TEMPORARY LAY-OFF OPTIONS
- CLICK HERE - Generic draft MOA TERS Inputs.docx
- CLICK HERE - 1 payroll companies template.csv
- CLICK HERE - 2 payroll companies sample CSV FOR EMPLOYERS
- CLICK HERE - 3 National Disaster Payment Excel Template
- CLICK HERE - Copy of Employers Account Information
- CLICK HERE - Covid 19 TERS Easy Aid
- CLICK HERE - UI19 Employers Declaration
- CLICK HERE - UI-2-7 Remuneration whilst in employment
- CLICK HERE - UI-2-8 Authorisation pay benefits into banking account
- CLICK HERE - UI-2-1 Application for unemployment benefits
- Temporary Employer/Employee Relief Scheme (TERS) benefits option
Please see the attached documents and explanation notes should you which to apply for the Temporary Employer/Employee Relief Scheme (TERS) benefits.
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 appears in the Government Gazette (No. 43161) on 26 March 2020, sets the C19 TERS out the basis of the scheme 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 Covid19 Temporary Relief Benefit.”
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 company has closed its operations as a direct result of Covid-19 (at this stage this option does not seem to apply if the company doesn’t close entirely, but lays off only some of its employees)
- 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 company (rather than the employee) submits a claim for UIF and the company then pays over the money to employees.
- Online process: Send blank email to Covid19ters@labour.gov.za and you receive an automated response with the relevant forms and other requirements.
- The UIF will be prepared to “top up” any payment made by the employer (by prior arrangement with the UIF).
- 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. Despite conflicting reports, our understanding is that the maximum benefit for a high earner would be 38 % of R17 712 a month, which amounts to about R6 730 a month.
- 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, the employee might receive less than the minimum wage based on the above sliding scale.
- There is supposed to be a faster turnaround time with processing (According to the agreement to be signed with the UIF the benefit should be paid out to the company within 30 days of a valid submission).
- The company has to enter into a written agreement with the UIF if it has 10 or more employees (updated in the latest “COVID 19 TERS EASY AID).
- The company has to fulfill a number of administrative requirements, e.g. proof of payroll for the last three months.
- The company has to open a dedicated UIF bank account, or clear an existing account, so that Covid-19 benefits can be tracked.
- UIF ‘Reduced working time’ option
Although indications are that the C19 TERS is likely to receive priority and seems to be preferred by Department of Labour and Employment, the ‘reduced working time’ option is still available to employers and employees.
The ‘reduced working time’ 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.”
Although not expressly stated, this scheme should also be available to employees that are on temporary lay-off without pay during the Covid-19 crisis. 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
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 employee has to obtain a UI-19 form and then get a bank authorisation in respect of the account into which the benefit is to be paid, which will be a challenge, especially during the lock-down.
- Submission can be made online to the relevant processing centre
- 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.
All documents and guides are attached for your convenience.
Please feel free to contact Lee (email@example.com), Malcolm (Malcolms@hlb.co.za) or myself if you require assistance or otherwise Mandy (Mandyl@hlb.co.za) or Gerda (Gerda@hlb.co.za) in the accounting and payroll departments.