There is a serious concern amongst employers across South Africa, and across all industries, regarding whether they will be able to continue operating after the lockdown period ends and during the COVID-19 pandemic. Will they have enough cash reserves and funds available to pay their employees during the lockdown period, during the phased easing of lockdown restriction or after the lockdown is lifted completely?
Here are three important and practical measures employers must take before making a knee-jerk reaction to retrench employees:
- Work from Home:
Determine whether employees can contribute remotely.
- Layoffs:
Should remote working not be an option, alternatives to retrenchment are a) for employees to work short-time or b) to temporarily lay off employees without pay. Temporary layoff is a possible solution in the short-term and can be coupled with UIF relief. On 18 January 2018, the President assented to several amendments to the Unemployment Insurance Act of 2001, including the insertion of the following provision to section 12 of the Act:
“(1B) A contributor employed in any sector who loses his or her income due to reduced working time, despite being employed, is entitled to benefits if the contributor’s total income falls below the benefit level that the contributor would have received if he or she had become wholly unemployed, subject to that contributor having enough credits.”
This caters for precisely the type of situation faced by employees at the moment – those who will be forced to work short-time or are temporarily laid off. The relevant forms are available from the Department of Labour (“DOL”). The DOL has published an Easy Guide to assist with the claiming of Unemployment benefits for employees who are:
- Laid off or placed on short-time;
- Placed under quarantine; or
- Who have passed away from the disease.
Click here to download the Easy Guide for Employers
- Temporary Employee/Employer Relief Scheme (“TERS”):
Employers can claim relief from the UIF for employees’ salaries they are either partially or completely unable to pay, or have been required to take annual leave in terms of section 22(10) of the Basic Conditions of Employment Act, during the lockdown period and as a result thereof. Employers who required employees to take annual leave can now set off any amount received from the UIF in terms of the COVID-19 benefit against the amount paid to the employee in respect of annual leave provided that the employee is credited with the proportionate entitlement to paid annual leave in future. Employers can also pay employees based on the directive and set off the payments with the UIF benefit received.
Here are some practical guidelines for employers regarding the TERS benefit:
- Previously the UIF TERS benefits calculation stated that where the employer’s top-up and the UIF TERS benefit exceeded R17 712 the employee did not qualify for a TERS benefit. The UIF will now pay additional benefits even if the employer has paid the employee a certain portion of his or her salary, provided that the total amount paid to the employee does not exceed his or her normal salary.
- Should the amount of the benefit to which an employee is entitled by applying the UIF’s formula be less than R3 500, the employee will receive the minimum of R3 500.
- For employees earning above the threshold amount of R17 712 per month, the benefit that may be received is the maximum of 38% of R17 712, which is R6 638.33.
- Should the employee receive a portion of their R6 000 salary (still below the R17 712 threshold), e.g. R2 800, a day and month benefit will be calculated, and the employee receive a R3 200 UIF contribution to receive up to a normal salary of R6 000 (R2 800 + R3200).
- Should the employee receive a 50% portion of their R18640 salary (above the R17 712 threshold), e.g. R9 320, a day and month benefit will be calculated, and the employee receive a R6 638.33 UIF contribution to receive a salary of R15958.33 (R9 320 + R6 638.33).
What are the benefits available to employees where the employer is unable to pay salaries or pay only a portion of their salaries?
The following is required to apply for this benefit:
- Applications can only be done online at https://uifecc.labour.gov.za/covid19/.
- Employer information to be provided as requested in the application form.
- Confirmation of bank details (supported by bank statements).
Click here for the COVID-19 FAQ
What process should be followed by employers during this time?
Step 1:
As is required in terms of Section 189 of the Labour Relations Act, the employer’s first duty is to call the affected employees in, notify them in writing that their positions have been selected for possible retrenchment, consult with them and allow them an opportunity to make representations in relation to the options provided to them.
Step 2:
Ideally, consensus should be reached on which measures are to be taken in both the employer and employees’ interests and thereafter be implemented.
Step 3:
Should this prove to be fruitless, the employer must consider either temporary layoff and/or applying for TERS before the process of retrenchment can commence.
Lastly, here are some useful links:
- Easy guide for electronic claims – Click Here
- TERS Solutions Guide – Click Here
- Workplace Readiness Guide – Click Here
If you require any assistance or guidance, you are more than welcome to contact us.
