27 Mar 2020

Covid-19 TERS (Corona Virus Temporary Employer and Employees Relief Scheme)

by Michael Maeso, Partner, Durban,
Practice Area(s): Employment |

The Unemployment Insurance Commissioner, in consultation with its executive has developed a relief scheme that is described as Corona Virus Temporary Employer/Employees Relief Scheme (“Covid-19 TERS”).

This is the scheme for employers to make application for benefits during the period of lockdown and beyond. Previous references to National Disaster Benefit and other normal UIF benefits being available to compensate affected employees that have had their income impacted, appear to have fallen away.

It is also important to note that the Department of Employment and Labour has issued a memorandum accepting that employers have the right to force employees to take annual leave during this time. However, the Department does encourage employers to rather utilize the Covid-19 TERS.

The Directive on Covid-19 TERS issued by the Minister of Employment and Labour, printed in Government Gazette No 43161 on the 26 March 2020, records in its preamble that “companies will have to shut down and employees laid off temporarily” during the lockdown and that they anticipate that “employees may lose income.”

This raises the question whether only properly registered companies will be entitled to make application for the benefit ? Our view is that the reference to company was not intentional as later in the directive, reference is made to the payment of benefits to “the Contributors who have lost income due to Covid-19 pandemic”. The definitions of contributor, employer and employee in the Unemployment Insurance Act are very wide and cannot be limited to companies and their employees.

The purpose of the Directive is to pay benefits to contributors who have lost income due to Covid-19 pandemic. Paragraph 3 of the directive records that an employer qualifies for the benefit if it closes operations for a period and that the employer is suffering financial distress.

What about those employers who have decided to make part payment to employees or those employers that have not completely shut as some of its employees are able to work remotely?

It cannot have been the intention of the Department of Employment and Labour to deny benefits to employees who receive part payment but not to the extent offered by the Covid-19 TERS. We believe that employees will be able to claim the difference in what was paid by the employer and what is payable by the Covid-19 TERS. The same principle will apply to those employees who are not working in businesses that are partially operational. The fact that the employer is not closed will not prevent a claim. The fact is that the employee is prejudiced and may receive a benefit.

So how does the employer make application?

All information regarding funding can be requested from covid19ters@labour.gov.za

The following information is required:

  • A letter of authority of the letterhead of the employer authorising the person to make the application of behalf of the employer;
  • A Memorandum of Agreement signed by the UIF and the employer (it seems the Department has a standard MOA that it sends out);
  • Critical information relating to the employer that is requested in the application form;
  • Payroll information backdated to 3 months;
  • Bank account supported by bank statements;
  • Applications are made to covid19claims@labour.gov.za

The website suggests payment to be made promptly on completion of all the documentation.

Please contact us should you require any assistance with an application to the Department.

Please note that the approach to these benefits has changed a short notice in the past and remains very fluid. We will continue to monitor the situation and advise accordingly.