The President had on 15 March 2020 declared the COVID-19 pandemic a national disaster. On 23 March 2020, he announced the national lockdown in order to curb its spread.
During this period of lockdown, companies may have to shut down and employees laid off temporarily. This means that employees are compelled to take leave, which is not out of choice. A ‘temporary layoff’ means a temporary closure of a business due to the COVID-19 pandemic and for the period of the national disaster.
The Minister of Employment and Labour has, in anticipation of many employees losing income, established a scheme linked to the current Unemployment Insurance Fund (UIF) to assist both employers and employees.
Employers are encouraged to continue to pay, however, where this is not economically possible a special benefit will be paid via UIF and specifically, the newly-established Temporary Employees/ Employer Relief scheme. The guide explaining who is eligible to claim from the scheme and how to do so is attached. This will hopefully reduce the economic impact of the COVID-19 virus and minimise unemployment. It is important to know that the scheme has been established to compensate employees who have lost income due to COVID-19.
Payments will be made in three defined instances :
1. Where a company closes for a short period as a precautionary measure;
2. Where an employee, in any sector, loses their income as a result of reduced working time, but is still employed; and
3. Where an employee is self-quarantined for 14 days or, in special circumstances, for more than 14 days.
The scheme specifically states that the benefits payable will be calculated using the formula in the existing Unemployment Insurance Act, namely on the basis that for every 4 days’ work, 1 credit would be accumulated and the maximum credit days payable is 365 for every 4 years worked.
Should the employee’s salary fall below the minimum wage of the sector concerned the employee will be paid the minimum wage.
In addition, a death benefit is available to beneficiaries of an employee if they pass away due to the COVID-19 virus, calculated using the above UI Act formula.
Although not reflected in the attached guide which was produced by the Department of Employment and Labour for employees recovering benefits, the Scheme is also available to employers who close operations for three months or less and suffer financial distress.
The benefit payable will be the cost of salary of the employees during the closure of the business operation capped at a maximum amount of R17 712.00 per month per employee.
To qualify for temporary relief, the company must meet the following requirements:
1. It must be registered with the UIF;
2. The company must comply with the application procedure for financial relief; and
3. The closure must be directly linked to the COVID-19 pandemic.
Comprehensive reporting, communication and application procedures are put in place and the relevant department and provincial contact details are contained in the attached guide.
Legal Sub-Committee Chairperson
Please note, the Cape SAJBD cannot be held liable for any loss or harm arising from the content hereof and has produced this guideline to assist; It is suggested that if decisions are made based on this guideline, professional advice in the relevant field be sought.