Can an employer pay employees during the lockdown period and thereafter claim the said amount from the UIF? The answer can be found in addressing the so-called COVID19TERS.
On the 23rd of March 2020, President Cyril Ramaphosa announced a nationwide lockdown to minimise the adverse effect that the COVID-19 (coronavirus) has on the country, both economically and regarding the health and safety of the country. This was after the coronavirus was declared a National Disaster in terms of the National Disaster Act, 2002 (Act No. 57 of 2002) (“the Act”).
This announcement had a dramatic financial influence on businesses around the country since many businesses were forced to shut their doors for the time being. Not only did it influence businesses financially, but employees were left with many questions regarding their salaries and the aspect of claiming UIF.
In preparation for the lockdown, a few employers indicated to their employees that they, for example, will still receive their normal salaries during the lockdown, should they work from home and still render a service (This, however, is not applicable to “essential services” since the employees falling in this category still works and renders an essential service to members of the community).
Employees were therefore faced with 2 (two) options to ensure that a loss of income as a result of the lockdown is minimised. These 2 (two) options were as follows:
- Apply for annual leave during the lockdown period and therefore still receive a full salary, since annual leave is paid leave by the employer (Section 20 of the Basic Conditions of Employment Act). The risk involved here is the fact that employees leave will be effected for the festive season in December and throughout the year. It might happen that the employees do not have any leave days left at the end of the year, for example, if the company has an annual shutdown and employees must put in leave, then the leave becomes unpaid; or
- Rather than not applying for leave, the employee is then “laid off” (temporary closure of business where an employee does not work/render a service), whereby the employer is then obligated to register the employees with the so-called C19TERS (COVID-19 Temporary Employee/Employer Relief Scheme) (hereafter “TERS”).
In terms of the Government Gazette, Notice 215 of 2020, published on the 26th of March 2020 (No. 43161) the purpose of the directive is as follows in Schedule 2.1.1:
- Payment of benefits to the Contributors who have lost income due to COVID-19 pandemic;
- Minimise the economic impact of the loss of employment because of the COVID-19 pandemic;
- Avoid contact and contain the spread of COVID-19 during the process of application for benefit;
- Establish the Temporary Employee/Employer Relief Scheme and set out the application process for benefits of the COVID-19 pandemic and to alleviate the economic impact of COVID-19; and
2.1.2) to make provisions for online applications for benefits in order to avoid contact during the national disaster period.
The following question however arose and is asked frequently: “Can an employer pay employees during the lockdown period and thereafter claim from the UIF department?”
In terms of the Government Gazette, Notice 215 of 2020, published on the 26th of March 2020 (No. 43161) Schedule 5 specifically addresses the application itself in terms of TERS. Section 5.3 clearly stipulates as follows:
“An employee who is being paid by the employer during this period is not entitled to this benefit.”
On 8 April 2020 FASA (Franchise Association of South Africa) published an article regarding TERS and includes, but not limited to aspects regarding the employer. They are invested in the aspect of the coronavirus since all the franchisees and their employees are being highly affected by the lockdown. It should be noted that the employer has a legal obligation to follow the TERS application and register the employees on their behalf. The following important points should, however, be noted:
- The benefit may only cover the costs of salaries during the closure of business: IT MAY NOT BE USED FOR ANY OTHER PURPOSES BY THE EMPLOYER;
- The employer must pay the benefit to the concerned employee within two days after receiving such an amount from the UIF;
- If the employer is a member of a bargaining council, the UIF will pay the amount to the bargaining council and last mentioned will administer the payments to the employees; and
- The employer must keep all their accounting records regarding payments and registration for 5 (five) years, separate from the normal accounts of payroll.
If the employer, however, paid the relevant benefit amount to the employee without following the TERS application, the employer can claim such an amount back by way of reflecting the benefit as a “TERS BENEFIT” on the salary of the employee and submitting same to the UIF. This, however, is not recommended since it might create certain disputes. Any disputes regarding the TERS benefits or aspects relating thereto will be referred to a senior official of the UIF. The official and the employer will attempt to resolve the dispute, but if unsuccessful, either of the parties may refer the dispute to the Arbitration Foundation of South Africa.
On the 9th of April 2020, President Cyril Ramaphosa has announced a further 2 (two) week lockdown, extending the lockdown to 1 May 2020. Lenient employers who paid their employees up until the last announcement of the President might rethink this since it will have a detrimental effect on the company financially.
Employers are urged to follow the above advice and seek SEESA’s legal expertise to assist them in registering the employees through the TERS application during this lockdown period.
ABOUT THE AUTHOR
Werner van Vuren joined SEESA Labour as a Legal Advisor during August 2019. He resided in Mbombela where he obtained his matric certificate at Hoërskool Nelspruit whereby he obtained six distinctions. He then obtained his LLB degree at the North-West University of Potchefstroom. Before he joined the SEESA team Werner conducted his articles at Du Toit-Smuts & Partners in Mbombela. He obtained experience in numerous fields of the law such as third parties, conveyancing and civil litigation. Werner enjoyed all the different fields of law during his articles but found his passion in Criminal Law. Currently, Werner enjoys being on the road as a legal advisor and believes that he can make a difference in Labour Law in South Africa to ensure that justice prevails.