06 April 2020: letter three from lockdown

Many organisations, facing significant drops in funding and other income, as well as the inability to carry out many of their projects, are considering temporary or even permanent shutting of operations, and looking for advice on how to support employees at this time.  There is much discussion (and confusion) around the new TERS (Covid-19 Temporary Employer/Employee Relief Scheme)) scheme offered in the  Directive issued under the Disaster Management Act on 25 March 2020.  Some of the confusion was sown by an inaccurate initial guide issued, and some of it is contained in the Directive itself.
DecisionsIn this ngoLAW Brief we:

  • Examine the TERS offering, explain how it works and when it is applicable, and deal with the misconceptions; and
  • Compare the TERS option to the more final option of retrenching and allowing ex-employees to claim UIF.

We don’t deal with the mechanics of the application and the forms, as there is plenty of useful information already in circulation on these aspects.  
Please note that this advice is our current interpretation (6 April) of a Directive which was speedily drafted, and which has not yet been tested (people know how to make the TERS applications,  but we have not yet spoken to anyone whose claims have been paid). If anyone has any practical experience which sheds further light,  please let us know.  We will be sending out updates as the situation unfolds. We apologise for the length of this- it is not “Brief” but we have many clients wanting this guidance urgently.
In the emails to follow this one, we will

  • Analyse the other options available to organisations (leave, reducing working days, advance payments etc);
  • Answer further questions on the TERS option and other questions you send us; and
  • Discuss those who work for the organisation, but who are not formal employees: consultants, short-term contractors- ‘piece’ workers.  Neither the TERS nor the UIF benefits will be available to these workers. 

TERS is a temporary UIF-based scheme which provides funding for payment to employees during a temporary closure of operations of the organisation. TERS is intended to allow organisations to survive a break in operations of up to three months without retrenching its employees.


  • To organisations which are registered for UIF
  • For employees who are registered with UIF; and
  • For the duration of a closure due to COVID-19, up to a maximum of three months.

(this table does not deal with short-payment UIF, which will be dealt with in the next Brief)


How do we calculate the TERS benefit?

The benefit will be calculated in terms of the UIF INCOME REPLACEMENT RATE SLIDING SCALE of 38 % (for high earners) up to 60 % (for low earners) as provided in the Unemployment Insurance Act 63 of 2001 (UI ACT). 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 not be less than the minimum wage applicable for the relevant sector.
To allow you to compare the options and see the resulting payments, we have taken examples of  levels of monthly salary and then showed you the amount which would be paid. (The benefits here stated are taken from the examples in the Third Schedule to the UI Act, and with the help of the calculator at http://ezuif.co.za/uif-calculator/) . The numbers are intended to be illustrative only. We have presumed in this table that the national minimum wage is applicable and, remember, the period of employment is not relevant:

TERS MYTHS (and truths)

TERS MYTHS (and truths)


Complete closure required?
The Directive issued seems to contemplate and assume that there is a complete closure of the organisation, in order for the TERSbenefit to be applied for, and many commentators have agreed with this. However it is unlikely that all of the staff of any organisation will be unable to do any work during a temporary cessation of activities and, certainly, if the intention of TERS is to assist organisations so that they do not close down for good or retrench staff, then we believe that it must be accepted that certain levels of organisational operations must continue.
For instance, if the TERS payments are to be processed and made to the employees during temporary closure, then the finance and admin team will have to be working. And, if the organisation is to survive this crisis, then marketing and fundraising should be harder at work than ever. It also may be that there are certain projects or divisions which cannot continue, and then some which can. If an organisation is, for instance, involved in one project which is about delivering essential services, then that project can continue but others which are not essential (and the workers who are not essential to the essential services) will not be working.
Our feeling is that, if the TERS support is required for employees who are not able to work due to COVID-19, then the organisation should make the application to register for TERS for those employees. Although the Directive does not seem to contemplate the realities we have outlined, we feel that our interpretation is in the spirit of what is intended.

Can we claim TERS and the short-payment UIF benefit at the same time?
Because TERS is for temporary closure and short payment UIF benefit is for carrying on work but for fewer hours/days, the applications and the system is not designed to accept applications for both sorts of applications from one employer. Although a technical argument could be made that different employees could be treated differently (if our position on the total closure aspect holds up)  we very much doubt that an application for both TERS and short-payment UIF support from the same employer will be accepted and processed.

Can we claim TERS and top it up with what we can, to support employees?
This is not possible- the Directive specifically states that “an employee who is being paid by the employer during this period is not entitled to [the TERS] benefit.”

Can we first do TERS and then, if needed, retrench and let employees claim usual unemployment UIF?
If, at the end of the three months (or closure) period, it is clear that there are no funds to continue at all (or for a longer period) then there is no reason, at that stage, not to transition to retrenchment and the claiming by the ex-employees of the usual UIF. Please remember that retrenchment generally involves a severance package to be paid. If there are no funds for this and/or if the intention is to retrench with the idea of rehiring once projects can continue and there are funds available, then you will need to negotiate with the employees that no (or a smaller) package is payable on termination, in the hope that it is possible to rehire later.

Summary of potential benefits:
The following table sets out illustrative examples of the difference between the TERS and the UIF unemployment amounts for different salaries and terms of employment, and also the severance packages that would be standard. (The calculations of benefits have been done with reference to the Third Schedule to the UI Act, but using the calculator at http://ezuif.co.za/uif-calculator/).

Thanks to Fanie Nothnagel of Dalmeny Consulting dalmenyconsult@gmail.com, Cathy Masters and Paul Tyler of CMDS http://cmds.org.za/  and Marcus Coetzee https://www.marcuscoetzee.co.za/ for valuable input on this Brief. They have assisted but are not responsible and the views in this Brief are the current ones of ngoLAW.

Keep the questions coming!

At ngoLAW we will be continuing our work and will research and draw together information and advice to assist you with thinking through and making some tough decisions over the next while. Watch this space for our correspondence and conversations and please forward to anyone who may benefit.

To submit your questions, visit our website, hit the ‘contact’ tab, and enter your question into the ‘Contact Form’ space provided.

Stay safe, keep calm and carry on- A Luta Continua!

Nicole, Lize, Bandile, Janice, Lisa and Dorothy

Time to catch up

The lockdown time may be the gap you needed to get your admin, governance, standard agreements and overdue updates done.

This is the stuff we are best at, so let us know how we can help.

ngoLAW services continue. We will all be working from home. The easiest way to get in touch is email, and we will also be available on zoom/skype/cell phone (the landline will only be answered intermittently).



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