I would like to know if a Sole Proprietor can register with the Department of Labour for UIF?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
In terms of section 1 of the Unemployment Insurance Contributions Act, 2002, “employee” means any natural person who receives any remuneration or to whom any remuneration accrues in respect of services rendered or to be rendered by that person, but excludes an independent contractor.
The Act doesn’t define the phrase ‘independent contractor’ and it must take its ordinary meaning.
In terms of section 12 of the Unemployment Insurance Act, 2001, it is the “contributor’ that will be entitled to the benefits under this Act. A "contributor" means “a natural person -
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who is or was employed;
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to whom this Act, in terms of section 3, applies; and
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who can satisfy the Commissioner that he or she has made contributions for purposes of this Act;”
A sole proprietor can therefore not contribute to the unemployment insurance fund, because the sole proprietor cannot be an employee who becomes unemployed. If the sole proprietor employees employees, the sole proprietor will have to register and make contributions in respect of the employees.