GAME CHANGING ALTERATIONS TO THE C19-TERS UIF BENEFITS
If you or any business or organisation you know is considering retrenching staff or putting them on short time now, please read this first (and pass it on) - or you could be missing out on a real opportunity to support and retain your staff.
As you may know, C19-TERS is a temporary UIF-based scheme which provides funding for payment to employees during a temporary closure of operations of the organisation due to the Covid-19 pandemic. TERS is intended to allow organisations to survive a break in operations of up to three months without retrenching its employees.
TERS IS AVAILABLE
- 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.
The Minister of Employment and Labour gazetted on Wednesday, 8 April amendments to the Directive on the Covid-19 Temporary Employee/Employer Relief Scheme (C19 TERS) which have dramatically changed the landscape for those considering applying for support under this system.
- The major amendment now specifically allows employers to top up TERS payments received by employees under the Covid-19 TERS scheme.The previous version of the Directive had prohibited an employee who was receiving any payment from an employer from benefitting from the TERS scheme. The amended Directive now states that if an employee is receiving a TERS benefit, the employer may top up this payment subject to a maximum ceiling of the salary that the employee would ordinarily have received. This change to the Directive means that those who have dismissed use of the TERS scheme because the amount that would have been paid out under the scheme was unconscionably low in supporting their employee, can now apply and, if they have funds, add to the amounts received from the C19 TERS UIF scheme for employees under TERS.
- The other major amendment is the recognition that a total closure of the organisation or its operations should not be applicable as a pre-requisite to apply for C-19 TERS.
The previous directive as gazetted on 26 March 2020, had referred to a “temporary closure of business operations” or a temporary “closure” of the company.Those who read our previous brief on the TERS regulations will recall a discussion around whether any organisation which wanted to survive post Covid would be able to comply with the previous TERS requirements and close all of its operations. The Minister has recognised this and provided that the TERS benefit is available during a “temporary closure of business operations whether total or partial”. The regulation now also refers to a “reduction in work” as opposed to a complete cessation of work.Whereas the previous Directive had provided for where an employer “as a direct result of Covid-19 pandemic close[s] its operations for a three month or lesser period” it now provides for a scenario where an employer “as a direct result of Covid-19 pandemic close[s] its operations or part of its operations for a three month or lesser period”.
Please note that, when it comes to applying, the amended Directive now refers to “affected employees” as those who may benefit. This amended section now reads:
“Should an employer as a direct result of Coviid-19 pandemic close its operations or part of its operations for a 3 (three) months or lesser period affected employees shall qualify for a Covid-19 Temporary Relief Benefit”
Therefore, where a unit/project/division of an organisation/business is still operational and funded, the employees who are busy with this work, whose salaries are still covered and whose income is not affected by Covid-19 do not qualify for the C19 TERS benefit.
However, where there is partial closure or where Covid-19 has resulted in a sudden drop in income/funding for operations, our view is that all those employees who are affected by the partial closure and/or the lack of income do qualify. Thus, all employees working for an organisation or business which is not fully operational will qualify for the C19-TERS benefit.
- The third important change made is that the previous directive referred to the minimum amount that would be paid under the TERS scheme being the minimum wage in the sector concerned. All of the references in the Directive to minimum wage in the sector concerned have now been amended to refer to the figure of R3 500.This means that employers need not concern themselves with proving which sector they are in in order to calculate what the applicable minimum amount would be as it is now R3 500 across the board.
- The language used in the previous directive resulted in some confusion around the maximum amount that would be paid out and many had believed that the maximum amount paid out would be R17 712 per month, based on the way that the regulation was phrased. The language of the directive has now been amended to clarify matters.It is now clear that the maximum amount to be payable will be calculated at the UIF rate based on a maximum salary being taken into account of R17 712. The clause now reads:“The salary to be taken into account in calculating the benefits will be capped at a maximum amount of R17 712 per month, per an employee and an employee will be paid in terms of the income replacement rates sliding scale (38% - 60%) as provided in the UI Act”.
This last clarification is one which will not be welcomed quite as gladly by those who were hoping that the actual amount of R17 712 would be paid out. The maximum benefit, as previously advised by us will be R6 730.
- There is also some clarity (for those who are thinking about the details) on the MOA (agreement) to be signed with the UIF. Applicant businesses or organisations must sign and lodge it, but a simpler version (not requiring a separate bank account) and already signed by UIF is now being provided.
The cumulative effect of these changes is immense-
- organisations and businesses which have not totally closed are included;
- employees in closed/slowed-down divisions qualify;
- employers who had intended to commit to at least a ‘survival’ wage can now apply for C19-TERS which will provide needed relief on the payroll burden(which was the intended effect); and
- organisations and businesses that were considering retrenching or reducing hours to be worked can (and should, if they now qualify) instead apply for TERS and at least delay any decision on retrenchments or short time for at least three months.
These changes mean that TERS will achieve what was intended, which is to minimise, in the short term, retrenchments and job losses.
We predict a sudden rush on applications, as those who previously could not benefit or participate suddenly will be able to do so, and this will place more pressure on an already terribly busy office. The UIF office has committed to paying out on processed applications at the end of April, in time to pay salaries.We suggest getting those applications in as soon as possible.
For assistance with TERS applications from ngoLAW please email email@example.com ORlisa@ngolawsa.co.za. We are offering slashed rates on fees for the lockdown period and are well placed to assist with, advise on and/or make these applications on your behalf.
Employers who are negotiating survival salary changes will need to ensure that these are recorded and signed off by affected employees. If the TERS benefit will be included in the amount to be paid, the addendum to the employment contract will need to be clear on this so as to manage expectations. Please let us know if you need assistance with wording these amended employment agreements.
We will be re-working and updating the tables and numbers in our previous brief to assist your decision-making, and sending this out shortly.
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).
- If you have not read it yet: Marcus Coetzee- always thought-provoking and strategic: https://www.marcuscoetzee.co.za/my-thoughts-on-the-shifts-that-this-pandemic-may-encourage-in-south-africa/
- Joan Garry’s blog post on 5 steps the best boards are taking right now https://blog.joangarry.com/best-boards/
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