On 26 March 2020 the Department of Labour issued Directives in terms of Regulation 10(8) issued by the Minister of Cooperative Governance and Traditional Affairs in terms of Section 27(2) of the Disaster Management Act, 2002 (Act No. 57 of 2002).
As a result of the national lockdown (which commenced 27 March 2020 at 00h00) companies who do not fall under the essential services category have had to close their doors with the result that employees have been laid off temporarily, alternatively, compelled to take forced leave. Whilst the government has urged employers to continue to pay employees, it is aware that there are cases where it is not economically possible for the employer to do so.
Government has created a special benefit under the Unemployment Insurance Fund as per the Directive COVID-19 Temporary Employee / Employer Relief Scheme (“Temporary Relief Scheme”). The purpose of the Temporary Relief Scheme is to minimize the economic impact on loss of employment due to the COVID-19 pandemic.
For a company to qualify for the Temporary Relief Scheme, it must satisfy the following requirements:
- The company must be registered with the Unemployment Insurance Fund (“UIF”);
- The company must comply with the application procedure for the financial relief scheme; and
- The company’s closure must be directly linked to the COVID -19 pandemic.
The Directive provides that:
- An employer that has had to close their doors as a direct result of COVID-19 for a period of three months (or less) qualifies for the COVID-19 Temporary Relief Benefit.
- The benefit will be de-linked from the UIF’s normal benefits, therefore the normal rule that for every four days worked, the employee accumulates a one day credit and the maximum credit days payable is 365 for every four years will not apply.
- The benefits will only pay for the cost of salary for the employees during the temporary closure of the business operations.
- The salary benefits will be capped to 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 Act.
- Should an employee’s income fall below the minimum wage of the sector concerned, the qualifying employee will be paid a replacement income equal to minimum wage of the sector concerned, no less.
- Where an employee is placed into quarantine for 14 days due to the COVID-19 pandemic, the employee will qualify for illness benefit. Confirmation letters from both the employer and the employee must be submitted together with the application as a proof that the employee was in an agreed pre-cautionary self-quarantine for 14 days. If an employee is quarantined for more than 14 days, a medical certificate from a medical practitioner must be submitted together with continuation form for payment.
Companies must apply by reporting their closure by way of electronic mail to email@example.com . Once emailed, an automatic response will be sent outlining the application process and the employer must furnish the Unemployment Insurance Fund with the following completed documents:
- Letter of authority from the company; and
- Signed Memorandum of Agreement (MOA) from the employer or Bargaining Council with the UIF.