covid 19 employer's obligations
Covid 19 Employer’s Obligations – What are your obligations as Employer? Are you required to pay salaries / wages, can you require that your staff take leave and what are the options regarding UIF / Temporary Relief Scheme during the Lock Down?
coronavirus covid 19 - lock down. what are your obligations as an employer
On 25 March 2020, Cyril Ramaphosa declared a national lock down due to the Coronavirus outbreak with effect from 27 March 2020 until 16 April 2020 (or extended as required). During the lock down period, only businesses operating essential services can operate.
As a result of the lock down, many businesses are forced to close their doors, with the effect that such businesses cannot earn revenue and employees cannot work.
Questions have therefore been asked, as to what the Covid 19 employers’ obligations are during this period, do they have to pay their staff, can they put their staff on annual leave and what other options are available to employers and employees.
do employers have to pay their staff?
- In short, at this time, the answer is no. Employers have no obligation to pay their staff during the lock down period.
- In South Africa, our Labour Law is regulated by the Basic Conditions of Employment Act (75 of 1997, as amended) (“BCEA”) and the Labour Relations Act (66 of 1995, as amended) (“LRA”).
- In order to answer the question regarding payment of wages/salaries to the Employer:
- The BCEA provides that the definition of wage is that “wage means the amount of money paid or payable to an employee in respect of ordinary hours of work or if they are shorter than the hours an employee ordinarily works in a day or week”
- Wage is only given in return for hours worked.
- The issue is further clarified in Section 35(1) of the BCEA, which states: “an employee’s wage is calculated by reference to the number of hours the employer ordinarily works”.
- From the above, an employee is entitled to be paid in exchange for hours worked. If the hours are not worked, there would be no legal claim for a wage or a salary.
- Therefore, there is no entitlement to payment while employees are on lockdown. There has been a request made by the Department of Employment and Labour for employers to consider paying employees on lockdown, or to at least try to make up the difference between payment from the Unemployment Insurance Fund and the actual wage.
can employers force employees to take annual leave?
- The question arises as to whether an employer can force an employee to take annual leave. In summary, the answer is yes.
- The Department of Employment and Labour has published a Directive on Covid-19 and implications on the leave provisions as set out in the Basic Conditions of Employment Act 75 of 1997 as well as a new Government Gazette No. 43161 titled Covid-19 TEMPORARY EMPLOYEE / EMPLOYER RELIEF SCHEME of 2020.
- The leave Directive clarified that during the Covid-19 nationwide lockdown period, an Employee may be requested by his or her Employer to utilize their annual leave credits and further that the BCEA lawfully allows Employers to determine the time that Employees can take their annual leave. For example, many Employers request that annual leave be taken during the December/January holiday period and Employees, by virtue of their employment contract with the Employer, which stipulates the leave time, have agreed to same.
The issue of forced leave is again determined by the BCEA and answered by Section 20 (10)(b): “Annual leave must be taken (a) in accordance with an agreement between the employer and employee; or (b) if there is no agreement in terms of paragraph (a) at a time determined by the employer in accordance with this section.”
It is therefore clear that if there is no agreement about the leave to be taken, then the employer will make a decision as to when paid leave must be taken.
temporary relief scheme - uif as an alternative option
- What is the Temporary Employer and Employee Relief Scheme (“TERS”) and the claim process?
- The Department, in addition to the Covid-19 TERS Gazette, published a further media statement titled “UIF to process COVID-19 TERS benefit to assist Employers and workers during Coronavirus (Covid-19) lockdown”.
- Therefore providing Short-term financial relief for companies facing liquidity challenges to pay their employees during the lockdown period through the Covid-19 Temporary Employer-Employee Relief Scheme (TERS) Benefit.
- The benefit is applicable to all employers who are registered with UIF and make monthly contributions as required by the Contributions Act
- The Covid-19 TERS Benefit was de-linked from the other UIF benefits and other processes, but applications were subjected to normal verification and validation processes of the fund.
- The UIF will be electronically processing applications for the Covid-19 TERS Benefit and employers can apply by sending an email to email@example.com
- Upon sending the email, applicants will receive an automated reply which outlines all the steps and details, including the requirements to claim benefits.
- The UIF said manual claims will not be accepted during the lockdown in order to reduce contact between people to curtail the spread of the pandemic.
- The scheme is done through the Unemployment Insurance Fund, so the employee must have been contributing to UIF while employed. The employer is the one that makes the application on behalf of the employee and all applications are online.
- Under the special benefit, all the normal UIF rules fall away and employers can claim up to R17 712.00 per month per employee and the employee will be paid “in terms of the income replacement rate sliding scale (38% – 60%) as provided for in the Unemployment Insurance Act”, provided that if this calculation leads to the salary being below the minimum wage of the sector the employee belongs to, the scheme will pay such employee the minimum wage.
- The above arrangements for group/collective payments require that the Department of Labour enters into a Memorandum of Understanding with the employer and if applicable, bargaining councils and to provide that the use of the monies will be subject to audit. This has led to some resistance from some employers.
- NOTE: Therefore employees do not claim for UIF under this scheme, but employers. All UIF offices are also closed during the lock down and accordingly employees will only be able to apply for their own individual UIF benefits after lock down.
How to apply
- Employers can apply by reporting their closure by emailing firstname.lastname@example.org and there shall be an automatic response outlining the application process.
- Employers will be required to furnish the Unemployment Insurance Fund with the following completed documents:
- Letter of authority from the company;
- Signed Memorandum of Agreement (MOA) from the employer or Bargaining Council with the UIF.
- It should be noted that an employee who is being paid by the employer during this period is not entitled to this benefit.