Covid-19 Employee Relief

UIF

To combat the impact of the COVID-19 pandemic on UIF contributors, the UIF will assist affected workers through existing benefits including

  • Illness
  • Reduced work time
  • Unemployment, and
  • Temporary Employer / Employee Relief Benefits

In addition to these standard benefits a National Disaster Benefit and a COVID-19 Temporary Employer / Employee Relief Scheme (COVID19TERS) have been implemented.

To enable you to pay your staff directly during the Covid-19 pandemic and avoid having to retrench anyone, your employees will receive wage payment through the Temporary Employee Relief Scheme (TERS). Previously referred to as the National Disaster Benefit. In terms of the TERS process, the UIF may fund your company if you are affected by Covid-19 directly, in relation to the TERS allowance.    

TERS functions similarly to maternity benefits. If you are still able to pay your staff a portion of their salaries, TERS will top up their salaries up to 100% of their current salaries. The amounts your employees can expect to receive will be between 38% of their salaries for higher income earners to 60% of their salaries for lower income earners. The sliding scale peaks at a maximum salary level of R17 702 per month which would a maximum salary payment of R6 730 per month. The salary your employees receive will never fall below sector minimum wage. 

How it works:  

  • Previously employees could not apply for this benefit, you as the business had to apply to UIF to get money to pay your employees.
    • employees can now apply directly to the UIF provided their employer has not applied for the TERS money (or in the absence of an arrangement between the UIF and the bargaining council)
    • it has not yet been confirmed how individual workers can apply – the current TERS application platform only accommodates companies and bargaining councils 
  • As part of this process you will have to prove that your business has suffered a severe knock from the lockdown. 
  • Applications for TERS need to be made each month. The first payment covered five weeks to end-April. Applications for May have not yet opened 
  • Currently the turnaround time for payment on approved unemployment claims is approximately 15 working days.  
  • The delay in payments due to the volume of applications coming through, and the majority of those being processed, are found to have incomplete application documents.   
  • Previously, if approved, unlike normal UIF benefits, which is paid to employees directly, this benefit will be distributed first to you the business, then you will pay employees. This now been amended as the UIF is now paying money straight into some employees’ bank accounts.
  • The money is paid, in one lump sum, directly into the companies’ bank accounts and companies must pay out the TERS money to their workers within 48 hours.  

 Challenges:  

  • There is a lack of clarity around TERS, and the complicated calculations involved have resulted in misunderstandings and incorrect calculations. 
  • Most companies did not receive any guidance (payment schedule) from the UIF about how the money should be split among the employees and there is no official online calculator to determine TERS payout  
  • It is advised that you wait until there is a clear payment schedule from the UIF before payments are made to your employees. If you are uncertain about what you should pay should contact the UIF immediately. 
  • In calculating the TERS benefit on a salary of R7 000 using a formula based on the UIF legislation  
  • Determine the daily income (monthly remuneration x 12/365)  

R7 000 x 12 = R84 000/365 = R230,13  

  • Calculate the percentage of daily income replacement  

Formula: 29.2 + [7 173.92/(232.92 + 230.13)] = 44.69% 

  • The employee would then be paid 44.69% for the number of days: R230.13 x 44.69% = R102.84 (daily benefit amount). If the employer did not pay the employee at all, the amount of R102.84 x 30 days = R3 085.20 will be paid. 

 TERS will be applicable to your company if your business is:   

  • registered with UIF. Your business must have been registered with the UIF before the crisis started to qualify for the benefits 
  • compliant with the relevant UIF legislation, and   
  • making your required monthly contributions   

However, should your business not be compliant, you will be able to undertake to pay outstanding contributions, and bring your required declarations up–to–date within a stipulated timeframe. The following applications will be considered:   

  • wage subsidy rulings   
  • over and above wage subsidy and training intervention, and   
  • turnaround solution intervention   

To find out more about the financial assistance options available to you from the UIF to support your employees, you can access further information here. 

You can now apply online: The Department of  Labour has launched an online portal for applications to the UIF Temporary Employer-Employee Scheme (TERS). The new online application portal aims to provide companies with a simpler method for completing TERS applications.  

The online interface allows applicants to complete a series of online forms and register a profile on the department’s website, removing the need to submit a pipe-delimited CSV file as part of the application. Supporting documentation is required, including a PDF confirmation of company banking details, and applicants can now complete employee details one-by-one on the online platform.  

To apply: visit the UIF TERS application portal (https://uifecc.labour.gov.za/covid19/)     

  • register a profile on the portal, supplying a username, password, email address, and contact number   
  • then, you will be able to apply for TERS funding by entering your company’s information and banking details   
  • the TERS national disaster application system will then require you to accept memorandums of understanding (MOAs) before uploading confirmation of your business banking details   
  • choose to upload a CSV file with employee details or add employees one-by-one directly on the portal   
  • once these steps are completed, your application will be submitted and processed by the UIF   

Any employee of yours who falls ill through exposure at their workplace will be paid through the Compensation Fund. The Unemployment Insurance Fund (UIF) will compensate affected workers through the existing Illness and Reduced Work Time benefits. If employees are ordered to go into quarantine for 14 days because they have been exposed to someone with Covid-19, the employee will qualify for illness benefits. 

CURRENT STATUS: new online application portal launched https://uifecc.labour.gov.za/covid19/ 

UIF hotline for the Corona Virus benefit is: 012 337 1997 

The Oppenheimer family have made R1 Billion available to South African SMES to allow those of you who are suffering from short-term cashflow constraints to continue operations during this time of crisis, whilst retaining your employees.  

The funding will be distributed via the Oppenheimer’s newly created South African Future Trust (SAFT), a public benefit organization, and will be paid out directly to your employees as interest-free loans:   

  • employees themselves will not be liable to pay the money back, but your company will be  
  • there is no minimum monthly payment requirement; the loan only needs to be repaid at the end of the period. 
  • there will be no interest payable for a five-year (60 month) period, and the loan is subordinated to other pre-existing loan agreements
  • should your business be unable to repay the loan, SAFT will work closely with you to ensure that repayment plans are in place, which are sustainable for your business 

Employees do not apply directly for this fund. Employers will apply for the benefit of your employees. Employee recipients will also carry no financial liability, and any payments made by SAFT to the employees will be free and clear of income tax. Should you be approved, you will enter into the loan agreement with SAFT.  

Funding is currently available to you if your business was financially sustainable before the COVID-19 pandemic and you bank with either Absa, FNB, Nedbank and/or Standard Bank. All of which have waived their normal fees to manage the SAFT scheme. SAFT and the Oppenheimer’s are currently working with other banking institutions to extend the scheme.   

To be eligible for support your business will need to meet the following criteria:  

  • not make more than R25 million per year  
  • the ability to demonstrate the impact of COVID-19 on your operations now, or in the future 
  • have been trading for at least 24 months  
  • your accounts must be in good standing as of February 29, 2020 
  • you are not able to pay or retain permanent employees 

How the SAFT will distribute funds: 

The Oppenheimers are not directly involved in distributing the funds. They have handed it over to the trust, and this is how it will work:  

  • SMMEs must contact their bank and ask for access to SAFT support  
  • bank will redirect you to a portal and employer must fill in their name, their company name, VAT number, PAYE number etc.
  • then redirected to another page to list employees you want supported, and provide their ID numbers – banks will match these to individuals using Home Affairs
  • bank will source bank details of individual, and payments will be made to their accounts a day or a day and a half later
  • employees will receive R750 a week for 15 weeks 

 Although applications only formally open from Friday, April 3, you can start preparing your application by getting the following information ready: 

  • company registration number (if you have a company or a close corporation), or  
  • the master’s reference number (if applying on behalf of a trust), or  
  • identity number and business address (if you are a sole proprietor)  
  • names and ID numbers of all directors / members / trustees / sole proprietor  
  • PAYE number (if applicable)
  • income tax number 
  • a list of the full-time employees to receive relief with the full names, ID number, bank account details and contact details 

Once the application process is complete, and if your loan is approved, it will take up to seven days after signature of the loan agreement for the first week’s payments to be deposited into your employee/s’ account/s, dependent on the day that the signed loan agreement was received.  

In addition to this relief measure, Mary Oppenheimer has donated R1 billion to the Solidarity Fund, along with her daughters Victoria, Rebecca, Jessica and Rachel.

CURRENT STATUS: You will be able to apply directly with your bank.

For further information about SAFT please refer to the following link: https://opp-gen.com/saft/

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