On Wednesday (15 April), the Department of Employment and Labour published a list of frequently asked questions about the Covid-19 Temporary Employee / Employer Relief Scheme (TERS).
According to law firm Werksmans, the FAQs offer insight into what the Department and Unemployment Insurance Fund (UIF) view as the requirements that must be met in order to obtain benefits under the TERS.
Government has also provided a framework of when the deadline period will end and how much employees will get paid out.
The TERS applies to employers who are ‘facing distress, on lockdown and unable to pay salaries due to the lockdown’.
Werksmans noted that this differs from the regulations previously published and which govern the TERS as well as the terms of the Memorandum of Agreement for employers in that:
- The FAQs indicate that there must be an inability to pay salaries as opposed to a loss of income; and
- According to the FAQs, the financial distress must result specifically from the lockdown as opposed to the Covid-19 pandemic more broadly.
Who does not qualify?
The FAQs clearly state that the following, among others, will not qualify for the TERS:
- Employers who are not registered with the UIF. In this regard, the FAQs indicate that ‘companies who registered after the 15 Mach 2020 may not be eligible for the benefit‘;
- Informal businesses such as Spaza shops and hair salons etc. do not qualify. Instead, they must approach the Department of Small Business Development; and
- Anyone who works on commission or as freelancers.
The FAQs state that “the Covid -19 TERS Benefit is applicable for the 21 days lockdown period, (and that) no applications will be entertained once the lockdown is lifted“.
It is therefore imperative that employers ensure they make application for TERS during the lockdown period, Werksmans said.
“Insofar as the reference to ’21 day lockdown period’ is concerned it appears that the Department have failed to take into account the extension of the lockdown,” it said.
“As long as the application is processed prior to 16 April 2020, the benefits will be payable to the employer. In other words, they will be paid even if at the time of the payment the lockdown has ended. Once again the reference to 16 April 2020, as opposed to 30 April 2020, appears to be an error.”
The FAQs indicate that the turnaround time for processing the application is 10 days once complete documents have been provided.
In line with the previously published Memorandum of Agreement, Werksmans said that this appears to be 10 business days.
How much is the benefit?
The calculation of the benefit is based/informed by the last remuneration paid to the employee but capped to the current ceiling of R17,712.
The benefit amount is then determined in line with the current sliding scale which ranges between 38% to 60%.
The ‘higher the remuneration the lower the replacement rate’. For instance, where the remuneration is R 20,000 the calculation will be based on R 17 712 (ceiling).
Since this is the highest remuneration taken into account, the replacement rate will be 38%, which will be (38% of R 17 712 = (R 221.28 per day) = R 6 638.40 for 30 days or R 6 859.68 for 31 days).
The UIF will take into consideration the current salary of the employee to determine the Income Replacement Rate applicable.
Werksmans noted that employers can now also apply for the TERS online. Although this is not expressly mentioned in the FAQs it is catered for on the website.
Nevertheless, an email must still be sent to [email protected] to “register” to obtain the necessary information. it said.
You can read the full FAQs below: