Authors: Imraan Mahomed – Director: Practice Area Leader Employment/Labour Law & member of the Management Board and Vicky Frazao – Associate Designate
On 15 March President Ramaphosa announced a national disaster as a result of the pandemic and regulations were issued on 18 March 2020 to give effect to the announcement. Since then there has been much uncertainty on how to deal with employee remuneration in these extraordinary circumstances. This uncertainty quickly escalated on 23 March when the President announced a national lockdown which included all businesses except for those which were designated an essential service, by midnight on 26 March. The Regulations stipulating which businesses would be classified “essential services” and other important laws applicable over the period of the lockdown were only issued late afternoon of Wednesday, 25 March.
Late on Thursday, 26 March the Minister of Employment and Labour, Thembelani Nxesi published a Directive referred to as: "COVID -19 Temporary Relief Scheme, 2020 " which provides for the payment mechanism for staff during the lockdown. This applies to employees who are not over the lockdown period working from home and therefore not able to render services to their employers and to be remunerated for such services by their employer.
The Preamble to the "COVID -19 Temporary Relief Scheme, 2020" provides:
“During this period of lockdown, companies will have to shut down and employees laid off temporarily. This means that employees are compelled to take leave, which is not out of choice. We therefore anticipate that employees may lose income. Employers are encouraged to continue to pay employees, but where this is not economically possible; we have created a special benefit under the Unemployment Insurance Fund as per the Directive COVID-19 Temporary Employee / Employer Relief Scheme”. (our emphasis)
The benefits to be paid by the Scheme will only be for the cost of employees’ salaries during the temporary closure of business operations. The minimum payment is R3500 per month (being the national minimum wage or a sectoral determination minimum) and is capped at a maximum of R17 712.00 per month.
Employees will be paid by the Scheme in terms of the income replacement rate sliding scale (38%-60%) which is already provided for by the Unemployment Insurance Act.
The qualifying criteria to process a benefit from the Fund is the following:
The business closure is a direct result of the COVID-19 pandemic (which is the current situation), and the business will have to close its operations for a period of three months or less. Whether a business is partially closed and certain services are rendered off-site and from home, should not in our view mean that there has not been a business closure having regard to the purpose of the Notice;
The closure must result in the business suffering financial distress (this is a factual and accounting question which will need to be considered by the business);
The company must be registered with the UIF; and
The company must comply with the application procedure.
Companies can apply for the relief by reporting its closure to the following email address: Covid19ters@labour.gov.za, which will generate an automated response setting out the application process.
The following documents will be required to apply for the relief:
Letter of authority.
Signed Memorandum of Agreement from the employer with the UIF.
For more information on how to access this benefit, please see the “COVID-19 TERS Benefits Easy-Aid” which can be accessed at the following link:
It follows that employees who are being paid during this period will not qualify for the benefit.
Self-Quarantined Employees:
There was much uncertainty on this aspect prior to the publication of the "COVID-19 Temporary Relief Scheme, 2020"
Where an employee is in quarantine for 14 days due to COVID-19 pandemic the employee will qualify for illness benefits.
Confirmation from the employer and the employee must be submitted together with the application as proof that the employee was in an agreed pre-cautionary self-quarantine for 14 days. Confirmation letters from the employer and employee will suffice. Should an employee be quarantined for more than 14 days, a medical certificate must be submitted together with a continuation form for payment of the benefits.
Key contacts:
Director: Practice Area Leader Employment/Labour Law & member of the Management Board
imraan.mahomed@lawtonsafrica.com
Vicky Frazao
Associate Designate
vicky.frazao@lawtonsafrica.com
Lawtons Africa is a South African law firm. With roots that grew out of seeds sown in down-town Johannesburg in 1892, our history features various changes and different names. Our team of lawyers, including directors, consultants, associates and candidate attorneys is highly qualified, market-recognised and skilled. For further information, visit www.lawtonsafrica.com