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A guide to the COVID-19 temporary employee/employer relief scheme (TERS)

Article by P Assenmacher (Assenmacher Brandt Attorneys)

Herewith a summary of the COVID-19 temporary relief benefit fund for your consideration, as well as a link for more information: https://www.businessinsider.co.za/government-pays-workers-during-lockdown-2020-3

Employers whose businesses have been crippled by the Coronavirus crisis can apply for funding to help cover worker salaries.

  • The largest pay-out to a staff member will be R6732.00 per month, for those employees earning more than R17 702.00 per month, and the minimum will be in line with the current legislated minimum wage;
  • Each company will first have to prove how badly the crisis affected it, before payments will be considered;
  • Temporary Employee/Employer Relief Scheme (TERS) will cover a period of up to three months during the lockdown, and also afterwards, if companies continue to struggle with their cashflow. Again, companies will have to prove that their business has been severely damaged by the Coronavirus crisis before receiving access to funding;
  • TERS will be administered by the Unemployment Insurance Fund (“UIF”), which will essentially operate on the same principle as maternity leave benefits;
  • If a company can still afford to pay employees a part of their salaries, TERS funding will top up these payments, but employees cannot earn more than 100% of their current salary;
  • Amounts paid will be a percentage of an employee’s salary, according to a legislated sliding scale from 38% (highest earners) to 60% (lowest earners);
  • The sliding scale stops at R17,702.00.  All workers earning more than this will only receive 38% maximum benefit, which is R6,730.00 per month;
  • Companies which are struggling to pay salaries due to the Coronavirus crisis must report this per email to covid19ters@labour.gov.za. Applicants will receive an automatic response outlining the application process;
  • Each company will be judged on its own individual merits before the COVID-19 Temporary Relief Benefit will be extended to them;
  • Companies must be registered with UIF already to secure payments for their employees.  The normal UIF rule that employees will accumulate one day’s pay-out for every four days’ worked, up to certain maximums, will fall away for this particular benefit;
  • All employees at approved companies will be entitled to these payments;
  • A wage payment regulation were gazetted recently for the clothing/textile sector by way of a Bargaining Council agreement.  According to this Agreement, the UIF and employers will take turns to make weekly wage payments to employees during the lockdown. I will send you a summary of this agreement for cognisance. If you form part of a Bargaining Council, I suggest that you make enquiries with them in regards to any prospects on this front ;
  • More of these industry arrangements by Bargaining Councils are possible, which will vary from the normal TERS regulations;
  • The UIF will release funds to the Bargaining Councils, which can then be released to employees on a regular basis during the lockdown period;
  • Evidently the UIF has assets of ca. R180 billion.

Here is the latest COVID-19 TERS Easy Aid for your consideration.  My suggestion is that employers who may wish to potentially access TERS benefits should consider to lodge a potential request to the dedicated mailbox mentioned above and consider its position thereafter going forward.

From the Easy Aid Guide, the steps to be followed are summarised, and you will note that the last step will comprise the conclusion of a Memorandum of Agreement to be signed off between the Fund and the employer.

SARS has also announced a number of tax breaks available to small/medium-sized businesses, with an annual turnover of less than R50 mil. More info can be accessed on the link: https://www.businessinsider.co.za/tax-breaks-coronavirus-2020-3

Click here to download the COVID 19 TERS EASY AID guide.

Assenmacher Brandt Attorneys is a proud Partner of the NSBC