The Covid-19 Temporary Relief Scheme Refined

23 Apr 2020 2:33 pm

The Covid-19 Temporary Relief Scheme Refined – Recent Amendments to the Minister’s Directive

Amendments published to the Directive responsible for the implementation of the Scheme on 08 April 2020 have clarified the application of the Scheme and have further refined its operation.

Written by Peter Turner, Associate at Dingley Marshall, for LexisNexis South Africa.

[Durban, 16 April 2020]

The Covid-19 Temporary Relief Scheme (“the Scheme”) was implemented by the Department of Labour as a direct remedial response to the havoc wrecked on small to medium enterprises (“SMME’s”) by the Covid-19 pandemic. Whilst the Scheme has been functional since 26 March 2020, amendments published to the Directive responsible for the implementation of the Scheme on 08 April 2020 have clarified the application of the Scheme and have further refined its operation.

The most relevant amendments affected by the amended Directives are as follows:

Item 3.1 of the Directive, as it was prior to the recent amendments, reads 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 Covid-19 Temporary Relief Benefit”. The Directive was accordingly prepared with a singular focus on employers whereas the amended Item 3.1 replaces the use of the word “company” and substitutes it with “affected employees” thereby correctly shifting the focus of the ultimate benefit derived from the Scheme from the employer to the employees affected by its temporary closure.

Item 3.5 of the original Directive required that in that event that the value of the benefit an employee qualified for in terms of the Scheme was less than the minimum wage set for that particular sector, the employee would be entitled to an amount equal to that of the relevant minimum wage. However, this Item has been amended and now sets the minimum benefit, irrespective of sector or industry, as R3,500.00, and in the circumstances where an employee’s income calculated in terms of the income replacement sliding scale falls below this amount (R3,500.00).

The amendments to the Directive acknowledge that access to the benefits derived from the Scheme has been extended to include bargaining councils as the body applying for the benefit, in addition to employers.

In this regard, the amendments prohibit the employer of an employee who derives his entitlement to the benefit from a bargaining council, from making application in terms of the Scheme, and the employee of that employer may not receive any payment in terms of the Scheme other than through the bargaining council. In other words, employees are prevented from “double-dipping”.

This restriction only applies if the parties to the bargaining council have concluded a collective agreement that has been extended by the Minister of Employment and Labour in terms of section 32 of the Labour Relations Act – this means that the application of the collective agreement is expanded to include those who were not initially party to the collective agreement. The collective agreement must expressly state that funds received from the Scheme will be used solely for the remuneration of employees whose income has been affected by the Covid-19 pandemic.

The restriction will also apply in circumstances where the bargaining council and the UIF have concluded a Memorandum of Agreement (“MOA”) regarding the disbursement of funds to employees in terms of a collective agreement, and if the MOA permits, to employees falling outside the ambit of the collective agreement.

Very importantly, Item 5.3 of the initial Directive has been amended and now allows employees who are still receiving some form of reduced income from their employers, to benefit. However, this will only be allowed if the combined value of the employee’s income and the benefit does not exceed the remuneration the employee would, in normal circumstances, have earned during that period.

Finally, Item 5.4 has been replaced in its entirety and requires that any funds disbursed from the UIF to employers or bargaining council must be utilised solely for remunerating employees. Also, the amendments require that no amount paid by or for the UIF to an employer or bargaining council under the Scheme will fall into the general assets of the employer or bargaining council, and no bank may refuse to release or administer the transfer of that amount into the bank account of the employee as required by the Scheme, irrespective whether the employer or bargaining council is in breach of its overdraft or similar contractual arrangements with the bank concerned.

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