#4 – COVID 19: SUPPORT FOR EMPLOYEES – UIF & TERS

#4 – COVID 19: Support for Employees – UIF & TERS

More often than not, salaries or staff costs are the highest expenditure line item for non-profit organisations.Right now, organisations may find themselves struggling to pay salaries and may be considering either a temporary shut down or even a full closure.The usual consequence of this is that staff lose their jobs.In terms of the law, the staff members affected, are entitled to the usual notice and leave pay, as well as retrenchment pay, equivalent to one week’s pay per completed year of service.They will then find themselves unemployed and standing in line for the standard UIF benefit, which is available only to those who have contributed to the fund. The amount paid and duration is determined by the number of months employed and contributing to UIF.

The Unemployment Insurance Fund (UIF) has always provided for a level of protection to employees and the unemployed in a number of ways that are relevant in this time, and these have been highlighted in various media statements. These UIF benefits and the processes, will be available on our website www.Ziyo.org.za

The government has, however, announced and gazetted additional measures that offer significant relief through the UIF.   This is in the form of the Temporary Employer/Employee Relief Scheme (TERS). 

TERS provides relief to businesses (including non-profits) that temporarily close down operations because of COVID 19, and may, therefore, be unable to pay  salaries to employees.   This relief is being funded through UIF but is processed and paid through the employer to the employee.   It is intended to enable organisations to keep their employees on the payroll, to survive the break in operations, and to speed up the payment of relief to employees, who otherwise would be laid off and would have to follow the very slow process of applying for UIF benefits.

How it works is that the employer applies for and receives the funding in order to pay employees for up to 3 months during the operational close down period of the particular organisation or business.

NEW!  An amendment gazetted on 8 April has clarified that the relief is available for total and partial close of operations.

The amount of relief is calculated on the UIF income replacement sliding scale from 38% to 60% of the monthly salary of the individual employee.

NEW!  The recent amendment has also clarified that should an employee’s income determined in terms of the sliding scale fall below R3,500, the employee will be paid a minimum of R3,500 per month.   

However, the salary to be taken account in calculating benefits will be capped at the maximum salary of R17,712 per month, which when applying the sliding scale amounts to a maximum of  R6,730 per month (38% of the R17,712 monthly salary) per employee.

NEW!  The new amendment has also clarified that the relief provided can provide a top up to any reduced salary amount paid by the employer in this period

Clause 5.3 states that “Subject to the amount of the benefit contemplated in clause 3.6, an employee may only receive covid-19 benefits in terms of the Directive if the total of the benefit together with any additional payment by the employer in any period is not more than the remuneration that the employee would ordinarily have received for working during that period.”

This relief is not only extremely relevant and important for businesses, and non-profit organisations, it is generous.  It enables employers to continue to pay employees for the duration of the operational close down up to a maximum of 3 months, buying time to find alternative ways to operate and generate income.  If, at the end of the 3 months, it is still apparent that operations cannot or will not resume in the near future, the organisation could then decide to lay off employees through retrenchment and these employees can then apply for UIF benefits in the normal way, with the amount of that benefit unaffected.This is definitely relief worth applying for, if your organisation is in this position.  It is yet to be seen how quickly the applications can be processed.  A quick process will, we hope, bring welcome cash flow relief to employers to enable employees to still be paid.

TERS is only available to organisations that are registered for UIF and to employees who are registered with UIF.

Information about the process is available from the Department of Employment and Labour website: www.labour.gov.za.    To obtain application forms and all relevant details, please send an email to: infoTERS@labour.gov.za, or covid19ters@labour.gov.za.   You can also email ters@labour.gov.za and will receive an automated response with the documents to be filled in.   The response email will also guide you through the application process.

We thank and acknowledge Nicole Copley and her team at NGOLAW for their insights and analysis.A few days ago they released a brief with examples, a comparison between UIF and TERS, as well as addressing the TERS myths (and truths) and some initial questions.Here is the link: https://ngolawsa.co.za/06-april-2020-letter-three-from-lockdown/.

The application process for the TERS relief is new to us all and we are finding our way.Ziyo provides payroll services to a number of non-profit organisations, and we will be working with these clients to assist them to make application as required.We are available to support other non-profit organisations around the practical steps and financial implications of this relief, and we will also refer you to other professionals and specialist service providers for the legal (NGO Law) and HR advice (Connold & Associates).

Information about the process is available from the Department of Employment and Labour website: www.labour.gov.za.    To obtain application forms and all relevant details, please send an email to: infoTERS@labour.gov.za, or covid19ters@labour.gov.za.   You can also email ters@labour.gov.za and will receive an automated response with the documents to be filled in.   The response email will also guide you through the application process.