RELIEF TO EMPLOYERS AND TAXPAYERS AMID COVID-19 PANDEMIC

Many employers are currently under pressure and are struggling to pay their employees during lockdown. As a result, the UIF Temporary Employee Relief Scheme (TERS) benefit was announced. Unfortunately, the information available is very vague and unclear with frequent updates. We can assist your business with this application process at Du Plessis & Van der Westhuizen Inc.

Covid-19 temporary employee / employer relief scheme (C19 TERS)

The intention of this scheme is to provide emergency relief to enable employers to pay employees who are “temporarily laid off.” due to the Covid-19 crisis. The directive issued on 26 March 2020 has been amended (in Government Gazette no. 43216, dated 8 April 2020).

“Should an employer as a direct result of Covid-19 pandemic close its operations, or a part of the operations, for a 3 (three) month or lesser period and suffer financial distress, the company shall qualify for a Covid19 Temporary Relief Benefit.”

and

“temporary lay-off means a reduction in work following a temporary closure of business, whether total or partial, due to Covid-19 pandemic for the period of the National Disaster.”

This confirms that an employer does not have to close its operations completely to qualify for benefits under C19 TERS.

Features of the COVID-19 TERS scheme:

• It is a separate benefit scheme (separate from normal UIF benefits with its own set of forms and requirements) which cannot be claimed at the same time as the UIF ‘reduced working time’ benefit.
• It applies where the employer has temporarily closed its operations, completely or partially, as a direct result of Covid-19.
• Claims are not dependent on an employee having any UIF credits and will be entitled to benefits irrespective of how long they have contributed.
• The employer and not the employee should submit a claim for UIF and the employer then pays over the money to the employees.
• The benefit will be calculated in terms of the income replacement rate sliding scale of 38 % up to 60 % as provided in the Unemployment Insurance Act, subject to the maximum threshold currently at R17712. The maximum benefit for a high earner would be 38 % of R17712 a month, which amounts to about R6 730 a month. This seems to have been confirmed by an amendment to paragraph 3.4 of the directive.
• For the duration of the shutdown or a maximum period of three months, the benefit will be not less than the minimum wage (R3500 per month). After the expiry of this 3-month period, the employee may receive less than the minimum wage based on the above sliding scale.
• According to the agreement to be signed with the UIF the benefit should be paid out to the employer within 30 days of a valid submission.
• An employer with more than ten employees has to enter into a written memorandum of agreement (MOA) with the UIF, or there needs to be a written or electronic confirmation of acceptance by the employer of the terms and conditions of the scheme.

The announcements made by the President on 21 April mentioned additional tax relief. Please keep an eye out for this as and when it becomes available.

For more info please visit:
https://www.dupwest.co.za
Direct line: 014 523 4600
Email: etienne@dupwest.co.za