The latest amendment to the Temporary Employee Relief Scheme (TERS), published on 15 May 2020, now permits employees to apply for COVID-19 benefits where the employer has failed, or refused to do so. Initially published on 26 March 2020, TERS provides for the measures to be taken in respect of remuneration and leave during the lockdown as well as the National State of Disaster.

There have been frustrations around employees not receiving the financial support which TERS has sought to provide, and as such the latest amendment making the provision for an employee to apply directly for COVID-19 benefits has placed these employees in a position to now apply for and receive payment of the COVID-19 benefit directly from the UIF. An employee who has contributed to UIF, has suffered a loss of income due to the pandemic, where no bargaining council or entity has concluded a Memorandum of Association with the UIF and whose employer has either failed or refused to apply for the COVID-19 benefit, may qualify to apply individually to the UIF for the COVID-19 benefit.

The directives were issued to aid companies which were required to shut down and where it has been economically impossible to continue to pay employees during the lockdown period. Unfortunately, there is no requirement in law that requires employers to remunerate employees during the lockdown. The no work no pay principle will apply in some instances, except for those employees whose nature and scope of business fall part of essential services. For these employees, the standard labour laws will continue to apply, i.e. working hours, overtime, etc.

TERS provides for the minimum payment of R3500 (minimum wage) and the maximum payment determined at R17712 during lockdown or per month up to a maximum of three months. This is calculated in terms of the income replacement rate sliding scale as provided for in the Unemployment Insurance Act, 2001, being between 38% to 60%. The lower the income an employee earns, the higher the percentage applied. For example, an employee earning R5000 (R5000 x 60% = R3000) will have his or her income determined below minimum wage and will therefore be entitled to the payment of a replacement income equal to R3500. No employee shall receive a benefit of less than R3500.

Employers who require financial assistance from the Unemployment Insurance Fund (UIF) must report the closure of business to covid19ters@labour.gov.za. An automatic response will then be sent, setting out the application procedure to be followed as well as the required documents and information to be furnished. The UIF will verify the supporting documents and the calculated benefit of the relevant employees will be paid to the employer. It is then the responsibility of the employer to pay over the benefit to the employees. In terms of the amended directive of 8 April 2020, the amount paid by or for the UIF to an employer or Bargaining Council will not fall into the general assets of such employer or Bargaining Council. Furthermore, banks may not refuse to release, or administer the transfer of that amount into the bank account of the employee as required by TERS.

Where the employer intends to apply for COVID-19 benefits on behalf of the employee, the employer must be registered with the UIF, must comply with the application procedure and the closure must be directly linked to the COVID-19 pandemic. The benefit is delinked from normal requirements of credits (ie.4 days worked = 1 credit).

Section 20 of Basic Conditions of Employment Act (BCEA) provides for Annual Leave which entitles a full-time employee to not less than 21 consecutive days paid leave. An employer may believe it necessary to place employees on forced annual leave during lockdown, however, this is not advised, and companies are encouraged to make use of TERS so that employees retain their annual leave credits. Where an employer has placed an employee on forced annual leave during the lockdown period, such employer may set off any amount received from UIF under TERS against the amount paid to the employees in respect of annual leave. The employer must credit the employee with the proportionate leave entitlement.

Employees who are advised to self-isolate as a result of COVID-19, or who have been diagnosed with COVID-19 and have been quarantined for 14 days, will qualify and may apply for the Illness Benefit from the UIF. The Illness Benefit may be applied for online at www.ufiling.co.za and must be supported with a confirmation letter from the employer and employee as proof that both employer and employee have agreed to the 14 days ‘special leave’.

Where the nature of the business of the employer falls under the scope of a bargaining council, the employer will be required to claim from the bargaining council and the bargaining council will claim from the TERS subject to compliance with the requirements. In this instance the bargaining council will conclude the memorandum of Agreement with the UIF and administer the payments to the employees concerned.

Retrenchment after Lockdown?

The Labour Relations Act, 1995, Section 189 makes provision for termination based on operational requirements. Many companies may view retrenchment as a necessary means to continue operations after the lockdown or as result of COVID-19 and the negative impact it has on the business, however, this must be seen as a last resort and the employer must explore all alternatives to avoid retrenchment.

Alternative options to avoid retrenchment include placing employees on short-time or temporarily laying off staff. In the case of short-time work, unless it is provided for in the employment contract, an agreement must be reached with the employee. If an agreement is not reached in this regard, and the employer unilaterally enforces short-time work on its employees, this could result in a labour dispute. Other options include a reduction in salary or demotion, the latter to be considered with extreme caution as an employee who finds such demotion to be unfair may approach the CCMA or bargaining council for relief. It is imperative for an employer to consult with employees in finding a way forward and to obtain consent where required to ensure that the employees’ rights have not been infringed.

There are unfortunately no easy answers for employers during this time. Despite the challenges faced as a result of this pandemic, employers must adhere to the labour laws and the legal implications for non-compliance with such laws.

Written by Shannon Ally, a Regulatory Compliance Author at LexisNexis South Africa