Temporary employee relief scheme – understanding your options and how to apply
Most businesses are under server strain as a consequence of the severe measures implemented due to the COVID-19 having been declared a national disaster, wreaking havoc on their cashflow. We asked Maria Vannucci, of Marican, registered professional accountants and tax practitioners, who counts many franchises amongst her clients, to help businesses navigate the crisis.
“Employees who won’t be allowed to work during the lockdown period of three weeks, are, to a large degree, at the mercy of their employers,” says Maria Vannucci.
“While government has encouraged all businesses to continue to pay their employees, who may be stuck at home and won’t be able to work during this time, many companies can’t afford this and are considering their options.”
Businesses are resorting to emergency measures such as short time and temporary lay-off. A fairly recent amendment to the Unemployment Insurance Act of 2001 is likely to bring much-needed relief to affected employees.
The ‘temporary employee relief scheme’ intent and purpose is to preserve employment and not retrench employees who are most vulnerable during this lockdown period. We urge businesses to not take the retrenchment route during lockdown BUT to apply the ‘temporary lay-off’ – which means that staff will receive UIF payments BUT STAY ON AS EMPLOYEES – option. If retrenchment is the only solution, then we advise to apply the retrenchment procedures as stipulated in the Labour Relations Act.
Most businesses have considered scrapping the traditional shutdown period over December and into January and paying out annual leave. Employers may place their employees on annual leave and exchange this with the shutdown in December – if possible and feasible.
Employers are within their rights to insist that you take leave during the lockdown. If an employee has leave available, this could be a struggling company’s first option: TO USE EMPLOYEE’S LEAVE ALLOCATION UNTIL IT IS DEPLETED.
The other option will be the temporary layoff, whereby staff will be in the employ of a company but won’t receive a salary. They will claim money from the Unemployment Insurance Fund but it won’t come close to their full salary.
Government is also in consultation to pay wages of employees working for struggling companies through the Temporary Employee Relief Scheme, which will avoid retrenchments.
The UIF doesn’t have a sterling reputation for paying money quickly and it is expected to be flooded with huge volumes of claims during this time, leaving the employee with no funds to feed their families. However, the Minister of Labour Thula Nxesi confirmed that companies may do payouts directly to staff and then claim it back from the UIF.
When applying to the UIF the following forms are required:
- UI19 and UI2.7 (completed by Employer)
- UI2.8 (bank form completed by the bank)
- A letter from the Employer confirming Reduced Work Time is due to the corona virus
- Copy of ID document
A total of R30 billion has been allocated to a special National Disaster Benefit Fund, which will pay Unemployment Insurance Fund benefits for up to three months to qualifying workers whose income has been impacted by the coronavirus pandemic.
- Employer and employee relief during the Corona virus pandemic - 30th March 2020