Contributors: Alisha Naik and Candidate Attorney
INTRODUCTION
The COVID-19 pandemic has presented an unparalleled level of economic uncertainty in South Africa. The spread of the pandemic has forced both employers and employees to adopt a proactive role in limiting the negative impact of the virus. It is essential that employers and employees are provided with updated information to help them navigate, survive and move forward through this crisis. This article will focus on two of the schemes provided by the government, namely: the ordinary Temporary Employer/Employee Relief Scheme (“TERS”) and the Covid-19 temporary relief scheme (“Covid-19 TERS”).
TEMPORARY EMPLOYER/EMPLOYEE RELIEF SCHEME
In December 2019, TERS was introduced to assist employers in distress is administered jointly by the Commission for Conciliation, Mediation and Arbitration (“CCMA”) and the Unemployment Insurance Fund (“UIF”).
What constitutes “employers in distress”?
Employers who wish to claim from the TERS may do so if they find themselves in one or more of the following circumstances:
- Business distress – a decrease in revenue, as reflected in the audited financial statements or the most recent management accounts.
- Employee distress – the high likelihood of retrenchment, short-time, and/or any other layoff;
- Operational distress – this occurs when a business enters into a new business venture, in anticipation of profits, but ends up creating a bigger debt book for themselves due to the fact that they have increased their operational costs.
The TERS applications are processed through the CCMA, and whilst employers are still able to submit such applications, they will not be regarded as priority during the current Covid-19 crisis. During this period, Employers are urged to rather consider the Covid-19 TERS (or other alternatives such as the National Disaster Benefit, which will not be discussed in this article).
COVID-19 TERS
On 26 March 2020, the Minister of Employment and Labour issued a directive which provides emergency relief and is intended to alleviate the economic backlash caused directly by the COVID-19 pandemic.
As per the directive in the Government Gazette (No. 43161), the basis of the Covid-19 TERS is as follows:
“Should an employer as a direct result of Covid-19 pandemic close its operations for a 3 (three) months or lesser period and suffer financial distress, the company shall qualify for a Covid19 Temporary Relief Benefit.” It is important to note that these benefits are delinked from the normal UIF benefits.
What is the application process?
Employers wishing to claim under this benefit must send a blank email to [email protected] and thereafter follow the online application process. This process will begin with the employer receiving an automated email response, which will attach the prescribed documents that must be completed and include instructions on how to complete same.
The prescribed documents, required for Covid-19 TERS application, are:
- a Letter of authority, on an official company letterhead, granting a specific individual permission to lodge a claim on behalf of the company;
- a Memorandum of Agreement (“MOA”) to be concluded by the UIF, Bargaining Council and Employer;
- a prescribed template which requires critical information from the employer;
- proof of the last three months of employees’ salaries; and confirmation of bank account details, in the form of certified latest bank statements. Thereafter, employers must submit the above documents to [email protected].
How is Covid-19 TERS calculated?
The salary benefits are calculated in terms of the Unemployment Insurance Act, 2001, and are the same as maternity leave benefits (i.e. calculated on a sliding ranging from 38% (highest earners) to 60% (lowest earners) which scale stops at R17 702 per month and any employee earning more than this will only get the 38% maximum benefit which is R6726.76 per month). If a company can still afford to pay its employees a portion of their salaries, the Covid-19 TERS may be used to “top up” salaries. Employees are entitled to this benefit through their employers, irrespective of how long they have contributed to normal UIF as these claims are independent of the normal UIF benefit.
What about a period of quarantine?
The Covid-19 TERS benefit extends to employees who are quarantined for 14 days due to Covid-19, irrespective of whether the employee is ill or not. The employer and employee have to submit a confirmation letter, together with the relevant application, as proof that they have agreed to the “special leave”. The letters will stand in place of a medical certificate. Should an employee be quarantined for more than 14 days, a medical certificate from a medical practitioner must be submitted with the application form.
CONCLUSION
In light of the fact that there are various UIF relief options available, several considerations need to be assessed in respect of each as employers cannot claim more than one UIF benefit simultaneously.
