Potential closing of gap in social protection for self-employed workers

On 23 July 2021, the South African Law Reform Commission (SALRC) released a media statement and discussion paper relating to its investigation into maternity and parental benefits for self-employed workers in the informal economy in South Africa. The investigation and its recommendations signal an important recognition of and move to address the inequalities between women and men in South Africa and the obstacles to women’s full participation in the economy.

2 Aug 2021 2 min read Employment Law Alert Article

At a glance

  • The South African Law Reform Commission (SALRC) has released a discussion paper on maternity and parental benefits for self-employed workers in the informal economy, aiming to address gender inequalities and promote women's economic participation.
  • Currently, maternity and parental benefits are limited to employees, funded through contributions to the Unemployment Insurance Fund (UIF). Extending these benefits to self-employed workers raises questions about contribution requirements and the scope of the definition of "self-employed worker."
  • The discussion paper recommends extending the UIF system to self-employed workers and proposes a definition of "self-employed worker" that includes various scenarios. Public input on the discussion paper is open until 29 October 2021.

The SALRC is an advisory body seeking to renew and improve the law of our country. In its discussion paper, it identifies the fact that self-employed workers in the informal sector are not afforded maternity and parental benefits as a critical gap in the state’s social protection system. The ultimate purpose of the SALRC’s investigation is to give effect to South Africa’s obligations in terms of the Constitution and applicable regional and international gender equality conventions.

While parental, adoption and commissioning parental leave and benefits are recent positive changes in our law, these are currently restricted to employees. Employees who suffer a loss of earnings while on maternity, parental, adoption or commissioning parental leave can claim benefits in terms of the Unemployment Insurance Act 63 of 2001 (UIA) and the Unemployment Insurance Contributions Act 4 of 2002 (UICA). These benefits are primarily funded through mandatory contributions from both employers and employees to the Unemployment Insurance Fund (UIF). Contribution to the fund is a prerequisite for accessing the benefits.

This raises one of the challenges that will need to be addressed if maternity and parental benefits are extended to self-employed workers in the informal economy namely, whether informal workers will contribute to the fund and, if so, how; and whether participation will be compulsory or voluntary. The discussion paper makes a number of recommendations in relation to the nature of the benefits which may be extended, including that the UIF system be extended by the Department of Employment and Labour to self-employed workers to allow for the granting of maternity and parental benefits, as currently provided for in the UIA and Basic Conditions of Employment Act 75 of 1997 (BCEA), to all workers.

Another important consideration is the scope of the definition of “self-employed worker”. The discussion paper recommends that “self-employed worker” be defined as “any person, including an independent contractor, who (a) has created her or his own employment opportunities and is not accountable to an employer; (b) works for a company or entity that is not incorporated and not registered for taxation; or (c) in any manner assists in carrying on or conducting the business of an employer in the informal economy.”  It is further recommended that the definition of “self-employed worker” be integrated into the definition of “employee” in the relevant provisions of the UIA, UICA and BCEA.

The discussion paper is open for public comment and input by no later than 29 October 2021.

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