Notes on COVID-19 Temporary Employee/Employer Relief Scheme (TERS)

By Zandré Janse van Rensburg and Jaqueline Swindown

Following the announcement of the national lockdown by the President of the Republic of South Africa, the Unemployment Insurance Commissioner, after consultation with the Unemployment Insurance Executive, has developed a relief scheme, known as the COVID-19 Temporary Employee/Employer Relief Scheme (C19 TERS), under the auspices of the Unemployment Insurance Fund (“UIF”). C19 TERS provides emergency financial relief to affected employees who suffered loss of income due to temporary lay-offs by their employers during then national lockdown.

What is C19 TERS?

The nature and scope of C19 TERS are succinctly recorded in the regulations in terms of which the scheme was created:

1. Should a UIF contributing employer, as a result of the Covid-19 pandemic, close its operations, or a part of its operations, for a 3 (three) months or lesser period, affected employees shall qualify for a C19 TERS benefit;
2. The benefit shall be de-linked from the UIF’s normal benefits and therefore the normal rules that for every 4 (four) days worked, the employee accumulates one day’s credit, and the maximum credit days payable is 365 for every 4 (four) years worked, will not apply;
3. The benefits will only pay for the cost of salary for the employees during the temporary closure of the business operations;
4. 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 Unemployment Insurance Act;
5. Should an employee’s income, determined in terms of the income replacement sliding scale, fall below R3500, the employee will be paid R3500; and
6. Under certain circumstances, employees of employers who belong to a bargaining council may not receive payment from the C19 TERS scheme other than through the relevant bargaining council.

What is the distinction between claiming for C19 TERS benefits and claiming for normal UIF benefits?

Employees still have the option to seek relief from the normal UIF benefits. However, employees cannot seek relief from both C19 TERS and normal UIF benefits. Claiming from normal UIF benefits will have the disadvantage that such claims will reduce the credits in the system which have been accumulated by an employee.

The C19 TERS benefits will only be available during the national lockdown period. Strangely, claims submitted thereafter will not be entertained. We submit that a system should be implemented to allow for claims to be submitted in a reasonable window period after the end of the lockdown period in respect of claims accruing during the lock down period. For now, claimants will have to ensure that they comply with the imposed deadline, which is currently “a moving target”.

Who can claim?

Employers and employees who contribute to the UIF may claim under C19 TERS, regardless of the size of the operation of the Employer (special arrangements do apply to Employers with less than 10 employees).

Only employees who have been in the employer’s service on 27 March 2020 will qualify. Furthermore, only employees who have suffered, or will suffer, loss of income as a result of the closure of the employer’s operation, may claim.

Employers are free to compensate employees in addition to the C19 TERS benefit but no employee may receive more than his/her normal salary.

Benefits received by employers from the scheme must, subject to the following paragraph, be paid to employees within 2 days after receipt of the benefit.

Employers who have paid their employees despite the closure of operations may claim from C19 TERS and then retain any portion of the ultimate benefit which have already been paid to employees.

Record keeping

Benefits received from C19 TERS may be subject to extreme scrutiny in order to avoid abuse and fraud. Employers are obliged to retain all accounting records relating to C19 TERS for a period of 5 years. These records must be separated from the normal accounting records of the enterprise.

C19 TERS claim process

Employers and/or Bargaining Councils are encouraged to apply for the C19 TERS benefits on behalf of the employees in an effort to reduce the number of claims and payments to be processed by UIF. It also remains possible for employees to claim directly from the scheme in instances where an employer has failed to do so

An employer or Bargaining Council can register online (https://uifecc.labour.gov.za/covid19) using the employer’s UIF reference number. An automated response with guidelines and prescribed templates can also be obtained by sending an e-mail to: Covid19ters@labour.gov.za

Assistance

We are aware that legitimate claims under this scheme have already been rejected by the UIF for, seemingly, arbitrary reasons. A decision to reject a claim amounts to administrative conduct which is subject to review.

Please feel free to contact us should you require any guidance or assistance with regards to C19 TERS or any claims submitted under the scheme.

Van Rensburg is a Candidate attorney in our Business Rescue and Insolvency Practice, Labour and Employment and Litigation and Alternative Dispute Resolution departments and Swindon is the Head of our Finance and Human Resources department

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).