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Much confusion has arisen with the introduction of the Covid-19 temporary employee / employer relief scheme (C19 TERS), previously referred to as a “National Disaster Benefit”, in terms of a directive that was gazetted on 26 March 2020.
C19 TERS is not the only UIF relief option available in the case of temporary lay-offs. Some employers who laid off their employees without pay in March may have submitted claims under the UIF ‘Reduced working time’ option. However, as discussed below this is the appropriate route to go after the termination of C19TERS relief has come to an end.[NOTE: The confusion has by and large been caused by a Easy- Aid Guide for Employers to access UIF benefits that seems to confuse C19 TERS document requirements with that of the UIF ‘Reduced working time’ option.]
So, what is the difference between these two options? May employers apply for both?
TEMPORARY LAY-OFF OPTIONS
1. UIF ‘Reduced working time’ option
Although the C19 TERS (described under point 2 below) will enjoy priority for from the end of March to the end of the National State of Disaster, the ‘reduced working time’ option has been, and continues to be, available to employers and employees.
The ‘reduced working time’ option was originally intended for employees who have to work short time. This benefit was introduced fairly recently (2018) in the following terms:
“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.”
(The Government Gazette is available at the link below).
It has been confirmed that this scheme is not only available to employees that work reduced working hours, but also available to employees that are on temporary lay-off without pay. The following documents need to be submitted:
The following documents need to be submitted:
- UI 19 and UI 2.7 (completed by employer)
- UI 2.1 (application form)
- UI 2.8 (bank form completed by bank)
- Letter from employer confirming reduced work time (or lay-off) is due to the Coronavirus
- Copy of ID document
Also see the “UIF Easy Guide for Electronic claims”
(The UIF Easy Guide and the relevant forms are available at the link below).
Features of the ‘reduced working time’ option:
- The claim is subject to the employee having enough credits.
- The claim is by the employee (with the assistance of the employer).
- The practical challenges of obtaining and submitting forms, have been facilitated by an online option (see “UIF Easy Guide for Electronic claims” available at the link below).
- The benefit will be calculated in terms of the income replacement rate sliding scale of 38 % (for high earners) up to 60 % (for low earners) as provided in the Unemployment Insurance Act, subject to the maximum threshold as determined from time to time.
- It is possible that lower earning employees may get out less than the minimum wage under this dispensation.
- Payment is made by the UIF directly into the employee’s bank account.
- Subject to available credits the employee can (theoretically) receive this benefit for up to 12 months.
2. Covid-19 temporary employee / employer relief scheme (C19 TERS)
(Currently only be available for claims up to 15 September 2020, but possibly to be extended until the end of the National State of Disaster)
This scheme is intended to provide emergency relief to enable employers to pay employees who are temporarily laid off due to the Covid-19 crisis.
The directive issued on 26 March 2020 was amended on 6 April 2020 (GG dated 8 April 2020) on 16 April 2020 (GG dated 5 May 2020) and again on 25 May 2020. The most important amendments appear from the following (underlined portions have been inserted through in the 6 April amendment):
“… in view of social distancing and in order to avoid in person individual employee applications at Departmental offices for the Covid-19 benefit during lockdown, should an employer as a direct result of Covid-19 pandemic close its operations, or a part of the operations, for a 3 (three) month or lesser period the employer must apply in accordance with clause 5.1 and 5.2 for Covid-19 benefits for and on behalf of its employees.”
“temporary lay-off means reduction in work following a temporary closure of business, whether total or partial, due to Covid-19 pandemic for the period of the National Disaster.”
These amendments now clearly confirm that an employer does not have to close its operations completely to qualify for benefits under C19 TERS.
The amendments to the directive on 16 April 2020 provide more clarity on how annual leave and advances paid by employers can be dealt with – see discussion under ANNUAL LEAVE, ADVANCES AND LOANS below.
(The directive, as well as amendments thereto, are available at the link below.)
Features of the COVID-19 TERS option:
- It is a separate benefit scheme (separate from normal UIF benefits with its own set of forms and requirements) which cannot be claimed at the same time as the UIF ‘reduced working time’ benefit.
- It applies where the employer has temporarily closed its operations, completely or partially, as a direct result of Covid-19.
- Claims are not dependent on an employee having any UIF credits and will be entitled to benefits irrespective of how long they have contributed.
- The employer (rather than the employee) submits a claim for UIF.
- Payment would in most instances be made directly to the employer, who would then pay the money over to the employees.
- Employees may submit claims individually if employers have failed or refused to so.
- The definition of ‘workers’ has been extended (in the 25 May amendment) to accommodate employees who were unable to claim merely as a result of circumstances beyond their control (e.g. employer failed to register registering them or did not pay contributions over to the UIF).
- Online process: Send blank email to Covid19ters@labour.gov.za and you receive an automated response with the relevant forms and other requirements. You are directed you to an online portal where details can be submitted (The online portal can be found at https://uifecc.labour.gov.za/covid19/ ).
- All employers have to accept the terms of a memorandum of agreement (MOA) with the UIF. This is done as part of automated on-line process.
- The requirement for the employer to open a dedicated UIF bank account, or to clear an existing account, has been scrapped. It would nevertheless be useful to have a separate account in order to track all payments relating to Covid-19 benefits.
- The benefit will be calculated in terms of the income replacement rate sliding scale of 38 % (for high earners) up to 60 % (for low earners) as provided in the Unemployment Insurance Act, subject to the maximum threshold which is currently R17712. The maximum benefit for a high earner would be 38 % of R17712 a month, which amounts to about R6 730 a month. This has been confirmed by an amendment to paragraph 3.4 of the directive (available at the link below).
- After correcting errors in their system, the UIF has been to ‘topping up’ payments made by the employer. In many instances (especially claim submissions done earlier in April) employers are still waiting for errors to be corrected.
- For the duration of the shutdown or a maximum period of three months, the benefit will be not less than the minimum wage (referred to as a ‘flat rate’ of R3500 per month). After the expiry of this 3-month period, an employee may only be able to claim normal UIF ‘reduced working hours’ benefits which would be based on the above sliding scale and amount to less than the minimum wage.
- The UIF has sped up the turnaround time to process applications, indicating that it “is less than 10 days with complete, valid and accurate documents.”
(Labourwise HR offers an administrative service to assist employers with UIF COVID-19 TERS submissions. Employers who are interested in making use of this service can Contact us.)
(The Covid-19 guidelines are available at the link below.)
Which UIF benefit option do I choose?
The Covid-19 TERS is intended for as emergency relief with a relatively quick turnaround time. It is more beneficial and the UIF has become much more efficient in processing claims. All affected employers, large and small, have been encouraged to make use of Covid-19 TERS for as long as it has been or may be available. Access to this relief may be available until the end of the National State of Disaster.
Many employers will not be able to resume business fully or at all for some time. It may be necessary for the lay-off or reduced working hours for employees to continue. In these circumstances, employees will still have access to UIF ‘reduced working time’ benefits.
ANNUAL LEAVE, ADVANCES AND LOANS
There have been conflicting reports on what employers are entitled to do with regard to leave.
In our view the point of departure is this: The lock-down has been imposed by Government. Neither employers nor employees are to blame. Employees who have to stay at home are unable to tender their services due to the lock-down. They are not entitled to be paid. So, what measures are available to mitigate the financial deprivation suffered by employees during the lock-down?
There seem to be the following options:
- Employees take the annual leave that is due to them.
- UIF benefits (UIF ‘reduced working time’ benefit or Covid-19 TERS benefit).
- Employers pay their employees in part or in full, if they have the resources to do so (even though they have no obligation).
- Employers grant their employees loans/ advances.
What to do with annual leave?
Employers may already have an arrangement in place that employees use their annual leave credits during the lock-down. It would have the advantage of providing immediate financial relief during the lock-down.
In terms of a further amendment to the directive issued 16 April 2020 (gazetted on 5 May 2020), employers who have required employees to take annual leave during the lock-down, may use C19TERS benefits to credit the employees’ leave proportionately (For example: An employee took 10 annual leave days during the lock-down; the employer then successfully claims 50% of her pay for those 10 days in C19TERS benefits; the employer may then take those benefits for itself and credit her with 5 days’ annual leave). Employers should keep a proper record of these calculations for auditing purposes.
Employers who have already paid out leave, but have not submitted claims for C19TERS benefits in respect of the leave period, should still be able to do so.
Loans and advances
The amendment of 17 April also urges employers to pay employees in advance and then to recover (i.e. “reimburse or set off”) such payment from the CT19TERS benefits once these are paid out. (A guideline on how to calculate C19TERS benefits is available at the link below).
Even though the directive authorises a recovery equal to the COVID-19 TERS benefits, we would nevertheless recommend that employers get employees to sign an acknowledgement of debt to enable the employer to recover any advances paid from the employees’ remuneration in future. Again, employers should keep proper records of how payments are allocated.
(Examples of an acknowledgement of debt – in English and Afrikaans – are available to Labourwise subscribers).
COIDA AND SICK LEAVE
Covid-19 has been declared an occupational disease. If an employee is absent due to contracting the Coronavirus out of and in the course of his or her employment, it will not be regarded as sick leave. Instead it would be covered in terms of the Compensation for Occupational Injuries and Diseases Act of 1993 (COIDA). The employee must as soon as possible after the commencement of a disease give written notice thereof to his or her employer or to the employer where he or she was last employed, and he or she may also give written notice of the said disease in the prescribed manner to the compensation commissioner. Thereafter, a further process needs to be followed by the employer and a medical practitioner (For more details see our article at https://www.labourwise.co.za/labour-articles/covid-19-sick-leave-crisis-looming)
If, however, it cannot be shown that the Coronavirus was contracted in the course of the employee’s employment, any period of absence as a result of being infected will be regarded as sick leave.
OTHER UIF OPTIONS
Illness benefits for 14-day quarantine period
This UIF benefit is available to employees who are quarantined for 14 days due the Coronavirus (i.e. “special leave”), irrespective whether the employee has contracted the virus or not. No medical certificate is needed for the first 14 days but the employer and employee have to submit a letter of proof that they have agreed to “special leave”. In addition to the letter referred to above, there is certain other documentation that has to be submitted (See resources at the link below). This form of relief should be available until the end of the National State of Disaster.
In the unfortunate event that an employee passes away, certain beneficiaries may apply for benefits (See “UIF Easy-Aid Guide” at the link below). The following documents need to be submitted:
- UI 19 and UI 53 (completed by employer)
- UI 2.5 or UI 2.6
- Death certificate
- UI 2.8 (bank form completed by bank)
- Copies of ID documents of applicant and the deceased
OTHER ‘TERS’ BENEFITS (NON COVID-19 RELATED)
There is another temporary relief benefit scheme (TERS) that was originally introduced towards the end of 2019. It was introduced to assist employers in distress, in order to avoid retrenchments. This scheme – which is overseen by the CCMA – is not to be confused with the Covid-19 TERS scheme.
This scheme does not envisage normal lay-offs. Instead employees are laid off work for a period while they receive training, along with a training allowance. It involves a rather cumbersome process (e.g. requires the submission of annual financial statements, turnaround plan, etc.). While employers should still be able to submit an application for relief in terms of this scheme, it is unlikely to enjoy priority during the current Covid-19 crisis. (See guideline at the link below).
There have been rapid developments surrounding the Covid-19 crisis and the relief options available. Amidst the confusion, we are doing our best to interpret the regulatory changes in a way that makes sense. The situation may change from day to day and the views expressed above should not be regarded as legal advice.
This document will be updated as matters develop. We will alert our readers of any changes.
For access to the updated documents, forms and other relevant information referred to above, please click here.
Jan Truter for www.labourwise.co.za
Disclaimer: The material above is provided for general information purposes only and does not constitute legal or professional advice. Neither the author nor the publisher accepts responsibility for any loss or damage that may arise from reliance on information contained in this article.