Many employers are waiting for greater clarity regarding unemployment benefits for their staff that have been temporarily laid off during the national lockdown, which is being enforced from March 27 to April 16 to curb the spread of Covid-19, according to business law firm Cliffe Dekker Hofmeyr (CDH).
Since the lockdown was announced, there is some uncertainty regarding unemployment benefits that may be payable to workers who have been temporarily laid off.
Consequent to the national lockdown and looming job losses, the UIF and the Department of Employment and Labour (DEL) launched the C19 Temporary Employee/Employer Relief Scheme (TERS) to provide emergency relief to enable employers to pay employees who are temporarily laid off owing to the Covid-19 crisis.
However, confusion remains as to rules and requirements relating to the benefit and what other assistance benefits are available. Communication from DEL suggests that in addition to the TERS there is also a National Disaster Benefit (NDB).
This confusion is compounded by the fact that negotiations are ongoing at the National Economic Development and Labour Council (Nedlac) which may result in amendments or refinements to the scheme.
Each time a new guide is published by the UIF, it appears to override the one before, thereby creating more uncertainty.
However, CDH employment practice director and regional practice head Gillian Lumb notes that clarity will be reached soon, and then companies can make an informed decision about which financial assistance package is best suited for their employees, as ultimately, only a single package can be applied for.
While the UIF appears to have the necessary resources available for the scheme, having earmarked R30-billion, there is a concern around its administrative capacity as high numbers of claims are expected.
As such, contrary to the normal practice of workers submitting claims individually, Employment and Labour Minister Thulas Nxesi states that UIF benefits will be paid through companies, sectoral associations and bargaining councils.
Lumb says that while there is some uncertainty surrounding who can access the money and the requirements to do so, a good starting point would be for those companies that have registered with the UIF to look into the options provided by the UIF.
She adds that those that are not registered, can still do so, but they will face penalties.
Qualifying criteria extend to those companies that were forced to close during the lockdown, thereby excluding those that have remained open as an essential services provider, notes Lumb. However, she mentioned that, if within an essential service there is a part closure, the question arises whether employees may nonetheless still claim. This aspect will hopefully be clarified in the amended regulations.
Unlike the normal UIF benefit, she says the one applicable during the Covid-19 crisis requires an employer's application and not that of the employee. “The employer will need to provide information pertaining to the company’s payroll over the past three months to show the amounts and breakdowns of what employees have actually been earning,” says Lumb.
“This [UIF] scheme is also most beneficial for employees on a lower income level, as it is paid on a sliding scale, with salary benefits capped at a maximum of R17 712 /m per employee and an employee will be paid in terms of the income replacement rate sliding scale of 38% and 60%.
"Lower-income employees have a minimum benefit of R3 500,” she highlights.
Lumb also states that, critically, there has to be a memorandum of understanding (MoU) agreement between the UIF and employer or relevant bargaining council when it comes to paying out this money because the UIF will not pay out any money until this MoU has been signed.
At the moment, she says there is a generic MoU agreement available from the UIF. In addition to this, some of the bargaining councils have reached an agreement with the UIF which then regulates employers within that bargaining council’s ambit,” Lumb explains, adding that an MoU still needs to be signed before the UIF will pay out.
The role of the MoU is primarily to regulate how much money goes into an employer's bank account and how it is paid over to employees. “There is proper accounting and auditing done so the UIF can account for the money being paid and to ensure it actually reaches the affected employees / beneficiaries,” she says.
Lumb highlights that many employers are not yet using these benefits. “I understand that Business South Africa has advised its members not to apply for the benefit at this stage as these revised rules and requirements pursuant to negotiations going on at Nedlac level”. Business South Africa further wants clarity as to whether they can pay part of an employee's salary and the balance to be paid by the UIF as a result of the Covid-19 pandemic.
“I think a lot of people are just waiting to see how this is all going to play out and what the provisions are going to be before they make their decision. Things will become clearer as the Nedlac discussions progress,” she says.
“Given the economic conditions that prevail, clarity is required as a matter of extreme urgency,” Lumb concludes.