It will be recalled that the Minister of Employment and Labour issued a directive on 26 March 2020 establishing the Covid-19 Temporary Relief Scheme, 2020, also known as the “C-19 TERS”. This scheme formed the subject matter of our bulletin of 29 March 2020. You can read this bulletin here.
On 8 April 2020, the Minister issued a further directive amending some of the provisions of the C-19 TERS.
In this bulletin, we discuss the effect of some of the amendments.
Partially closed businesses now qualify for the C-19 TERS
In terms of the original directive, the C-19 TERS was only available to employers whose operations had closed as a result of the Covid-19 pandemic. The plain language suggested that employers had to have closed their operations completely before they could qualify for the benefits.
The amendments now make explicit that not only employers who have closed their operations completely, but also those who have closed a part of their operations, may qualify for the Covid-19 benefits.
“Financial distress” no longer a requirement:
Whilst the previous directive required, amongst others, that an employer had to be in financial distress to qualify for payment under the C-19 TERS, this is no longer mentioned as a requirement. In order now to qualify for payment under C-19 TERS, an employer must, for a period of three months or less, have closed its operations, or a part of its operations, as a result of the Covid-19 pandemic.
Now, an employer whose business is not necessarily in financial distress but whose operations or part of them have closed during the period, as a result of the Covid-19 pandemic, is entitled to apply for the benefits on behalf of its employees.
Limits on TERS benefits
The previous directive made provision for an employee to receive salary benefits ranging from the minimum wage in the sector concerned up to R17 712 per employee per month. The directive appeared to mean that R17 712 per month was the maximum benefit that could be paid.
The amendment has made it clear that R17 712 is the maximum salary that will be considered for purposes of calculating benefits. The benefit will still be calculated in accordance with the income replacement rate sliding scale (38% to 60%). In addition, the national minimum wage, rather than a sector specific minimum wage, has been set as the minimum benefit which may be received.
This means that the benefits an employee may receive from the C-19 TERS range from R3500, being the national minimum wage, and are capped at R6730.56, which is the maximum of 38% of the R17 712 salary cap.
Partial remuneration, partial benefit
Previously, an employee who was being paid by an employer was not entitled to any benefit under the scheme. Such an employee is no longer disqualified.
An employee may only receive Covid-19 benefits if the total of the benefit together with any additional payment by the employer in any period is not more than the remuneration that the employee would ordinarily have received for working during that period.
This means that an employee may receive a benefit under the scheme even if he is also receiving a payment from the employer. But, the amount of the benefit will be further limited to ensure that the benefit together with the employer payment does not exceed the remuneration which the employee would ordinarily have received for that period.
Employers falling under a Bargaining Council
Employees who fall under a bargaining council which has received benefits for such employees under the C-19TERS may not receive any payment in terms of the C-19TERS. Such employees must apply to and be paid by the bargaining council for loss of income during this period.