Important changes around South Africa’s coronavirus employee relief funding – what you need to know

The Department of Labour has published a new directive clarifying a number of issues around the Covid-19 Temporary Employee / Employer Relief Scheme (TERS).

According to law firm Werksmans, the directive makes a number of important changes to the benefit and the application procedures.

Below the firm outlined the most important changes and how they will impact businesses and employees.

Employer’s obligation to apply for the TERS benefit

The directives now make it clear that should an employer close all or part of its operations as a result of the Covid-19 pandemic for three months or less period then the employer must apply for the TERS Covid-19 benefits on behalf of its affected employees.

This obligation flows from the impact of social distancing and the need to avoid in person individual employee applications at Department of Labour, Werksmans said.

“The ‘must apply’ wording does not mean that an employer has no choice, and always has to apply for the TERS Covid-19 benefit; instead, if the Covid-19 benefit is applicable to its employees, the employees cannot apply in their individual capacity and the employer must do so on their behalf,” Werksmans said.

“The obligation to apply for the TERS Covide-19 benefit would only arise where the employees are not being paid their full salary (either in whole or in part) or have been placed on annual leave.

Advances on the TERS Covid-19 benefit

The directives now provide that employers are urged to pay employees their TERS Covid-19 Benefit in advance, and then to offset the advance payment against the payments from UIF.

“We have enquired from the UIF how an employer must disclose to the UIF that it has paid its employees an advance on their TERS Covid-19 benefit,” Werksmans said.

“The UIF have informed us that if it is an advance payment, there only needs to be an agreement between the employer and the employee. The UIF also advised that the employer should rather not include the advance payments in the prescribed template under ‘remuneration during shutdown’ as this would be deemed a salary payment.

“Rather, the employer should merely keep all necessary records that would indicate that the payment made was an advance payment and the TERS Covid-19 benefit was used to settle the payment. The employer must be able to provide these records if the UIF audits them.”

If the payment is a gratuitous payment, the UIF indicated that this must be disclosed in the ‘remuneration during shutdown’ column in the prescribed template, Werksmans said.

Annual leave taken during the lockdown

If an employer has required an employee to take annual leave during the lockdown in terms of section 22(1)(b) of the Basic Conditions of Employment Act then it may set off any amount received from the UIF under the TERS scheme against the amount paid to the employee in respect of annual leave.

The employee must then be credited with the proportionate entitlement to annual leave in the future.

“It must be noted that the reference to section 22(1)(b) of the BCEA in clause 5.4 is incorrect. Presumably, the reference should be to section 20(10)(b) of the BCEA,” Werksmans said.

“The wording of the new section seems to restrict this set-off only to employers who have placed employees on compulsory annual leave.

“We do not believe that this is the purpose of this amendment and that any employer which has placed or allowed employees to use their annual leave entitlement during the lockdown, should apply the set-off.”

A full accounting of the leave used, the leave credited, the value of the leave and the value of the set-off must be maintained to demonstrate to the UIF that lawful set-off has taken place.

Commentary provided by Andre van Heerden, Jacques van Wyk, Bradley Workman-Davies, and Thabisa Yantolo of Werksmans Attorneys.

Read: Companies need certificates to operate during South Africa’s level 4 lockdown

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Important changes around South Africa’s coronavirus employee relief funding – what you need to know