Suspension of the UIF E-Compliance Certificate System
The electronic UIF Compliance Certificate system was developed without consulting third-party stakeholders such as the PAGSA and introduced without warning in late January 2021 to replace the manual system that had been in operation up until then. Problems were experienced almost immediately, and the number and types of problems escalated steadily from then until now. After many, many emails to the Fund highlighting the problems, and after many, many requests to meet with the senior management of the Fund to discuss how to resolve the problems, a meeting was finally scheduled for 12 April 2022. To inform the meeting, the Fund requested the PAGSA to submit a report on the difficulties that the PAGSA and its members (and their clients) had experienced since January 2021. This report is included in the Annexure to this Newsflash for your information. Announcement of the Suspension of the E-CC
Having discussed other reports, and halfway through the points in the PAGSA report, a legal representative of the Fund announced the decision to suspend the E-CC system to allow the Fund and third parties time to discuss the way forward. It appears that this decision had been made prior to the meeting, and later that day the E-Compliance Certificate website was closed with a message that the system had been suspended temporarily until further notice. From the web site you can now download a Circular letter with more details of the suspension and print it. Unfortunately this letter cannot be copied or saved (I have asked for such a version but at the time of writing this Newsflash, I had not received it) so it could not be added to the appendix. Important Points
Legislation
1.The completely re-written Unemployment Insurance Act (administered by the Fund) and the Unemployment Insurance Contributions Act (administered by SARS) came into operation during 2002. 2.Simplifying the requirements, the Unemployment Insurance Act (UI Act) puts a duty on employers to pay their contributions to SARS (or to the Fund) and to declare their employees to the Fund. 3.The UI Act does not provide for a prescription period, nor does it provide for an amnesty in any way to absolve declarations that were not made or were incomplete (with hindsight, this is perhaps a weakness in the UI Act). 4.The Fund, as the administrator of the UI Act, has a duty to ensure that employers comply with the provisions of the Act, including the monthly declaration of employee data. 5.The Fund is therefore within its legal rights to enforce the re-submission of missing declaration data. Only the timing and the method used by the Fund (i.e. withholding Compliance Certificates) to coerce employers to fill their ‘declaration gaps’ can be questioned. This summary indicates that in order to be able to change the E-CC system, the UI Act will probably have to be amended, and changing the law is a lengthy process. Suspension Circular Letter
The closing of the E-CC web site means that employers (including those that are compliant) can no longer be issued with a UIF Compliance Certificate. The Circular on the E-Compliance Certificate web site letter is therefore not addressed directly to employers, but to all:
Government Departments,
State Agencies,
Organs of State,
Business (public and private), and
Non-profit-making organisations,
to make them aware that the UIF Compliance Certificate will no longer be created, and that they must adjust their tender application rules to no longer expect such a document. It could take some time before the tender application rules are changed, so companies that tender must be prepared for this, and armed with the circular letter, inform the tender adjudicators that the absence of a UIF Compliance Certificate does not disqualify the tender application. What Now? The Fund has a duty to encourage and enforce compliance, so in the short term perhaps other methods of enforcement will be put into operation. New administration methods can assist in making the Fund more efficient and improving compliance. This is disturbing.