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Difference between UIF Reduced Work Time and TERS benefits

There have been conflicting reports and much confusion on what employers are entitled to do regarding the 21-day lock-down that has been imposed by Government. Neither employers nor employees are to blame. Employees who have to stay at home are unable to tender their services due to the lock-down. So, what measures are available to mitigate the financial deprivation suffered by employees during the lock-down?

There seem to be the following options:

  1. Employees take the annual leave that is due to them (as depicted by the Government Directive: http://www.labour.gov.za/directive-on-covid-19-implications-on-bcea-leave-provision)
  2. UIF benefits (UIF Reduced Work Time or Coivid-19 TERS)
  3. Employers pay their employees in part or in full, if they have the resources to do so (even though they have no obligation).

The confusion mainly arises from the difference between these UIF Reduced Working Time option, and the TERS option. The following table provides a comparison between the two options:

 

UIF
Reduced Work Time
TERS

CANNOT CLAIM BOTH AT THE SAME TIME,
EMPLOYERS HAVE TO CHOOSE BETWEEN THE TWO OPTIONS

Company does not need to be closed down – can still have some employees working while others who aren’t working (as a result of reduced hours because of COVID-19) claim from the UIF.Entire company needs to be closed down as a result of COVID-19 (for 3 months or less). At this stage this option does not seem to apply if the company does not close entirely and only lays off some of its employees.
Employees in financial distress.Company has to be in financial distress.
Works on sliding scale of 38% (high earners) to 60% (low earners) of the income replacement rate (as depicted in the Unemployment Insurance Act), subject to maximum benefit cap.

Payable benefits can be calculated using the UIF calculator:  http://ezuif.co.za/uif-calculator/

Works on sliding scale of 38% (high earners) to 60% (low earners) of the income replacement rate (as depicted in the Unemployment Insurance Act), subject to maximum benefit cap (R17,712). Despite conflicting reports, it is our understanding that the maximum benefit for employees earning more than R17,712 would be 38% of R17,712 per month, which amounts to about R6,730 per month.
Employee facilitates the application and claim process (employer assists).Employer facilitates the application and claim process – a lot more administration in terms of documentation that needs to be provided. Company has to enter into a MOA with the UIF (excluding companies with less than 10 employees). Needs to provide information on a turnaround strategy due to financial distress etc.
Money paid directly in employee’s bank account – need bank authorisation (may be a challenge during lock down).Money paid into employer’s UIF bank account (dedicated bank account in order for payments to be tracked) and employer pays employees based on percentage indicated.
Need to have enough UIF credits to claim.Don’t need UIF credits to claim.
Subject to UIF credits, payment may continue (theoretically) for 12 months.Payment will continue for a maximum of 3 months.
Employees who have worked at the company for longer will have more UIF credits – will affect amount that can be claimed.Amount claimed will be based on salary, not credits or time at company.
Lower earning employees may get less than the national minimum wage.Minimum benefit is equal to the national minimum wage.
Benefits payable is the difference between what the employer pays and normal UIF benefits payable.Employer can “top up” TERS payment – must be stated in Memorandum of Agreement after prior arrangement with UIF.
Payment may take longer to be processed.Faster turnaround time for processing – paid out to company within 30 days of submission of valid documents.
No proof of payroll required.Proof of payroll of last 3 months required upon submission.
Rapid Response Team available to assist companies with more than 50 employees.  (Western Cape – Tony Lamati: 021 441 8054)Rapid Response Team available to assist companies with more than 50 employees.  (Western Cape – Tony Lamati: 021 441 8054)
Online submission: email necessary documentation to Capet.BCP@labour.gov.za or fax to 086 439 7300.Online submission: send blank email to Covid19ters@labour.gov.za and you receive an automated response with the relevant forms and other requirements.

Enquiries: 021 337 1997

Documents needed (to be found at http://www.labour.gov.za/):

 UI 19 and UI 2.7 (completed by employer)

  • UI 2.1 (application form)
  • UI 2.8 (bank form completed by the bank) / bank statement / bank confirmation
  • A letter from the employer confirming Reduced Work Time / lay-off is due to the Corona Virus
  • Copy of ID document
Documents needed:

  • Letter of Authority (on an official company letterhead) granting permission to an individual specified to lodge a claim on behalf of the company
  • Memorandum of agreement (MOA)
  • Proof of compliance with UIF legislation
  • Proof of employment and list of employees
  • Proof of payroll (3 months)
  • Salary information of staff (3 months)
  • Salaries of directors
  • Confirmation of dedicated UIF bank account details in form of certified latest bank statement
  • Registration with Central Supplier Database (CSD)
  • Company financial information – proof of distress
  • Turn Around Strategy Implementation plan
  • Report of progress on the implementation plan

(All documents submitted will be subject to verification.)

Sources:

https://www.labourwise.co.za/labour-news-teazer/guide-to-uif-and-other-covid-19-options-updated-30-march-2020
http://peoplefactor.co.za/covid-19-uif-benefits/
http://www.labour.gov.za/DocumentCenter/Publications/Unemployment%20Insurance%20Fund/COVID19%20TERS%20Easy%20Aid_.pdf
https://www.labourwise.co.za/downloads/topical-temporary-download

 

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