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UIF TERS webinar FAQs

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This FAQ is largely based on the questions submitted during our latest webinar on 22 July 2020. In this webinar, ASATA and its legal counsel, Novation Consulting, and FvT HR Consulting addressed some of the most pressing queries around the uncertainties relating to UIF and TERS. If you missed the webinar or if you would like to listen to it again, please click here.

Unfortunately for many of the questions relating to TERS errors/challenges and UIF applications, UIF/TERS has not provided answers or guidance. We have tried to answer the questions that we do have clarity on and provided the options provided by UIF when employers encounter issues with their applications. However, we do understand that the guidance provided by UIF/TERS is often not successful. Even though you might have not yet received responses from them, we urge you to at least get your query in the system as hopefully they will work through their backlog and assist. We have seen some success with employers who emailed queries specifically related to declarations and Foreign Nationals.

TERS BASICS

  1. Overview of submission process

The employer (rather than the employee) submits a claim for UIF, and the employer then pays over the money to the employees or can elect that employees are paid directly into their own accounts.

All required documents must be submitted to UIF online via https://uifecc.labour.gov.za/covid19/

Register as an employer and complete the following info:

  • Complete all company info
  • Accept the Memorandum of Agreement Terms and Conditions
  • Accept the Letter of Agreement Terms and Conditions
  • Upload a bank confirmation letter in PDF format
  • Upload the CSV File, OR you can skip the CSV file and upload the information manually one employee at a time

2. Should we apply for TERS or UIF Reduced Work Time Benefits?

Employers cannot claim under both systems at the same time.

TERS has been extended to include the period of July as well as August up to 15 August. We advise that employers apply for TERS as long as it is available and only thereafter apply for Reduced Work Time benefits from UIF for the following reasons:

  • TERS does not affect and employee’s credits with the UIF.
  • TERS benefit amounts are not dependent on the number of credits an employee has accumulated.
  • TERS payouts are likely to be quicker as applications are not individually based.

3. How do I fill in the “leave income” section of the application?

This section refers to the income received by the employee during the period of application. This will, for example, be the value of any short time hours worked or the reduced income for that month.

It does NOT refer to payment for leave taken. Do NOT include the value of any annual leave granted or any advances given in this column.

4. How can I contact TERS if I experience an error or have a query?

The TERS helpline number is 0800 030 007. There are more consultants operating the phones now, and it is, therefore, easier to get through, but the consultants are unfortunately not allowed to access employers’ accounts and will, therefore, escalate your query or provide you with the applicable email address where you can send your query.

We are aware that there is a backlog on their side in terms of responding to emails, but we suggest that you get your query in the system – we have seen some success, and hopefully, they will work through their backlog.

Alternatively, you can contact Suzaan de Stadler to assist with advice regarding errors received on your application.

TERS CRITERIA

5. Who is eligible to apply for UIF TERS?

The Covid-19 TERS benefit fund has been created to assist employers who may be unable to pay employees, in full or partially, for economic reasons as a direct result of the COVID-19 pandemic. Employers can, therefore, apply on behalf of employees who are on temporary layoff, who work reduced working hours, or who are earning a reduced salary.

6. We pay UIF contributions over to SARS, but we are not registered with the Department of Labour for UIF. We thought we only need to pay SARS – what then is the UIF reference number?

To submit your application, you will need your UIF reference number issued to you by the Department of Labour. This should be found in your company CIPRO registration documents – from when you initially registered with UIF. This is the same number you would use to fill in a UI19 form when an employee is claiming retrenchment or maternity UIF benefits.

The UIF reference number is an 8-digit number in the format, e.g., 1234567/8. It must have a forward slash before the last digit, and it contains no letters or spaces.

This differs from the U-number you receive from SARS. Your SARS U-number is not required for the application.

SARS is the collection agent for UIF. They collect UIF contributions payments from companies and then pay such across to the UIF Commissioner. That is why we have two numbers associated with UIF. The U-number is used by SARS to collect UIF; it is the same number as your PAYE number and skills development levy (SDL) number, only with a different initial in the front.

SARS credits your UIF reference number when they pay money across. This is the number you will need to complete your application.

7. If our company is not registered with UIF and does not have a UIF reference number as per the above, can we apply for TERS?

No, unfortunately not. Even if you pay UIF contributions over to SARS, you still need to be registered with the UIF in order to apply.

Also notes that Companies who have registered with UIF after 15 March 2020 may not be eligible for the TERS benefit.

8. If we pay UIF over to SARS and have a UIF reference number, but we haven’t submitted declarations on a monthly basis to UIF, will our employees receive benefits?

If the employee is not declared at the UIF, the application will be declined with the reason code “employee not declared by employer”.

In addition to paying UIF contributions over to SARS, employers must also send monthly UI19 declarations to UIF. If employers fail to do so, the initial application will be declined. Employers must then either register and declare their employees on ufiling or email the outstanding UI19 declarations to uifdeclarations@labour.gov.za. uFiling is, however, preferred as emails can be very delayed.

9. If an employee has not previously contributed to UIF, are they still eligible for TERS?

No. It is important to remember that UIF is an insurer. So just like any other insurance, employees are not eligible to claim TERS or UIF benefits if UIF has not been paid on their behalf.

10. Can sole proprietors (e.g. ITCs), commission earners, contractors, freelancers apply for TERS?

No, unfortunately not.

The same is true for a director who has not previously registered with UIF and where UIF is not being paid over on their behalf.

11. If I retrench staff, do I still apply on their behalf for TERS?

You can apply for TERS if the staff member is still in your employ, even if it is during their notice period. Consider rather extending the notice period in order for your staff member to still benefit from TERS (i.e. until mid-August 2020), especially since TERS is delinked from UIF credits and will therefore not have an effect on the credits available to claim for retrenchment benefits.

Once the employment is terminated at the end of the notice period, then the normal UIF process would apply.

12. Can TERS cover a portion of a retrenchment package?

Yes, in the event that an employee is on Reduced Work Time or on a Temporary Layoff during the restructuring consultations. Employees who are made redundant are still entitled to receive their statutory entitlements, i.e. notice pay or payment in lieu of notice, accrued annual leave and severance pay calculated on the basis of one week for every and continuous completed years of service.

13. Must a retrenched employee apply for normal UIF as an individual?

Yes, the employee can apply directly at a Labour Centre or create a profile on uFiling. The employer must supply the employee with a UI19 form.

14. If our business received the Tourism Grant of R50 000, are we still able to apply for TERS? (Is there a link between other forms of relief and TERS/UIF?)

This will depend on the rules of the particular grant/fund and whether it is intended to pay salaries.

The UIF rule is that an employee’s income plus the TERS benefit amount may not exceed that which the employee would normally earn. Employees may, therefore, not “profiteer” from UIF.

TERS APPLICATION PERIODS

15. Is TERS likely to be extended beyond 15 August? (i.e. until international borders re-open)

We have unfortunately not received communication from Government indicating this but will definitely let you know as soon as we hear anything.

16. Is TERS closing submissions for April, May, or June while there are still pending payments?

According to Employment and Labour Ministry’s announcement on 21 July 2020, all valid applications already received will be processed.

In the same announcement, the minister stated that the department is considering closing the April, May and June applications at the end of July 2020. This has not yet been confirmed, but we urge employers to submit their applications for April, May and June (if not already submitted), as soon as possible.

17. Can I apply for June if I am still awaiting payments for May or April?

Technically no, the TERS platform only allows employers to continue to the next month’s submission after they have uploaded proof of payment of the TERS benefit to Employees for the previous month’s benefits received.

Please see next question for possible solution.

18. How can I proceed to the next month’s application if I haven’t yet received payment for the current application (I.e. I do not have proof of payment to upload)?

UIF has been silent on this issue. We suggest that employers upload a letter instead of proof of payment explaining that they are unable to upload proof of payment due to their application still being in progress.

19. If employees have already applied for UIF (thinking that TERS was not going to be extended), can they withdraw their application so TERS can be submitted for July?

They should be able too but must do so as soon as possible.

The Department of Employment and Labour has resorted to providing contact details of specific officials allocated to their nearest labour centre office. Please find all numbers for different provinces here:

https://www.gov.za/speeches/employment-and-labour-provides-uif-contact-details-ordinary-unemployment-benefits-1-may

Employees can also phone the TERS helpline and select the first option to be referred to someone who can assist with normal UIF queries: 080 003 0007.

Employees can phone the TERS helpline and select the first option to be referred to someone who can assist with normal UIF queries: 080 003 0007.

TERS PAYMENTS

20. How is TERS payment calculated?

The salary to be taken into account in calculating the benefits will be capped at a maximum amount of R17 712.00 per month, per employee, and an employee will be paid in terms of the income replacement rate sliding scale (38% – 60%) as provided in the UI Act.

The maximum benefit for a high earner will, therefore, be 38% of R17712 a month, which amounts to about R6 730 a month depending on the number of days in the month.

Should an employee’s income determine in terms of the income replacement sliding scale fall below R3 500, the employee will be paid a replacement income equal to that amount. This means that an employee will not receive less than R3 500 (i.e. such will be slightly less or slightly more dependent on the number of days in the month).

The calculations are based on the normal salary amount and not the income earned during the application period. However, the benefit plus income received may not be more than the normal salary, so TERS may, therefore, reduce the benefit amount accordingly to prevent such overpayment. This will only be applicable to low-income earners who earn a salary/wage close to the minimum wage and received some income during the application period.

21. Are there still pending payments for April and May?

Yes, some employers are still waiting for April and May payments. It will depend on when the applications were submitted, whether there was additional information required, such as updated declarations, or it may be due to delays on the Department of UIF’s side.

22. Why would TERS payments differ from month to month?

The calculation is affected by the number of actual calendar days in a month. For example, June payments will be less than May payments, and April payment would have been the highest if submission was for 27 March – 30 April (35 days).

The income received during the period will also have an effect as the benefit payout plus income received should not be more than an employee’s normal salary.

23. Can an employer top-up an employee’s TERS payment?

Yes, as long as the TERS benefit plus “top-up” amount is not more than what the employee would normally earn.

24. If I advance my employees a portion of their salary while TERS payment is pending, will it affect the payment amount?

If you advance the estimated TERS portion of your employees’ salary, you are advised not to indicate this advance in the “income received” column of the TERS application – rather indicate such as an advance on the payslip.

It should not affect the benefit amount as the calculation is based on the normal salary and not income received. However, the benefit plus income received may not exceed the normal salary, so TERS may, therefore, reduce the benefit amount accordingly to prevent such overpayment. This will only be applicable to lower-income earners who earn a salary/wage close to the minimum wage and received some income during the application period.

25. As an employer, can I offset any advances to my employees once TERS is paid?

Yes, Employers may offset any salary advances against the TERS benefits received.

Since we are able to more accurately estimate TERS benefit amounts, it is advisable that employers only advance the estimated TERS benefit and not the entire income for the specific month.

Remember to ask a payroll specialist for advice regarding the processing of benefits and advances to ensure that your PAYE payments to SARS are correct as TERS income is not subject to PAYE and UIF deductions.

26. As TERS is available for half of August, will the payment be pro-rata? (i.e. minimum payment half of R3 500)

Yes, it should be, but we have not received any confirmation with regards to how the August application will work.

27. Do you deduct PAYE and UIF from TERS benefits?

No.

28. Do you deduct PAYE and UIF from the short time worked where applicable (i.e. Reduced Work Time) plus UIF payment?

You only deduct PAYE and UIF from the short time payment as this is income.

TERS ERRORS – TROUBLESHOOTING

29. What can I do if some of my employees have still not received TERS payment?

This will depend on the reasons for not yet receiving payment. If your employees were declined, check the reason codes on the breakdown report for declined employees.

If the application is still in progress, but there seem to be no issues with the application, it is very often the case that UIF is behind, and processing is delayed. Unfortunately, we have seen that some employers wait for more than three weeks. The reasons why some employers are paid quicker than others are not always clear (e.g. some employers who applied late are paid quicker than employees who applied before them).

30. Received message for some employees: “employee(s) not declared by employer”

This means that the employee is not declared at the Department of Labour.

In addition to paying UIF contributions over to SARS, employers must also send monthly UI19 declarations to UIF. If employers failed to do so, the initial application will be declined. We advise that employers:

uFiling is, however, preferred as emails can be very delayed.

31. I received the message “employee(s) not declared by employer”, but their declarations are up to date. What now?

It does sometimes happen that declarations are up to date, but for some reason, employees are still declined with the code “employee(s) not declared by employer”. This may be due to UIF being behind with updating declarations.

We advise that employers send both proof of previous submissions and the actual submissions (at least three months) to covid19declarations@labour.gov.za and uifdeclarations@labour.gov.za.

It may, unfortunately, take quite some time for them to process.

  • Received message “company registration number and or bank account verification has failed”

Make sure of the following:

  • Is your company registration number correct?
  • Are your bank account details correct?
  • Contact your bank to make sure that the information they linked to your account corresponds.

If there is nothing wrong with your information, we have been advised by a consultant at the TERS contact centre that employers must do the following: send an email with the bank confirmation letter and CK registration documents to Tshepiso.maphathne@labour.gov.za requesting that he corrects the system error. Use your UIF registration number in the subject line.

If there is an explanation for the error message or a mistake was made, and the system does not allow you to correct it, send a letter on the company letterhead explaining the reason and also attach to bank confirmation letter and CK registration documents to Tshepiso.maphathne@labour.gov.za

Alternatively, phone the TERS helpline to escalate the query.

Note new development since webinar: we have clients where the system “corrected itself,” even for clients who have not sent an email as per above (we do, however, advise to still send the email if your account is still blocked). You will not receive an email giving you this update and therefore have to check your account on a regular basis.

32. Received message “salary received during shutdown period is more or equal to normal salary”

This error message initially a common occurrence. However, it should not happen anymore. Unless the income declared in the “income received” column is indeed equal to or more than salary indicated in the monthly income column.

33. What does “employees not found” mean?

Very often, when employers use a CSV file to submit their application, the system initially says “employees not found.” We have found that the employees reflect after a while and assume this happens once TERS starts processing the application. We have also experienced that this message can remain as the status for quite a long time as there is a backlog in applications, but the system does eventually correct itself.

If you have a small staff compliment, consider rather manually submitting your application as they will then immediately reflect under saved employees.

Also, make sure that your CSV file is formatted correctly. If not, resubmit.

34. Foreign national staff not paid

Send the following information to covid19terssupport@labour.gov.za for Foreign Nationals that have been declared previously:

  • Proof of declarations submitted (3 months)
  • UI19 declaration
  • Payroll records/proof of payment of salaries (3 months)
  • Passport document
  • Cover letter

There are big delays in email processing, so it is advisable to capture foreign nationals on ufiling in addition to sending the email above.

Foreign Nationals that have not been declared previously must be captured on ufiling and submit:

  • UI19 declaration (at least 3 months)
  • Payroll records/proof of payment of salaries (3 months)
  • Passport document
  • Cover letter
  • In order to get TERS benefit on behalf of our Foreign National employees, do they have to register themselves on uFiling individually? Or should I, representing the company, register them on uFiling?

The company should register and declare the employee on uFiling.

UIF SUBMISSIONS (REDUCED WORK TIME BENEFITS; RETRENCHMENT BENEFITS; ETC.)

37. What is the Reduced Work Time benefit?

The ‘Reduced Work Time’ benefit is intended for employees who were placed on short time. This scheme is also available to employees who are on temporary layoff without pay, or who are receiving a reduced salary (even if they are working full time) during the COVID-19 crisis. The following documents need to be submitted either at a Labour Centre or via uFiling. See UIF Easy Guide for Electronic Claims.

  • UI 19 and UI 2.7 (completed by employer – and employer to indicate Code 17 on the UI19 form
  • UI 2.1 (application form to be completed by the employee)
  • UI 2.8 (bank form completed by bank)
  • Letter from employer confirming reduced work time (or layoff) is due to COVID-19
  • Copy of ID document

These requirements are not to be confused with those of C19 TERS.

38. Does the employer apply for UIF on behalf of their employees, as with TERS?

No, employees apply themselves, and the benefit is paid into their own bank account. However, employers may assist with applications, especially when employees who want to apply via uFiling are not tech-savvy or do not have access to the internet.

39. What is the process of applying on uFiling?

See UIF Easy Guide for Electronic Claims.

Both employees and employers are experiencing problems with ufiling applications. Hopefully, UIF will streamline and improve this process soon. We will keep you posted once we receive any more information.

40. What can be done if retrenched employees are unable to claim UIF now because they are still linked to TERS?

Unfortunately, we have not received any solution for this yet. Hopefully, UIF will correct this error, but currently, the system picks up on an employee’s ID number and will not allow an employee to have more than one application in progress at the same time.

41. If an individual employee has applied for UIF (e.g. the ‘reduced working hours’ option), can they withdraw their application before it is approved and join their employer’s TERS claim?

They should be able too but must do so as soon as possible.

You can phone the TERS helpline and select the first option to be referred to someone who can assist with normal UIF queries: 080 003 0007.

42. If an employee is going on maternity leave in the next few weeks, should I claim TERS on her behalf or should she claim maternity benefit?

First claim TERS until 15 August as this will not affect her credits when she applies for maternity benefits later.

43. If we are terminated/retrenched/placed on temp layoff, and we need to apply for UIF, will the calculations be based on what the company is paying now (July/August), or will it look at my salary for the month of March?

The calculations will be based on what you would normally earn prior to Lockdown.

UIF CRITERIA

44. How do UIF credits work?

In terms of section 13(3) of the Unemployment Insurance Act, as amended, 1 day of credit is accrued for every 4 days worked and contributed, in a 4-year cycle from the date of unemployment up to a maximum of 365 days.

45. Are UIF credits affected by what was claimed under TERS?

No, the TERS benefit will not affect any credits because it’s a special benefit.

46.Who is eligible to apply for UIF?

Employees who are registered with the UIF and who have been paying contributions to the fund can claim if they lose their jobs or cannot work.

These are the kinds of benefits covered by UIF:

  • Unemployment benefits (including retrenchment, dismissal and expiry of contract)
  • Illness benefits
  • Maternity benefits
  • Adoption benefits
  • Parental leave and commissioning parental leave benefits
  • Death benefits
  • Reduced Work Time benefit

You cannot apply for UIF benefits if you have resigned.

47. Does UIF apply for reduced working hours/reduced pay/temporary layoff?

Yes, based on the information we have now, the Reduced Work Time benefit should cover not only reduced working hours but also temporary layoffs and reduced pay.

48. Can sole proprietors/commission earners/contractors apply for UIF?

No, unfortunately not, as is the case with TERS as well.

49. Can I still receive UIF if there’s been a gap in my UIF contributions (but I have contributed in the past)?

We are uncertain, but we believe you should be able to. However, it will depend on the number of credits you have accumulated.

50. Am I eligible for UIF if I am receiving a pension payout?

Yes, if the “pension payment” is not a Government pension.

UIF PERIOD & PAYMENT

51. If I apply for UIF with a pending TERS submission, will it cancel the outstanding payment?

Yes, this is the feedback we are receiving from UIF; or it is more likely that the system will not accept your UIF application because the TERS application is pending.

52. How can I cancel my UIF application?

The Department of Employment and Labour has resorted to providing contact details of specific officials allocated to their nearest labour centre office. Please find all numbers for different provinces here:

https://www.gov.za/speeches/employment-and-labour-provides-uif-contact-details-ordinary-unemployment-benefits-1-may

You can also phone the TERS helpline and select the first option to be referred to someone who can assist with normal UIF queries: 080 003 0007.

53. For how long can I claim UIF?

The normal UIF credit is based on one day of UIF for every four days contributed. An employee would need to have contributed for four years to be eligible for a full 12-month benefit. However, an employee’s available credits will depend on claims for UIF benefits in the preceding recent years.

54. How is UIF payment calculated?

The UIF income replacement rate sliding scale of 38-60% of an Employee’s salary will be applied but to a capped maximum salary amount of R17 712. This means that even if an Employee earns R 30 000 per month, their benefit will be calculated based on a salary amount of R 17 712.

The claim is subject to the employee having enough credits. The employees’ period of contributions to the UIF fund as well as the previous times they claimed from the fund may be taken into account to determine to what percentage of the UIF benefit they will be entitled.

Subject to available credits, the employee can (theoretically) receive this benefit for up to 12 months.

It is possible that lower-earning employees may get out less than the minimum wage under this dispensation.

We can unfortunately not supply a calculator for normal UIF benefits as it is a complex formula that depends on credits as well as previous applications with UIF, and we are not privy to this information.

55. Can an employer top-up an employee’s UIF Reduced Work Time payment?

This may prove to be challenging for the following reasons:

  • UIF benefits are paid directly into the employee’s bank account.
  • It is difficult to estimate what the UIF will pay as it is dependent on the available credits, and employers are not privy to this information.
  • It is difficult to anticipate when payments will be received.

An employer can consider advancing the estimated UIF benefit but will have to enter into an acknowledgement of debt with the employee whereby the employee agrees to repay the employer the UIF benefit once paid into their bank account.

However, if an employer wishes to “top up” an employee’s salary, the employer may do so. However, note the employee may not profiteer, i.e. the employer contribution and the UIF benefit received may not exceed the employee’s usual gross salary.

56. Can an employee claim UIF for a portion of the difference in salary earned (reduced) and their normal salary?

Yes, based on the information we received, they should be able to under the Reduced Work Time benefit – code 17 on the UI19 form.

LABOUR ADVICE

If you have specific questions about labour law and advice, please consider contacting a professional, like FvT HR Consulting. Every situation – your business and your employees – is different, and a professional can base advice on your unique situation.

57. When should I consider retrenchment instead of temporary layoff for my employees?

As an employer, if you are anticipating that you will not recover from the impact to your business due to COVID-19, and cannot feasibly consider alternatives (e.g. layoffs, short time or reduced salaries), then you’re entitled to initiate a retrenchment process now.

However, remember that retrenchment should be your last resort and if there is a possibility that your business might still recover, we advise that you rather place employees on temporary layoff and apply for TERS benefits on their behalf whilst the window for submissions is still open.

The first priority should be to consider strategies to try and circumvent retrenchment. It is advisable to first consider which of the Employees are critical to the business, especially in the coming months. It will make no financial sense to retrench some Employees now for the following reasons:

  • Keep in mind that for 12 months of their being made redundant, Employers are legally obliged to offer such Employees “first right of refusal” when suitable vacancies arise – provided that they meet the inherent requirements of the available positions. In other words, an employer might have to rehire the same people they retrench now.
  • It is not a good strategy to protect cash flow as the employer would have to pay out severance packages (and may not arrange payment plans for those). Employers would need to pay any accrued annual leave, notice periods and severance pay (i.e. one week for every completed year of service).
  • Retrenchment processes as per section 189 and section 189A of the Labour Relations Act (LRA) are onerous, and there is a duty on Employers to meaningfully engage with Employees being contemplated as being made redundant before being able to procedurally and substantively fairly retrenching certain Employees.
  • Normal section 189 processes do not stipulate how long the process should take, but to be procedurally fair Employers should not rush the process. It should take nothing less than two weeks, but consultations often take longer.
  • If Employers employ more than 50 staff and there is a good chance that they would need to retrench more than ten people, such retrenchments would automatically be regulated by section 189A of the LRA. This means that Employers would be required to consult for at least 60 days before they may make Employees redundant. This also means Employers would have to cover the costs for at least 60 days unless such Employees wave their rights, which they are unlikely to do in today’s times.
  • Note: Section 189 is the section in the Labour Relations Act that governs restructuring processes. There is also section 189A which deals with large scale retrenchments.

To summarise, it is neither a cost-effective nor a quick way to retrench Employees at this point. Employers should consider putting some staff on short time or even on a temporary layoff – albeit for weeks on end – as an alternative to making them redundant.

Please note: It is very important that you follow the correct retrenchment procedures under the Labour Relations Act.

Alternatives to retrenchments in these times may include:

  • Affording employees’, the option to work from home, where possible;
  • Applying a reduction in working hours and proportionate deduction in salary;
  • Placing employees on a temporary layoff; or short time
  • Agreeing on a reduced salary;
  • Granting employees annual leave; or
  • A combination of the above

The above would be deemed to be feasible alternatives to possible retrenchments. While the aforementioned options need to be consulted with employees, they do not have to agree to such if the employer positions this decision as being a reasonable alternative to retrenchment.

58. We cannot afford to retrench. What do we do?

Rather place employees on a temporary lay off or on Reduced Work Time until such time as the business can afford to retrench. However, remember that employers are obliged to offer retrenched employees “first right of refusal” (for a period of 12 months after they have been made redundant), in the event that a suitable vacancy arises and hence take such into account before considering retrenchments.

Also remember that in the retrenchment agreement, the employer and employee may agree to pay severance packages in instalments to make it more financially viable for the employer.

59. Does an employee on temporary layoff accrue annual leave?

No, but employers may have to defend this stance.

If the employment contract states that employees accrue 1 day/hour for every 17 days/hours worked, their leave will not accumulate during temporary layoff.

However, if the employment contract states that the employees are entitled to 15 working days per annum, it may be more difficult to argue. The intention of the legislation is that employees accumulate annual leave based on time worked – that is why the calculation is 1 day for every 17 days worked. The BCEA was definitely not written with a situation like Covid-19 in mind.

A change in the accumulation of annual leave can, of course, be agreed on. We, therefore, advise that staff are issued with correspondence (for temporary layoff and reduced work time) stating that their annual leave does not accrue and to provide them with the opportunity to consult and make representations. Should they accept the letter, it serves as a form of agreement. Remember, the definition of consultation does not require agreement.

We strongly believe that, during these unprecedented times, employers will be able to justify not allowing annual leave to accrue during periods of temporary layoff, after consultation with staff.

Take note: annual leave does accrue during periods of unpaid maternity leave and periods of paid sick leave.

60. If our employment contracts don’t specifically address leave accruement during temporary layoff/reduced work time, then can this be addressed in their temporary layoff/reduced work time letter (in other words, the letter trumps the contract)?

The employer has the right to inform employees on a Temporary Layoff or on Reduced Work Time (RWT) that leave will only accrue on the basis of 1 day for every 17 days worked in any correspondence (for temporary layoff and reduced work time) issued in such time but afford such employees the opportunity to make representation. Their acceptance of the conditions in such correspondence serves as a sufficient form of agreement re leave accrual during this temporary lay off or periods of RWT.

61. If we didn’t mention leave in our temporary layoff/reduced work time letters, do we need to send something separately stating that they will not be earning leave?

Yes, please see example letter for temporary layoff and reduced work time. You can amend as required.

62. Regarding leave during Lockdown, what if staff were not given advance notice that they will not accrue leave? Can they dispute the leave due and demand to be paid out if they resign? 

They could lodge a dispute citing unilateral amendments to their conditions of employment hence issue memos/correspondence to this effect soonest. However, we are living in unprecedented times, and hence we expect future case law will dictate how the courts will process such disputes

63. Is an employee on temporary layoff entitled to sick leave?

No, they are not.

64. How does an employee on reduced work hours accrue annual leave?

Employees on reduced work time accrue annual leave at a rate of 1 day/hour for every 17 days/hours worked.

65. How does sick leave entitlement work for an employee on reduced work hours?

During a period of Reduced Work Hours, an employee will only be able to take paid sick leave for those days or hours an employee has agreed to work during the short time period (assuming the employee has sick leave left). An employee cannot take sick leave for the days or hours the employee would have worked normally before the implementation of short time.

(Entitlement: Employees are entitled to 30 days paid sick leave in every 3-year employment cycle (if they work a five day work week). During the first six months of employment, employees are entitled to 1 day for every 26 days worked).

66. Are there any scenarios in which I should force my staff to take annual leave?

It is never advisable to force employees to take annual leave.

It is our opinion that employees should be afforded the right to preserve their accumulated annual leave or elect to only take part of their Annual Leave should they wish to and exercise their right to access the UIF benefits available to employees during this period.

67. What does labour law say about temporary layoffs? (For how long can an employer keep an employee on temporary layoff?)

Our legislation does not prescribe time periods within which temporary layoffs must be applied.

The prevailing circumstances and any agreement achieved with the impacted employees will dictate these time periods. Should the temporary layoffs become indefinite or endure for an unreasonably long period of time, the employer may elect to (permanently) retrench employees, after following the provisions of s189 or s189A of The LRA (as amended).

Employers may not unilaterally change employees’ conditions of employment without first consulting with their employees. However, consultations relating to temporary layoffs is much less onerous than retrenchment consultations, in light of Covid-19 and the resultant National Lockdown.

Whilst the options need to be discussed with employees, they did not have to agree to the decision to be placed on short time or Temporary Layoff during the National Lockdown as the Lockdown was imposed by Government and is thus a decision beyond the employer’s control. However, if the employer needs to place Employees on a further period of temporary layoffs/short time, employers should consult with the affected employees. In the event that consensus is not reached, employers still have the right to place employees on temporary layoffs/short time, provided the employer bases their decision on sound business rationale.

Here are the steps Employers should take in the event that employers elect to and need to place staff on temporary layoffs /short time after the National Lockdown:

  • Issue employees with a notice of intention to introduce temporary layoffs/short time.
  • During the consultation period, give employees the opportunity to propose alternative solutions.
  • Once you have consulted with your employees, issue them with a notice of temporary layoffs/short time.
  • Assist employees with the documentation required to claim UIF benefits.
  • Once employees are retrenched and claim from UIF, can we contract them to work for a few days to supplement their income and assist the business if need be?

We would advise to rather place such employees on short time for the time being and applying for TERS benefits on their behalf.

Also, remember that employees may not be entitled to claim retrenchment UIF benefits if they receive full income.

However, income derived for a short duration is in order, but it is advised to then issue such employees with a  Flexi or Fixed Term Contract.

68. Government advised that employers not force annual leave on staff during the Lockdown, but now that TERS has run its course, can we pay out accumulated leave pay to staff should they opt to do so?

You may grant employees the right to take some of their accrued annual leave to supplement the shortfall in their remuneration and process such accordingly as normal remuneration. It is illegal to “pay out” leave (unless the employee is terminated). Also, remember that leave payouts are taxed at a higher rate (“bonus tax”).

UFILING

Currently, there is a lot of uncertainty and technical problems relating to uFiling applications. Hopefully, UIF will resolve the issues soon, and we will keep you posted on any new developments and information.

In the meantime, ensure that you apply for TERS – we will let you know once the window for July and August applications are open.

Visit uFiling’s FAQ page to answer some of your questions regarding how to register as a company, how to submit declarations and returns, and the employee registration process. https://www.ufiling.co.za/uif/help-faqs

We have also attached the uFiling system user guide here and well as the guidelines for electronic claims here.

Please note that UIF has announced that they are currently experiencing high volumes of queries on the uFiling support mailbox (ufilingsupport@labour.gov.za), and assistance is therefore delayed.

The impact of COVID-19 on the travel industry is unprecedented and unpredictable. The nature of the content that is being shared on the ASATA coronavirus microsite is therefore constantly changing. Please check the date of the post to ascertain its recency.
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