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COVID-19 Relief scheme: Implications for employers and employees of the TERS
07 Apr 2020 3:37 pm by Ingrid Barbara Lewin
COVID-19 Relief scheme – Implications for employers and employees of the temporary employer/employee relief scheme established by the Department of Employment and Labour.
Written by Ingrid Lewin, Admitted attorney and labour law specialist, for LexisNexis South Africa.
[Durban, 07 April 2020]
For a period of three months, unless it is withdrawn earlier, the Department of Employment and Labour has issued a Directive establishing a temporary employer/employee relief scheme. This will entitle employees, who have lost income as a result of a temporary closure of the employer’s business due to the COVID-19 pandemic, to special unemployment benefits for the period of the national disaster announced by the President.
Effect of the lockdown
Until the end of the national disaster and the subsequent lockdown period due to the COVID-19 pandemic (the pandemic) announced by the President, the labour market will be severely prejudiced as many employers have had to close their businesses and compel their employees to take leave. Only those who provide defined essential services can leave their homes and a fortunate few can work from home, thus enabling them and their employers to stay financially afloat.
Essential services are, as per the definition in section 213 of the Labour Relations Act 66 of 1995 (LRA), services which, if interrupted, will endanger the life, personal safety or health of the whole or any part of the population, it includes the Parliamentary Service and South African Police Service. However, Annexure B of GN 318 of 18 March 2020: Regulations issued in terms of section 27(2) of the Disaster Management Act 57 of 2002 (DMA) published in Government Gazette 43107, provides a closed list of essential goods and services and a permit which employers must complete for essential service workers to carry with them together with their identity document (ID) during this time.
If an essential service worker is confronted by officials charged with enforcing the lockdown and does not have the permit or their ID with them, they will be sent home for the duration of the lockdown. See Forms and precedents: Form 1 – Permit to perform essential service.
Employers who are keeping their businesses open because they are providing an essential service as defined are required to apply on the Companies and Intellectual Property Commission (CIPC) Bizportal website and obtain a certificate that allows them to continue trading.
COVID-19 Temporary Employer/Employee Relief Scheme
After the President announced a state of national disaster and lockdown, the Department of Employment and Labour issued a Directive under GN 215 of 26 March 2020: Covid-19 Temporary Relief Scheme published in Government Gazette 43161, establishing the COVID-19 Temporary Employer/Employee Relief Scheme (TERS) in anticipation that most employees will be compelled to take leave and will lose income as most employers, particularly those who have small businesses, will not be able to pay them1.
A Directive issued by the Department of Employment and Labour acknowledges that employers can insist that employees use their leave entitlement, as provided for in the Basic Conditions of Employment Act 75 of 1997 (BCEA) or their contracts of employment, during the lockdown. However, the Directive encourages employers not to request employees to use their leave entitlements but rather apply for the TERS benefits.
Those employees who are being paid their full salaries will not qualify for TERS benefits. However, according to a notice on the Unemployment Insurance Fund (UIF) website, partial payment will not disqualify employees from receiving the benefit.
Employers who qualify for the TERS benefit, include those who:
- are registered with the UIF;
- suffer financial distress because they have had to close their operations for a period of three months (or a lesser period) as a direct a result of the pandemic; and
- comply with the application procedure for the financial relief scheme.
Employees who are quarantined for 14 days due to the pandemic qualify for illness benefits.
The amount of the benefit
Employees who qualify for the normal unemployment or reduced working time insurance benefits, calculated in terms of section 12 and 13 of the Unemployment Insurance Act 63 of 2001 (UIA), will receive those benefits, provided that the benefit will not be less than the sector specific minimum wage. See Guidance note: Unemployment benefits
Illness benefits for employees who are quarantined for 14 days will be paid the usual amount of illness benefits for those days. See Guidance note: Illness benefits
The TERS benefit is de-linked from the UIF’s normal unemployment benefits and must be used to pay for the cost of the employees’ salaries during the temporary closure of the business operations. For those who do not qualify for the normal unemployment benefits, the rule that an employee accumulates one days’ credit for every four days worked and the maximum 365 days credit for every four years worked will not apply.
An employee will be paid in terms of the income replacement rate sliding scale as provided for in Schedule 3 of the UIA and will be capped at R17 712 a month for each employee. If the employee’s determined income, determined in terms of the sliding scale, falls below the minimum wage of the sector concerned, the employee will be paid a replacement income equal to the minimum wage of the sector concerned.
TERS application procedure
The Unemployment Insurance Commissioner has issued a Covid19 TERS Easy Benefit Aid laying out the procedure which must be followed. See Other resources: Easy-Aid Guide for Employers for UIF Benefits
The steps, very simply, are as follows:
- Employers can request the benefit by reporting their closure by email to the dedicated email address: Covid19ters@labour.gov.za.
- An automated reply acknowledging receipt will be received with a request for the following documents:
- Letter of Authority, on an official company letterhead granting permission to an individual specified to lodge a claim on behalf of the company.
- Memorandum of Understanding (completion of the agreement between the UIF and the employer or UIF and a bargaining council).
- A prescribed template that will require critical information from the employer.
- Evidence/payroll as proof of the employee’s salary for the last 3 months.
- Confirmation of bank account details in the form of a certified bank statement (should be the latest).
All documents submitted will be subject to verification.
All these documents must then be sent to the UIF dedicated mailbox: Covid19UIFclaims@labour.gov.za.
If the template is complete and the documents are valid and accurate, the spreadsheet will be “dumped” into an automatic calculator to produce the benefit amount due to the beneficiaries and the total amount to be transferred to the employer or bargaining council or another agreed method. Payment will only be effected if the Memorandum of Understanding between the fund and the employer/bargaining council has been signed off.
For quarantined employees claiming illness benefits, the usual procedure applies. However, letters from the employee and the employer will be accepted as proof for those who are quarantined for 14 days. If the employee is quarantined for a longer period, they will be required to submit a medical certificate.
Further information and assistance
The UIF has a dedicated phone line to assist employers, employees and bargaining councils. The contact number is: 012 337 1997.
In addition, all relevant, key information and urgent changes to the regulations will be published on the Department of Employment and Labour website - http://www.labour.gov.za/.
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