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Law firm flags NHI ‘point of departure’

Publish date: 10 June 2024
Issue Number: 1080
Diary: IBA Legalbrief Africa
Category: South Africa

President Cryil Ramaphosa recently signed the National Health Insurance (NHI) Act into law, which could make life harder for companies trying to attract talent. BusinessTech notes that this new legislation will establish a government-run fund to buy healthcare products for the population in an effort to address heathcare inequality in the nation. According to Cliffe Dekker Hofmeyr (CDH), the point of departure on an employment perspective is the funding of the NHI fund. The NHI Act names three primary sources of funding for the fund: a payroll tax on employees, raising personal income tax, and redirecting most of the approximately R250bn spent on private medical aid schemes to the fund. ‘SA has a skills mismatch and the race for talent is fierce. Employers in SA compete with both local and international competitors in a shallow talent pool for workers who have valuable, industry-specific skills,’ said CDH. ‘To attract and retain employees, employers often offer perks such as private healthcare. The NHI Act may in time require employers to think of alternative creative perks to attract employees due to the dilution of the benefit of private medical health insurance.’

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