Funds for financially distressed businesses that have applied for the Unemployment Insurance Fund’s (UIF) relief scheme to assist them in paying workers during the Covid-19 crisis are only slowly trickling in.
This is despite looming payment dates for many employers.
A look at the complaints from business owners on social media shows frustration over the bureaucratic process and red tape involved in claiming from the UIF’s Covid-19 Temporary Employer-Employee Scheme (Ters).
One Twitter user complained about having to fill out days of paperwork that he had to resubmit on more than one occasion as the fund requested changes to his documents.
Another complained about the automated system requiring different information, and once the application was complete they were not given a reference number or an indication that the application is being assessed.
What was the reason?
The view that claims aren’t being processed holds true when one looks at the figures.
To date, the UIF has received 39 000 applications and has only processed 136.
The reason for this is that only 136 applications out of the entire batch were valid, UIF Commissioner Teboho Maruping told Moneyweb.
The UIF has had to remove 15 755 duplicate applications, leaving it with 23 245 applications.
Only businesses that have had to partially or completely close their businesses on a temporary basis because of the nationwide lockdown meant to slow the spread of Covid-19 qualify for relief.
The process to apply for the Ters benefit requires an employer to apply online using this link or by sending a blank email to firstname.lastname@example.org that will be followed by an automated response with all the relevant forms and documents that need to be completed.
One of the documents is a UIF Excel template. The employer is required to fill in the details of the business, the day it closed, and list its employees, along with the dates they started working, their ID or passport numbers, their refugee identity documents if applicable, and their remuneration. This document has to be converted to a CSV file format before it can be submitted. The UIF provides a guideline on how to do this here.
Maruping said only 16 534 applications were in the correct CSV file format and after further processing, only 136 files were eligible because they had all the correct information.
“If you do the calculations you can already see the error rate we have is very high,” said Maruping.
What do you get?
Maruping said 23 000 companies were sent emails on Saturday advising them to resubmit the correct file format and/or supply full information.
For instance, one critical piece of information that has been missing from many applications is the amount of remuneration the employee has received during the shutdown period.
“People think when we ask for this information we are just being pedantic but we need it to calculate the right amount that is due to a person,” said Maruping.
“Because we could calculate and give you less money and people will run into poverty or we could give you more and the UIF will run out of money and other people who are eligible will not get anything.”
The UIF has set aside R40 billion for the Ters benefit.
The payout is not meant to cover an employee’s complete salary but between 38% and 60% of it.
The maximum salary threshold to be considered is R17 712. This means that if you earn more than that amount you would not receive a percentage of your full salary but 38% of R17 712. But if your salary is less than the maximum threshold the UIF will determine the payout amount using an automated calculator based on the information given.
The minimum amount the UIF will pay out is R3 500 and the maximum is around R6 730. An employer may supplement this benefit.
The value of the benefit for a company’s employees will either be transferred to an employer or the bargaining council that has a memorandum of agreement with the UIF, which will then pay individual member companies. If a business has fewer than 10 employees they must submit the individual bank account details of these employees and the UIF will pay the workers directly.
Only businesses that contribute to the UIF qualify – and those that only registered their businesses with the Companies and Intellectual Property Commission after March 15 will not be eligible.
At “worst”, said Maruping, an application that is valid will take 10 days to be processed and for payment to be processed.
To date, the UIF has paid R460 million in benefits but this figure is inclusive of all claims the UIF has settled and not just Covid-19 Ters claims.
Work life after lockdown
Companies will only be able to apply for the Covid-19 Ters benefit during the lockdown period. The scheme covers salaries for three months starting from April or a lesser period.
The R40 billion that has been set aside by the UIF will be used to cover all the interventions it has put in place to cushion the blow. In addition to the Covid-19 Ters benefit specifically developed for this period, the money will cover benefits related to illness, the UIF “reduced work time” benefit for employees who have lost a portion of their income due to cut working hours and an existing Ters benefit unrelated to Covid-19.
Employers may apply for all of these benefits. Maruping could not provide details about how much of the R40 billion would go to each benefit.
Maruping said the concern now is that if the lockdown goes beyond three months, the UIF’s balance sheet would be affected.
“We would have to look at other ways of funding this thing – we cannot fund it beyond three months,” he said.
The money going towards the intervention will come from the UIF’s reserves. Maruping said the UIF currently has investments of around R139 billion, more than 50% of which is in government bonds while the rest is in local equities, money market and other investments.
But the UIF cannot just dip into this money as it needs it.
“Our approach to retrieving these funds will have to be really careful,” he said, explaining that a quick liquidation of these assets would have a ripple effect.
For instance, if the fund rushed to liquidate government bonds this would send a negative message to the market.