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Wider relief for companies struggling to pay workers

Those whose operations have partially closed now qualify, as do businesses that are still paying their employees.
Informal businesses, freelancers and those working for commission remain outside the safety net as they are not covered under the UIF Act. Image: Shutterstock

The original article has been amended.

The amended measures under the Temporary Employer-Employee Relief Scheme (Ters) have been ‘relaxed’ in order to help more companies claim relief.

Read: UIF subsidy applications open

The Department of Employment and Labour earlier this month published its amended Ters directive from the Unemployment Insurance Fund (UIF).

Webber Wentzel says the initial directive required employers to have suffered financial distress as a direct result of business closures from the Covid-19 pandemic.

In terms of the amended directive, financial distress is no longer a requirement to claim Ters benefits, according to Webber Wentzel partner Joon Chong.

Legalese

“This amendment is most welcomed, as an admission of financial distress by the employer is an act of insolvency which could give a disgruntled employee the opportunity to initiate winding-up proceedings of the employer,” she notes.

The directive has also been amended to allow for relief to employers who pay their employees. “This amendment is also most welcomed. Employers who have prioritised payments of salaries should not be denied the opportunity to be granted some relief from the Ters benefits.

Chong notes that employers with partial closure of operations due to the coronavirus pandemic can also claim Ters benefits.

She explains that partial closure means the closure of the offices even if the majority of the employees work from home.

Chong adds that reduced operating hours also qualify as partial closure.

The department said only companies that are registered with the UIF will be able to claim Ters benefits. In its frequently asked questions document, the department notes that companies that registered after March 15 this year may not be eligible for the benefit.

Informal businesses, people working for commission and freelancers will not be able to benefit from the scheme as they are not covered under the UIF Act.

Sliding scale

The department says the principle is that the “higher the remuneration the lower the replace rate”. The calculation of the payment is informed by the last remuneration, capped at R17 712 per month.

The benefit amount is then determined in line with a sliding scale that ranges from 38% to 60%. If the remuneration was R20 000, the calculation will be based as if the worker received R17 712. Since this is the highest remuneration, the replacement rate will be 38% (R6 730).

In terms of the sliding scale people will be able to claim anything between 60% of their salary for lower income earners to 38% for the high income earners. Salaries are capped at R17 712.

Chong says employers paying reduced salaries will also be able to apply for the Ters relief.

Illness and death benefits

Piet Nel, project director of tax at the South African Institute of Chartered Accountants, said in an earlier statement that employees who have been quarantined for 14 days or longer will be able to apply for the Illness Benefit under the UIF.

Existing benefits for illness and unemployment will kick in if no leave is granted. Nel says if a UIF contributor passes on from Covid-19, death benefits will be paid to the beneficiaries of the deceased.

Beatrie Gouws, head of stakeholder management and strategic development at the South African Institute of Tax Professionals, says the queries they are receiving on Ters centre on the legal technicalities of the benefit and facilitating the claiming process.

Read: Incomplete applications hold up UIF relief

“We are aware that the Payroll Authors Group of South Africa is engaging directly with the Department of Labour to establish a template that the payrolls can use to programme and produce a report that will assist employers in claiming the Ters benefit.”

She says by making use of a payroll report many of the legal technical challenges facing employers and tax practitioners alike will be resolved.

Listen to Nompu Siziba’s interview with Sandile July of Werksmans Attorneys:

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I know of 3 people that have applied and all were declined.
Guess some people are more equal than others.

Or they just didn’t qualify because they are more equal than others. Shame, welfare is not for everyone.

Still the government bureaucracy is STILL GETTING PAID????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Yet again those who are privileged employers and employees can access these Grant’s, what about the businesses that employ people and do not make these contributions? Inevitably we all contribute to the tax chain yet there is a discriminatory factor to access these Grant’s. It’s even been told to some employees who do make uif contributions, that there’s too much red tape to access this grant by their employers.

I guess only the politically connected will get these business grants…..more corruption. The comrades will sign-off for their friends and family and the rest of us will be left in the dust.

I thought we had a history of opposing grants and subsidies? You know, the welfare state.

I’m a micro enterprise with 2 employees and my TERS application was declined. As a consequence, I’ve had to retrench 1 employee this morning. R500 Billion injection into the economy but the government can’t even part with a few thousand rand for a struggling SMME? This retrenchment is now going to cost the government more in UIF payments for the next 6 months and child grants that he will now be claiming. Pat yourselves on the back guys, well done.

End of comments.

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