Oct 01, 2020 | Labour | SoluGrowth
Since the South African Government first implemented lockdown in response to the COVID-19 pandemic on 27 March 2020, there has been significant disruption to our economy. According to the World Bank’s Global Economic Prospects report for June 20201, activity in South Africa is expected to contract by 7.1% this year compared to a global growth contraction of 5.2%.
The second wave of Stats SA’s COVID-19 Business Impact Survey2, conducted in April 2020, indicated that 90% of responding businesses’ turnover was lower than their normal expected range, 36% of firms would lay staff off in the short term as a measure to cope with the COVID-19 pandemic, and almost half (48%) reported a pause in trading in the period 14 April 2020–30 April 2020.
To assist employers that have been affected by Covid-19, the Department of Labour (DoL) developed the Unemployment Insurance Fund (UIF) Temporary Employer-Employee Relief Scheme (TERS). The scheme is still active under Lockdown level 2, and applications for July and August 2020 are open. Employers qualify if they meet the following criteria:
• The company closed operations or part of their operations as a direct result of COVID-19 impact • The company suffered a loss of income • The company is registered with UIF and makes monthly contributions to the UIF Fund • The company complies with the application procedure as specified in the C19 TERS directive • The employer applies on behalf of the company’s affected employees.
Employers must register on the UIF Portal to claim and may not claim for fully paid employees during the period of shutdown. Those who continue to receive their full income do not qualify for the benefit
What UIF amount can you claim?
The salary to be considered in calculating the benefit will be capped to a maximum amount of R17 712.00 per employee, using the 38%-60% sliding scale as per the UI Act to determine the amount to be paid to the employee.
If the employee’s income replacement sliding scale falls below R3 500, the employee will be paid a replacement income equal to that amount.
The latest amendments and changes on the original regulation (Gazette 43216) added some important changes:
• When TERS is claimed for an employee’s loss of income, or was paid in full by the employer as an “advance on TERS – UIF payment to be received”, or annual leave was forced to be taken during lockdown, the Employer’s banking details must be used, not the employees’. • When the TERS payment is received, it must be reflected in Payroll • The TERS – UIF payment must be linked to the SARS source code 3724 • The UIF payment is non-taxable.
The UIF requires proof that, where TERS was claimed for employees, changes in payment or leave adjustment have been made. Reports reflecting these changes must be provided to the UIF with the next TERS – UIF applications. Employers must also add their CIPC registration number OR the ID number of the person who opened the bank account to company details in the TERS platform.
Further options available from 30 June 2020
The “reduced working time” option is for employees who must work a short time. This benefit was introduced in 2018 in the following terms:
“A contributor employed in any sector who loses his or her income due to reduced working time, despite being employed is entitled to benefits if the contributor’s total income falls below the benefit level that the contributor would have received if he or she had become wholly unemployed, subject to that contributor having enough credits.”
To claim this benefit as an individual, you must submit: • UI 19 and UI 2.7 (completed by your employer) • UI 2.1 (application form) • UI 2.8 (bank form must be completed by the bank) • A letter from your employer confirming that the temporary layoff is due to the Covid-19 virus and lockdown • Copy of your ID.Claims can be submitted via www.ufiling.co.za or at the UIF branch.