COVID 19 – Managing the death of an employee

COVID 19 – Managing the death of an employee
 While we usually avoid talking about these things, death has affected a few organisations recently, and we became interested in what an organisation should be doing in this unfortunate situation. Desrae Connold of Connold and Associates was able to provide us with further information.

It is always a difficult time when an employee dies whilst in service, but even more so when it is Covid related and the employee may not be the only person in the family who dies. Perhaps even the immediate dependent (spouse) has also been an unfortunate victim of the pandemic.  What must the employer do in these circumstances in relation to what must be paid to the surviving family of the employee and any benefits available to them?

Payment of final salary benefits: The employee’s dependents or the deceased estate is entitled to be paid the employee’s salary up to the date of death and any leave pay due the employee.  There is no requirement to pay any notice payor to pay any severance or service pay, however, if there were any payments that were due to the employee, for example, a pro-rated 13^th cheque, long service award or dividends from an employee trust, these would need to be paid to the employee’s dependents or the deceased estate.

Who must be paid? This depends on the size of the employee’s total estate.  When an employee dies and a death certificate has been issued, normally the employee’s bank account is frozen until it has been determined who the beneficiaries of the estate are.   

It is important to note the Master of The High Court has determined the following:

• A death must be reported to the Master of the High Court within 14 days of date of death by the family of the employee or the executor. 
• If the estate is worth less than R125 000-00, then the process of distributing the estate is managed by a Magistrate’s Court and is relatively paperless and straightforward.In this case, the final payment can be paid to the spouse or life partner listed on the file of the employer on production of a letter of authority from the Court.
• Where the estate is more than R125 000-00 but less than R250 000-00, the process is managed by the Master of the High Court and is a little more complex, however a letter of authority can also be issued by the Master.
• Where the estate is more than R250 000-00, a letter of executorship must be issued by the Master of the High Court and the instructions of the executor willdetermine who the payment should be made to.

This can be quite a complicated matter and can take time to resolve.  This may leave a family with little in the way of resources.  It is advisable that all employers have some form of next of kin nomination on file for their employees and where possible a full list of dependents who could be beneficiaries of the deceased estate.  This is a standard practice for retirement funds, as they require that a beneficiary nomination form be completed annually. It is not a bad practice to implement in the absence of having a fund. 

Retirement Funding
Where an employer has a Provident or Pension Fund in place for their employees, the Fund Administrators, in conjunction with the fund Trustees, will determine who the beneficiaries of the Life Insurance and Fund reserves are.  This does not form part of the deceased estate and can be processed in parallel, however, it is important to urge employees to fully disclose who the beneficiaries must be.   Many employees have children who are unknown to their families (even second  families) and determining paternity can take time and prevent benefits from being paid out.  It is advisable to encourage all employees who have retirement funds in place to have a will.  The Master of the High Court has provided a sample of a simple will template on their website.

Death benefit from UIF
In terms of UI Act S30 UIF can be claimed by the spouse, children, or beneficiaries of the deceased employee.  In the event that a UIF contributor passes away as a result of COVID-19 contracted in the workplace, death benefits are payable to the deceased’s beneficiaries.

In all these cases, the amount of the benefit and the duration of the payment of such benefits is determined based on a sliding scale based on the monthly pay at the time of termination and period of time that contributions have been made to the UIF fund.  Benefits accrue on the basis of one day for every 4 days worked accrued up to a maximum of 365 days.  If the employee has contributed for more than four years, the beneficiaries will be entitled to a benefit calculated at 12 months at the benefit level applicable to that employee. 

The employer should notify the UIF of the death of the employee by loading the UI19 form on the Ufiling system.  If you are unable to access the Ufiling system, forms can still be sent to UIFdeclarations@labour.gov.za. 

The beneficiaries can also claim online, or they can proceed with the correct forms and supporting documents to the nearest labour department. 
The forms that need to be completed are:  

• UI2.5 – Dependents Benefits surviving spouse
• UI2.6 – Dependents Benefits other than spouse
• UI2.8 – Authorisation to pay benefits into a bank account.

The forms are not helpful in terms of advising which supporting documents are required, however, the regulations indicate that the following will be required:

• The identity documents of both the deceased and the applicant
• Details of a valid bank account
• A certified copy of a death certificate, post-mortem certificate or burial order of the deceased contributor
• In the case of a surviving spouse, a certified copy of the marriage certificate or customary union certificate
• In the case of a surviving life partner, proof that the applicant is the surviving life partner of the deceased contributor
• In the case of a child under the age of 21 years at the time of death of the deceased contributor, a certified copy of the birth certificate of the child and documentary proof of the child’s relationship to the deceased; and
• In the case of a child who was 21 years or older at the time of death of the deceased, documentary proof that the child is a learner or was wholly or mainly dependent upon the deceased

The UIF dependent’s grant does not form part of the deceased estate, however, in the absence of a spouse/life partner or children, the executor would need to determine the beneficiaries.  Because of this provision, the beneficiaries have 18 months in which to submit an application for Dependent’s Benefits.

COVID Contracted at Work: If it can be determined that the employee contracted the virus during the course of work and died as a result of the infection, then the employer and the beneficiaries (widow, widower or dependent children) can submit a claim for death benefits from the Workmen’s Compensation Commissioner.  This would then entitle dependents to a pension in terms of the COIDA Act.  More importantly, the fund will pay for any medical expenses (at a private hospital) that might have been incurred in treating the employee for the virus. 

It is interesting to note that the children of employees who die as a consequence of an injury or disease which was caused during the course of the employees’ employment, can apply for a bursary funded by the Workmen’s Compensation Fund for tertiary education .

Assistance to the employer and the employee in managing the death of an employee are available from the responsible government departments, SARS, Department of Justice and the Department of Employment and Labour. 

Desrae Connold from Connold and Associates has compiled this article and should you require help, they will be able to point you in the right direction.
https://www.connold.co.za