COVID-19 Temporary Employee/Employer Relief Scheme Update
Updated: Sep 8, 2020
Authors: Imraan Mahomed – Practice Group Leader Employment/Labour Law and Member of the Management Board & Vicky Frazao – Associate Designate Employment/Labour Law
(Update on article published on 27 March 2020 titled “Some Certainty for Employers & Employees during the COVID-19 lockdown” https://www.lawtonsafrica.com/post/some-certainty-for-employers-employees-during-the-covid-19-lockdown)
On 8 April 2020, the Minister of Employment and Labour, Thulas Nxesi, published an Amendment to the Covid-19 Temporary Employee/Employee Relief Scheme (TERS) Directive issued on 26 March 2020.
This followed an agreement reached in Nedlac on 7 April 2020 between business, labour and government on the COVID-19 lay-off benefit.
The Amended Directive extends the definition of “temporary lay-off” to include the reduction of work following a temporary closure of a business operation, whether total or partial. This allows businesses that have closed a part of their operations, whilst still rendering certain services, to also apply for the scheme.
The Amendment also clarifies the maximum amount of benefits that an employee can receive from the scheme by capping the salary amount used to calculate the benefit at R 17 712.00 per month, which will be paid in terms of the income replacement rate sliding scale (38%-60%). This means that the maximum benefit amount that an employee will be entitled to is R6 730.56 per month. Where an employee’s calculated benefit falls below the minimum wage, the employee will be paid a replacement income equal to the minimum wage (currently R 3 500.00).
The Amendment further prohibits employers from applying for the scheme where such application has already been made by the relevant bargaining council. In such an instance, the bargaining council must have concluded a MoA with the UIF to disburse the benefits to the employees who fall within the scope of the collective agreement and to any other employees identified in the MoA.
In respect of the documents required to apply for the scheme, the Amendment allows, as an alternative to a signed MoA, for a written or electronic confirmation of acceptance of the terms and conditions of the scheme by an employer or bargaining council.
An important aspect of this scheme is that it allows employers to supplement the benefits received from the UIF with other payments made to their employees, provided that the total amount received by an employee does not exceed the remuneration that he/she would have ordinarily received for such period. All amounts paid by the UIF may only be used for the purpose of the scheme and will not form part of the employer’s or bargaining council’s general assets.
Employers with more than 10 employees can apply for the benefit on behalf of their workforce. For employers with less than 10 employees, the employees apply for the benefit directly to the UIF. Bargaining Councils can also apply on behalf of their employees.
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