural person who receives any remuneration or to whom any remuneration accrues;
3. On page 5, from line 36, to omit the definition of "employer" and to substitute:
"Employer" means any person (excluding any person not acting as a principal, but including any person acting in a fiduciary capacity or in the capacity as a trustee in an insolvent estate, an executor or an administrator of a benefit fund, pension fund, provident fund, retirement annuity fund or any other fund) who pays or is liable to pay to any person any amount by way of remuneration, and any person responsible for the payment of any amount by way of remuneration to any person under the provisions of any law or out of public funds (including the funds of any provincial administration or undertaking of the state) or out of funds voted by Parliament or a provincial administration.
4 On page 6, from line 10, to omit the definition of "remuneration" and to substitute:
5. "Remuneration" means "remuneration" as defined in the
Unemployment Insurance Contributions Act, 2002;"
6."Seasonal worker" means any person, excluding an employee and a domestic worker, who is employed by an employer in agriculture for a period of at least four months over a 12 months period with that employer.

CLAUSE 3
Application of this Act

1 On page 6 line 44 to omit clause 3.1. (e)
2. On page 6 line 45 to omit 2(a) and substitute
2.(a) The Minister must, as soon as possible after this section takes
effect, designate or appoint a body which must seek to investigate and
make recommendations regarding the application of this Act to domestic
and seasonal workers.
3. On page 6, on line 48 after "within" to omit "18 months" and substitute "12 months".

CLAUSE 10
1. On page 8, in line 31, after "1999)" to insert ", in order to cover any deficit in the Fund".

CLAUSE 13
1 On page 9, in line 35, to omit "dividing the monthly remuneration by 30,33'" and to substitute "multiplying the monthly remuneration by 12 and dividing it by 365".
2. On page 9, line 36, to omit "dividing the weekly remuneration by 7" and to substitute "multiplying the weekly remuneration by 52 and dividing by 7".
3. On page 9, from line 40, to omit subsection (3) and to substitute:
(3) Subject to subsection (6), a contributor's entitlement to benefits in terms of this Chapter accrues at a rate of one day's benefit for every completed six days of employment as a contributor.
(4)A contributor's entitlement contemplated in subsection (3) is subject to a maximum accrual of 243 days benefit in the four-year period, less any days of benefit received by the contributor during this period.
4. On page 10, in line 1, to omit "(5)" and substitute "(6)" and omit "(3)" and to substitute "(4)".

CLAUSE 14
1. On page 10, from line 6, to omit paragraphs (i) and (ii).
2. On page 10, from line 14, to omit paragraph (iv) and to substitute:
(iv). any payment from whatever source as a result of that contributor's unemployment with an employer, except that the contributor shall be entitled to benefits once such payment has been exhausted at a rate equal to the usual remuneration of that contributor, which rate shall be determined from a certificate of service issued under section 42 of the Basic Conditions of Employment Act, 1997 (Act No.75 of 1997), whilst that contributor was employed with that employer;
(v). any pension benefit.
3. On page 10, after line 25, to insert the following subsections:
(2) Any benefit payable in terms of this Act to a contributor who is in receipt of a benefit provided by the State must be reduced to the extent that the contributor is entitled to such benefit provided by the State.
(3) This section does not apply to any disability grant provided by the State.

CLAUSE 15
1. On page 10, in line 29, to omit "application in terms of section 17" and to substitute "unemployment".

CLAUSE 16
1. On page 10, from line 37, to omit paragraph (a) and to substitute:
(a). the reason for the unemployment is-
(i) .the termination of the contributor's contract of
employment by the employer of that contributor
(ii). the dismissal of the contributor, as defined by section 186 of the Labour Relations Act, 1995 (Act No.66 of 1995), excluding constructive dismissal of that contributor
(iii). the termination of the contributor's employment due to the ending of the fixed term of contract, or
(iv). insolvency in terms of the provisions of the Insolvency Act, 1936 (Act No.24 of 1936).

CLAUSE 18
1.
On page 11, in line 42, after "contributor" to insert "receives unemployment benefits and".

CLAUSE 19
1. On page 11, in line 49, to omit "or receives" up to and including "illness" in line 50 and to substitute "contributor".

CLAUSE 20
1. On page 12, from line 10 to omit paragraph (a).
2. On page 12, in line 15, after "Chapter" to insert "or adoption benefits in terms of Part E of this Chapter; or".

CLAUSE 21
1. On page 12, in line 22, to omit "in each week of' and to substitute "for".
2. On page 12, in line 23, to omit "weekly".
3. On page 12, from line 24 to omit subsection (2) and to substitute:
(2) "When calculating the difference contemplated in subsection (1) any illness benefit payable in terms of this Act to a contributor who is in receipt of an illness benefit provided in terms of any other law, collective agreement or contract of employment must be reduced to the extent that the contributor is entitled to the benefit in terms of such other law, agreement or contract".

CLAUSE 22
1. On page 12, in line 43, to omit "weekly".

CLAUSE 24
1. On page 13, in line 9, to omit "in each week of' and to substitute "for".
2. On page 13, in line 10, to omit "weekly."
3. On page 13, from line 11 to omit subsection (3) and to substitute:
(3) "When calculating the difference contemplated in subsection (2) any maternity benefit payable in terms of this Act to a contributor who is in receipt of a maternity benefit provided in terms of any other law, collective agreement or contract of employment must be reduced to the extent that the contributor is entitled to the benefit in terms of such other law, agreement or contract".

CLAUSE 25
1. On page 13, in line 34, to omit "weekly".

CLAUSE 27
1. On page 14, in line 6, to omit "in each week of' and substitute "for".
2. On page 14, in line 7, to omit "weekly".
3. On page 14, from line 9 to omit subsection (4) and to substitute:
(4) "When calculating the difference contemplated in subsection (3) any adoption benefit payable in terms of this Act to a contributor who is in receipt of an adoption benefit provided in terms of any other law, collective agreement or contract of employment must be reduced to the extent that the contributor is entitled to the benefit in terms of such other law, agreement or contract".

CLAUSE 28
1. On page 14, in line 26, to omit "weekly".

CLAUSE 30
1. On page 14, in line 49, after "spouse" to insert "or life partner".
2. On page 14, in line 50, after "spouse" to insert "or life partner".
3. On page 14, in line 52, to omit "weekly" wherever it occurs.
4. On page 14, from line 55, to omit subsection (4) and to substitute:
(4). "A dependant is not entitled to receive benefits under this Part if that dependant has received any monies from whatever source as a result of the contributor's death, except that the depend ant shall be entitled to receive benefits once such monies have been exhausted at a rate equal to the usual remuneration of the deceased contributor, which rate shall be determined from a certificate of service issued under section 42 of the Basic Conditions of Employment Act, 1997 (Act No.75 of 1997), whilst that contributor was employed with that employer

CLAUSE 31
1. On page 15, in line 14, to omit "weekly".

CLAUSE 35
1. On page 15, from line 43, to omit subsections (2) and (3) and to substitute:
(2). "If the Commissioner determines that a person contemplated in subsection (1) has been paid benefits in error or in excess of the person's entitlement, the Commissioner must, within three years of the date of erroneous payment, make a written demand for repayment from that person".
(3). A written demand contemplated in subsection (2) must include-
(a). a statement of the amount paid in error
(b). an explanation of why that person was ineligible to receive the funds; and
(c). evidence that the person to whom the demand is addressed actually received the funds.
(4). The persons contemplated in subsection (1) must refund the amount within 90 days of the written demand.

CLAUSE 37
1. Clause rejected.

NEW CLAUSE
1. That the following be a new Clause:

Disputes relating to payment or non-payment of benefits
37. (1) A person who is entitled to benefits in terms of this
Act may appeal to the appeals committee of the Board if that person is
aggrieved by a decision of-
(a). the Commissioner to suspend such person's right to benefits; or
(b). a claims officer relating to the payment or non-payment of benefits.
(2). A person who is dissatisfied with the decision of the appeals committee may refer the matter for arbitration to the
CCMA.

CLAUSE 49
1. On page 18, in line 22, to omit "four": and to substitute "three".
2. On page 18, in line 23, to omit "four": and to substitute "three".
3. On page 18, in line 24 to omit "and" and to insert the following paragraph:
(c) three members must be nominated by NEDLAC to represent organisations of community and development interests; and
4.On page 18, in line 25, to omit "four": and to substitute "three".

CLAUSE 50
1. On page 18, in line 50, after "Board" to insert", which must include an appeals committee".

CLAUSE 51
1. On page 19, in line 33, to omit "Department of Finance" and to substitute "National Treasury".

CLAUSE 57
1.On page 20, after line 48, to add the following subsection:
(3) (a) In order to determine the payment of benefits in terms of this Act, the Commissioner may access any information on a database of the State that contains information regarding social security
.(b). For the purposes of paragraph (a) the
Commissioner must co-operate with other State institutions to link their respective databases.

CLAUSE 68
1. On page 24, in line 27,omit "this" and after "section" to insert", section
69".

NEW CLAUSE
1. That: the following be a new clause to follow clause 68:

Persons regarded as contributors for purposes of Act
69. (1) The Minister may, after receipt of an application in a prescribed form and with the concurrence of the Board, by notice in the Gazette, declare that as from a date specified in the notice any specified class of persons, or any person employed in any specified business or section of a business or in any specified area, must be regarded as contributors for purposes of this Act.
(2). The procedure referred to in section 55(1) applies with the necessary changes to a notice issued under subsection (1)

SCHEDULE 2
1. Schedule 2 rejected.

NEW SCHEDULE
1. That the following be a new Schedule:

SCHEDULE 2

MATHEMATICAL CALCULATION OF CONTRIBUTOR'S ENTITLEMENT
The benefit to which a contributor is entitled is calculated in one of two ways, depending on a contributor's income prior to becoming unemployed:
1. Contributors who earned less than a particular amount (known as the "benefit transition income level") are entitled to a percentage of their previous pay.
2. Contributors who earned more than the benefit transition income level are entitled to a flat benefit, equal to the entitlement of a contributor who was previously paid at the benefit transition income level.

The benefit transition income level
The 1953 International Labour Organisation Convention (Convention No.102)
stipulates that the wage of a skilled manual worker should determine the appropriate income level at which to set a ceiling for membership of a social insurance scheme. Over the years, South Africa's Unemployment Insurance scheme has roughly kept pace with this guideline. The benefit transition income level is therefore linked to this rate.
The current income ceiling is R8 099 per month. This will become the initial benefit transition income level for the purposes of this Act. However, in terms of section 1 2(3)(a), the Minister may change the benefit transition income level from time to time to reflect changing patterns of income.

Contributors who previously earned less than the benefit transition income level
For contributors who earned less than the benefit transition income level, entitlement to benefit is earnings-related. A contributor's entitlement is calculated according to the following formula:

Benefit = Daily Income * IRR

where IRR is the Income Replacement Rate corresponding to the contributor's daily income.

Daily Income:
If a contributor was paid weekly, daily income is the weekly rate of pay divided by 7
If a contributor was paid fortnightly, daily income is the fortnightly rate of pay divided by 14.
If a contributor was paid monthly, daily income is the monthly rate of pay multiplied by 12, then divided by 365.

Income Replacement Rate:
The Income Replacement Rate (IRR) determines the percentage of a contributor's previous income to which the contributor is entitled in the form of benefits. The IRR is a variable, so it defines a sliding scale. A contributor who previously earned a low wage is entitled to receive benefits representing a larger proportion of her or his previous income than a contributor who previously earned a higher wage.

The IRR is at its maximum when income equals zero, and it reaches its minimum where income is equal to the benefit transition income level. The maximum IRR is fixed at 60%. The minimum IRR is currently set at 38%. However, the Minister may vary the minimum IRR in terms of section 12(3)(b).

Using current values, the IRR can be calculated according to the following formula:

IRR = 29.2+ (99779.68/(3239.6+Yi))

where Yi represents a contributor's monthly rate of income. (Consistency of units is essential. To calculate IRR from daily or weekly rates of pay, please refer to the more detailed explanation of the IRR formula in the technical note below.)

Contributors who previously earned more than the benefit transition income level
Contributors who earned more than the benefit transition income level are entitled to a flat benefit equal to the benefit transition income level multiplied by the minimum IRR
At the current benefit transition income level of R8 099 per month, this works out to R101.18 per day:

Daily income = (8099 * 12)/ 365) = 266.2685
IRR = 38% or 0.38
Benefit = 266.2685*038=101.18

Duration of benefits
In terms of section 13(3), a contributor is eligible to receive one day's benefit for every six completed days of employment, up to a maximum of 238 days (34 weeks). A contributor will therefore be eligible to claim benefits for the maximum duration after being continuously employed for four years. If a contributor has already drawn benefits (other than maternity benefits) in terms of this Act in the preceding four years, the number of days for which the contributor is eligible to claim benefits will be reduced accordingly.

To calculate the number of days of benefits to which a contributor is entitled:
1. Determine the total number of days that the contributor was employed (and contributing) in the four-year period immediately preceding the date of application for benefits.
2. Divide the total number of days by 6, disregarding any remainder or fraction.31 portion of the result.
3. Subtract the number of days (if any) for which the contributor claimed benefits (other than maternity benefits) in terms of this act during the preceding four years.

Amount of benefit payment
The benefit payment to which a contributor is entitled in any given period shall be the amount of the benefit entitlement multiplied by the number of days for which the contributor is eligible to receive benefits during the payment period.

Technical note on the Calculation of IRR
The sliding scale for the Income Replacement Rate (IRR) is represented by a portion of the curve (rectangular hyperbola) produced by a graph of the function y=1/x, where the y axis represents the IRR and the x axis represents income. However, in order to associate this curve with values that are meaningful for this purpose, it is necessary to apply adjusting formulae.
Calculating the IRR associated with any given level of income below the benefit transition income level can be done in three steps:
1. The rate of income is transformed into a corresponding value on the x axis (xi) The formula for this is:
Yi =(xi-x1) YLRR/(x2-x1) (1)
where:
Yi is the contributor's rate of income;
YLRR is the benefit transition income level; and
x1 and x'2 are constants that determine the portion of the curve that is used to calculate IRR

The current values of the parameters YLRR, x1 and x2 are:
YLRR = R8 099 per month
x1 = 2
x2 = 7

Using these values, expression (1) can be simplified to:
xi=2+(Yi/1619.8) (1a)
where Yi is expressed as a monthly rate of income. [it is important to ensure that both the contributor's rate of income (Yi) and the benefit transition income level (YLRR) are expressed in the same units--monthly, weekly, or daily.]

2. The y values corresponding to the x values are calculated using the general formula:
y = 1/x (2)
thus:
y1 = 1/x1
y2 = 1/ x2
yj = 1/xi

3. The yi value is then converted to the corresponding IRR. The formula for this is:
IRR = LRR + (yi - y2) (URR - LRR)/ (y1 y2) (3)
where:
IRR is the income replacement rate;
LRR is the lower (minimum) income replacement rate; and
URR is the upper (maximum) income replacement rate.
The current values of the parameters LRR, URR, y1 and y2 are:
LRR =38%
URR =60%
y1 = 1/2
y2 = 1/7
Using these values, expression (3) can be simplified to:
IRR = 61.6yi + 29.2 (3a)

SCHEDULE 3
1. On page 28, in line 11, to omit "R93 288" and to substitute "R97 188".
2. On page 28, from line 13, to omit Table One and to substitute:
Tables to illustrate benefits at various earnings levels

Tables not included.