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The Unemployment Insurance Fund (UIF) has added an additional benefit for employers and employees, arising from the coronavirus pandemic and national lockdown. The popular conception is that a single payment of R3 500,00 per employee per month will be made. On careful reading of the guidelines and regulations, this appears to be an oversimplified understanding of the benefit.

Extract from the UIF’s Easy-Aid Guide:

  • The employer may decide, as a direct result from the current Coronavirus (COVID-19) pandemic to close their business for a period and send employees home. This constitutes a temporary lay-off. If the employer cannot pay his employees for this period, the employer can apply for the “National Disaster Benefit” from the UIF. 
  • This benefit will be de-linked from the UIF’s normal benefit structure and therefore the normal rule that for every 4 days worked the employee accumulated 1 credit day and maximum credit days payable is 365 for every 4 completed years will not apply.
  • This benefit will be at a flat rate equal to the minimum wage (R3 500) per employee for the duration of the shutdown or a maximum period of three months, whichever period is the shortest.
  • If an employee is ill, temporary lay-off or unemployed for longer than three months, the normal UIF benefits as explained below will apply.

This measure is intended as temporary relief for employers to pay employees whose employment had to be terminated as a result of the business closing as a direct result of the coronavirus pandemic.

The provision refers to employers that “may decide to close their business for a period” and on the face of it, this wouldn’t necessarily mean a closure because of the national lockdown in terms of the Disaster Management Act.  This is so because the closure was not the employer’s decision, but in the context, the benefit would also be available to businesses who were forced to close during the lockdown. It would, obviously, apply to businesses that voluntarily closed, for example where the worldwide pandemic made trading impossible or not economically viable, but outside of the lockdown.

The guidelines are based on a directive issued by the Minister of Employment and Labour, pursuant to the Disaster Management Act, which provides for a COVID-19 Employee/Employer Relief Scheme (C19 TERS). The relevant provision reads:  “The salary benefits will be capped to a maximum 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.”

However, if an employee’s income (as determined in terms of the scale mentioned above) falls below the minimum wage of a particular sector, “the employee will be paid a replacement income equal to the minimum wage of the sector concerned.”

Therefore, the reference is to a minimum monthly amount payable (R3 500). The Temporary Relief Benefit would, however, not be limited to this amount.

The employer must apply to the UIF to recover the amounts paid to employees and can claim the Temporary Relief Benefit for all employees, regardless of the length of their employment.

To claim, employers must submit:

  • UI 19 and UI 2.7 (completed by the employer);
  • UI 2.1;
  • UI 2.8 (bank form completed by bank);
  • A letter from the employer confirming that the temporary lay-off is due to the Coronavirus;
  • A copy of the employee’s ID document.

The relevant UI forms have not yet been adapted to provide for temporary lay-off, or for claims to be submitted by the employer. Employers should regularly monitor the Department of Labour’s website for updated forms

The Temporary Relief Benefit is payable for a maximum period of three months and thereafter normal unemployment benefits will apply.

Neels van Rooyen
Labour Law Consultant
Hayes Incorporated

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