Following the announcement of a 21-day nationwide lockdown by President Ramaphosa on 23 March 2020, many employers have had to close their doors for at least the duration of the lockdown.
Many of these employers will be unable to continue to pay their employees during this time.
Thankfully, the UIF has established a COVID-19 Temporary Employer-Employee Relief Scheme (TERS) Benefit option for employers. The TERS Benefits are equivalent to the ordinary UIF benefits available to contributing employees on termination of employment. However, the TERS Benefits are payable only in respect of business closures caused by the COVID-19 pandemic. The TERS Benefits are payable for a maximum period of three months.
In order to apply for the TERS Benefits on behalf of their employees, employers must send an email to email@example.com. Employers will then receive an automatic email response from the UIF with instructions on how to apply for the TERS Benefits. Unfortunately, the instructions contained in the automatic reply are relatively unclear especially with respect to the prescribed template document in which the employer must record all required employee information. The employee information must be captured in a specific .csv format although the template from the UIF is a .txt format.
Employers are required to open and maintain a dedicated UIF bank account, which must be separate from the employer’s business account, into which the UIF will pay the TERS Benefits. Employers must also issue and submit a letter to the UIF confirming the authorisation of the relevant person to submit the UIF TERS claim on behalf of the employer.
Finally, employers are required to complete and sign a template Memorandum of Agreement (MoA) with the UIF in respect of the payment of the TERS Benefits.
According to the template MoA, the UIF will pay the first month’s instalment of TERS Benefits to the employer within 30 days of receipt of the required documents from the employer. Thereafter, the employer is required to submit similar documentation to the UIF on or before the 15th of each month in order to receive the next two months’ instalments of the TERS Benefits. Employers will also be required to submit to the UIF proof of payment of the TERS Benefits to each employee.
Unfortunately, a number of uncertainties remain regarding the exact requirements of the prescribed documents. As a result, there are various possible technical grounds on which the UIF may refuse to pay TERS Benefits to employers. However, until further guidance is received from the UIF employers are hopeful that the UIF will adopt a pragmatic and expedient approach towards the processing and payment of these benefits, particularly given the gravity and urgency of the situation faced by many employers.
We will continue to keep our clients informed of any further guidance or directives received from the UIF.