The COVID-19 nationwide lockdown has brought about various emergency measures which for the most part are unknown territories to South Africans. Many businesses are under pressure, and in order to keep their doors open, have had to resort to emergency measures. These measures can only be viable if efficiently captured and processed by the various departments and stakeholders of the South African government. That said, there is hope for employers and employees, particularly those employees who need to work short time or are not able to generate an income due to being unable to work as a result of the Lockdown - temporary lay-off as it is defined. The Minister of Employment and Labour has unlocked by virtue of the regulations under the Disaster Management Act (as amendedID19), the Temporary Employer/Employee Relief Scheme ("COVID19 - TERS") in terms of the Unemployment Insurance Act 63 of 2001 ("the UIF Act") to assist employers and employees during this time of crisis. There are various measures an employer can utilize in order to alleviate the pressures created by the current crisis, however for purposes of this article we will only be discussing one of these measures, the COVID19-TERS UIF benefit specifically.
Who is entitled to receive benefits
It is important to note that the UIF Act applies to all employers and employees save for the following employees in the ordinary course: workers working less than 24 hours a month for an employer, learners, public servants, foreigners working on contract, workers who get a monthly State (old age) pension, or workers who only earn commission.1 Furthermore, employees who receive certain benefits as indicated in section 14 of the UIF Act are excluded from claiming. 2 These employees (hereinafter referred to as the "contributors") who are excluded due to receiving certain benefits include the following but are not limited to: a contributor that receives a monthly pension from the State, or any benefit from the Compensation Fund established under the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No. 130 of 1993) as a result of an occupational injury or disease, which injury or disease caused the total or temporary unemployment of that contributor; or benefits received from any unemployment fund or scheme established by a council under section 28(g) or 43(c) of the Labour Relations Act, 1995 (as Amended).The above section 28(g) and section 43(c) refer to the powers of bargaining councils and statutory councils to establish and administer pension, provident, medical aid, sick pay, holiday, unemployment schemes or funds or any similar schemes or funds for the benefit of one or more of the parties to the statutory council or their members (Act No. 66 of 1995). Meaning, that if a contributor receives benefits from a fund so created, such contributor will not be entitled to claim from the UIF. These exclusions apply in the ordinary course.
Various benefits can be claimed in terms of section 12 of the Act with the COVID19-TERS being the recent addition in the wake of the anticipated onslaught of COVID-19. The employer applies on behalf of its employees alternatively a representative who is authorized to do so on behalf of the employer. The authorization will have to be issued by providing documentary proof to show that the person acting on behalf of the employer has the necessary authorization to do so. This is crucial as the information dispensed by such person will be of a confidential nature. It is advisable for the employer to submit directly as this should speed up the claims process as the employer will have a UIF reference number that can be effectively followed up upon. The UIF further requires proof of salaries in the form of payslips or confirmation of payroll and bank statements. It is advisable to have all this information ready before submitting to the UIF or seek appropriate advice where you employ a substantial amount of employees in order to ensure that all required documentation is submitted the first time around, as failure to submit correctly may result in a delay of payment.
What Special Arrangements are in Place For Employers with More Than 10 Employees?
The first point of reference is to send an email to Covid19ters@labour.gov.za and to wait for an automated response which will inform you of the required steps to lodge a claim with the UIF. Worth noting is that where an employer has more than 10 employees such an employer is required to sign a contract, which is referred to as the Memorandum of Agreement ("MOA"), entered into between the UIF and the Council / Employer. In terms of the MOA, an employee who has been appointed after the commencement of the MOA shall receive no payment in respect of COVID19-TERS. In terms of paragraph 5.5 of the MOA, any unutilized funds shall be refunded to the UIF together with interest accrued thereon. Furthermore, the employer must undertake to utilize the COVID19-TERS exclusively and solely for the benefit of the employees and if contributions are not kept up to date the employer can be required to sign an acknowledgement of debt. Lastly, it is advisable that the accounting records for the COVID19 - TERS payments be kept separate from other forms of accounting records and it should be identifiable. Employers are urged to seek appropriate advice and to create policies to streamline the process and align such processes with the prevailing UIF terms and conditions if such processes are not in place yet.
How Benefits Will be Assessed
In terms of schedule 3 of the Act, the benefit is calculated in terms of the income replacement rate sliding scale of 38% for employees that fall under the higher-income bracket and up to 60% for employees that fall under the lower-income bracket. The maximum income threshold for a contributor is currently at R17 712.00 and R3500.00 is the minimum income threshold. This means that a contributor earning a salary of R17 712.00 would receive approximately R6730,56 being the maximum amount claimable by calculating 38% of the maximum income threshold. Should an employee's income fall below R3500 per month, the employee will be paid a replacement income equal to that amount R3500.3 This is only an estimate and will be subject to the assessment done by the UIF.
Times are tougher than usual due to the COVID-19 pandemic and lengthy Lockdown, and employers and employees are urged to utilize the above benefit to alleviate some of the pressures created by the Lock Down. The UIF has been inundated with claims and it will help to properly submit claims in order to avoid delayed payments.
1. Section 3 of the Unemployment Insurance Act 63 of 2001("the Act")
2. Section 14 of the Act
3. Regulation 3 of GN 215 of 26 March 2020 (as Amended)
Originally published 8 May 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.