SEIFSA .

In an effort to clear up some confusion regarding the COVID-19 Temporary Employer/Employee Relief Scheme (TERS) benefits, the Minister of Employment and Labour signed an amended Directive on 16 April and a Correction Notice on 20 April 2020 respectively.

It is now clear that employees who were required to take annual leave during the period that the employer’s business was closed (either completely or partially) may claim the COVID-19 TERS benefit. Annual leave days are therefore regarded as no income days for purposes of the benefit. An employer who receives the benefit on behalf of its employees may retain the amount, but must then credit the employee concerned with the proportionate entitlement to annual leave.

The Correction Notice of 20 April 2020 deleted the reference to section 12 of the Unemployment Insurance Act in clause 3.6 of the Directive. This enables employees who receive remuneration in excess of R17,712 per month and whose employers apply top up to claim the benefit. By way of example:

The employee earns R20,000 per month. In terms of the Directive, benefits are calculated as a percentage (38%-60%) of the employee’s salary. However, the salary at which benefits are calculated is capped at R17,712 per month. The employee in this example would accordingly only be able to qualify for the maximum benefit of R6,730.56.

Assume that the employer pays the employee R10,000 during the period of closure.

The amount paid by the employer and the amount of the benefit would be around R16,730.56. This is less than the employee’s normal remuneration of R20,000 and the employee will accordingly qualify for the benefit.

Assume that the employer pays R18,000. In this case, the employee would only receive R2,000 as the benefit, so as to ensure that the employee does not receive more than 100% of her/his normal remuneration of R20,000.

Assume that the employer pays R20,000, i.e. the employee’s normal remuneration, and that the employee is not required to take annual leave. In this case, the employee will not receive a TERS benefit.

On the wording of the Directive prior to this correction, the comparison was made vis-à-vis the threshold amount of R17,712 (and not the employee’s actual remuneration). Thus, if the employer’s top up and the benefit exceeded the amount of R17,712, the employee would not qualify for a TERS benefit. We are informed that the UIF will automatically re-calculate the benefits of employees whose applications were rejected on this basis.

A revised formula which now incorporates this principle can now be found in the revised calculator. A copy of it can be found at

https://www.businessforsa.org/wp-content/uploads/2020/04/TERS-calculator-final.pdf

Employers whose operations are closed and who are applying the no work no pay principle, or who are requiring their employees to take leave, or who are paying only a portion of their employees’ remuneration, are urged to apply for the COVID-19 TERS benefit on behalf of their employees. In these circumstances, the employees are not eligible for unemployment benefits. This is because their employment has not yet been terminated. Only if they are in fact dismissed, will employees qualify for unemployment benefits.

We are informed that where the application has been incorrectly made for unemployment benefits, the UIF may be approached to correctly classify the benefits as COVID-19 TERS benefits, and in these circumstances, the employee’s credits will be reinstated.

CLOTH MASK DEMAND TO BOOST SOUTH AFRICAN LOCAL MANUFACTURING

ProudlySA Marketplace to link local cloth mask manufacturers to corporate buyers

Corporate buyers/consumers can visit https://www.proudlysa.co.za/covid_19/covid_19.php

Manufacturers wishing to register on the portal can email: bongani@proudlysa.co.za

Proudly SA has launched a dedicated marketplace online portal for cloth masks, which connects corporate buyers with local producers of cloth masks.

Boost for local manufacturing, textile and CMT industries

It is the culmination of the Department of Trade, Industry and Competition (DTIC), SA Clothing and Textile Workers Union (SACTWU) and the Manufacturing Circle’s drive to capacitate, retool and reinvigorate the local clothing and textile manufacturing industry, and to generate opportunities for SMEs, so that they are able to participate in the economy, save and create jobs, and remain resilient in the tough economic times ahead.

Many local manufacturers of clothing and textiles have repurposed their production capability and machines to produce cloth masks. Government is urging cloth mask manufacturers to only use locally produced textiles.

The demand for cloth masks is aligned with Government’s announcement that all medical-grade masks, including N95 respirators and surgical masks, be reserved for frontline health care workers, who are our only line of defence against the virus. The President announced this week that all passengers travelling on public transport will be required to wear a non-medical or cloth mask. It is also recommended that all citizens wear a cloth mask outside of their homes.

Business for South Africa (B4SA) welcomes the DTIC, SACTWU and the Manufacturing Circle’s intervention and leadership, and believes it will not only spur local manufacturing in the textile and CMT industries, but will also provide the country with the volumes of cloth masks needed to protect its citizens and health workers.

This is an incredibly important initiative that will provide real solutions for two of the most pressing challenges we have in South Africa at the moment: ensuring that our citizens, and most importantly, our frontline health care workers are protected against the Covid-19 virus; and to ensure critical sectors in the local market are able to weather the economic storm. As Business for SA, we congratulate the Minister and his team, as well as SACTWU, the Proudly SA team and the Manufacturing Circle, for their work in this regard.

Given our Government’s call-to-action around wearing cloth masks, there may be many companies in South Africa with excess medical-grade PPE, including N95 and surgical masks, gloves, goggles and visors, gowns, aprons and overshoes. These companies can be a force for good, by either diverting or donating their stock. This stock will be used to protect our frontline doctors, nurses and community health care workers. If we protect them, they will be able to protect us.

Companies asked to donate medical grade PPE in national interest

To donate medical-grade PPE: http://covid19manager.co.za

Manufacturers urged to use locally produced textiles

The DTIC has developed guidelines for the production of cloth masks by textile and CMT companies:

BUSINESS FOR SOUTH AFRICA PAPER ON LOGISTICS INDUSTRY

Business for South Africa (B4SA) has written a paper to provide an overview of the logistics industry in South Africa. The aim of the paper is to highlight the importance of the industry during this critical time of national disaster. B4SA agrees with the sentiments expressed by the International Maritime Organization (IMO) stating that “it is vital that Governments facilitate the continuing operation of shipping and ports under their jurisdiction to allow the transport of marine cargoes so that supply chains are not disrupted and to allow the global economy, and society as a whole, to continue to function throughout the pandemic”. The paper outlines the logistics industry in the South Africa and shows the critical role it plays in the economy and across sectors. It highlights risks, complexities and main activities in the industry with specific focus on their application during the COVID-19 pandemic.

The paper can be accessed on the B4SA website at https://www.businessforsa.org/economic/supply-chain-security/ and may be shared broadly across the industry.

OFFICIAL GOVERNMENT REGULATIONS AND GUIDELINES ON COVID-19

All official government regulations and guidelines are available at https://www.gov.za/coronavirus/guidelines

OFFICIAL RESOURCES:

NICD website:                                     http://www.nicd.ac.za
COVID-19 information website:          https://sacoronavirus.co.za
Coronavirus 24-hour Hotline:              0800 029 999
Coronavirus WhatsApp:                      060 012 3456

Business for South Africa fully supports the decisive action taken by President Cyril Ramaphosa and the government to help mitigate the health, labour market and economic impacts of the coronavirus. As organised business, we are actively collaborating with government to use business resources and capacity to support public sector initiatives.

We have mobilised volunteer resources from across South Africa business bodies and organisations, member companies large and small, professional services firms as well as communication specialists, to form focused working groups that are driving a coordinated and proactive programme to mitigate the economic, social and health impacts of COVID-19 on South Africa.

RISK ADJUSTED COVID-19 STRATEGY ON PHASED RESTARTING OF THE ECONOMY: INDUSTRIAL CLASSIFICATION SYSTEM

From 1 May, South Africa will assume Level 4 of the recently announced risk adjusted approach for the measured, phased restarting of certain sectors of the economy.

Level four is a continuation of the lockdown but under a phased return of the economy for certain sectors.  A phased return is an absolute imperative as the risk remains large for the spread of the Covid-19, and the effect of overloading the healthcare sector is significant.  Adhering to the conditions and procedures for level four is critical.

In determining workplace and sector openings, government considered four factors:

• Risk of transmission and spread
• Expected impact on sector of a full lockdown
• Economic imperatives: GDP, jobs, export earnings
• Promotion of community and well-being – i.e. livelihoods of the vulnerable

Strict social distancing requirements remain in place. In addition to generally applicable health and safety protocols, individual businesses and workplaces must have COVID-19 risk assessments and plans in place, and will be required to conduct worker education on COVID-19 and protection measures. These plans must include:

• Identification and protection of vulnerable employees
• Safe transport of employees
• Screening of employees entering the workplace
• Prevention of viral spread in the workplace
• Hand sanitisers and face masks
• Cleaning of surfaces and shared equipment
• Good ventilation
• Shift arrangement and canteen controls
• Managing sick employees

Thank you to the companies that have forwarded comments, SEIFSA will be submitting a consolidated set of comments to Government for consideration and through BUSA will be engaging government substantively on the proposed opening of sections of the economy during Level 4 of the crisis.

The President last night outlined various measures to support companies and workers, including a R200-billion loan guarantee scheme to assist enterprises negatively affected by the Covid-19 lockdown, as part of a broader R500-billion social and economic relief package last night.

The package is designed to respond to the devastating economic and social fallout that has accompanied government’s response to the pandemic.

The support for companies and workers forms part of a four-part package that also includes an extraordinary health Budget to strengthen the fight against the virus; a series of measure designed to relieve hunger and social distress and plans for a phased re-opening of the economy.

Full details of the adjustment Budget will be tabled by the Finance Minister in the coming days, while the President will address the nation again on Thursday April 23 to provide additional details regarding the phased re-opening of the economy.

LOAN GUARANTEE SCHEME

A new feature of government’s support for business is a R200-billion loan guarantee scheme, which would be implemented in partnership with South Africa’s major banks, the National Treasury and the South African Reserve Bank to assist enterprises with operational costs, such as salaries, rent and the payment of suppliers.

In the initial phase, companies with a turnover of less than R300-million a year would be eligible and it was anticipated that the scheme would support over 700 000 firms and more than three-million employees through this difficult period.

Also announced was an additional R100-billion for protection and creation of jobs and to create jobs, in addition to the R40-billion set aside for income support payments for workers under the Temporary Employer/Employee Relief Scheme (TERS), which is being administered by the Unemployment Insurance Fund (UIF).

The President also announced that an additional R2-billion would be made available to assist small businesses and spaza shop owners and the taxi industry.

MORE TAX RELIEF

Various additional tax measures were also unveiled, which the President said should provide at least R70-billion in cash-flow relief or direct payments to businesses and individuals.

Among the measures announced were the introduction of a four-month holiday for companies’ skills development levy contributions; the fast-tracking of Value Added Tax refunds; a three-month delay for filing and first payment of carbon tax; and a 10% deduction from taxable income for those who donate to the Solidarity Fund.

To assist a greater number of businesses, the previous turnover threshold for tax deferrals is being increased to R100-million a year, and the proportion of PAYE payment that can be deferred will be increased to 35%.

Businesses with a turnover of more than R100-million a year could apply directly to the South Africa Revenue Service on a case-by-case basis for deferrals of their tax payments.

The other main health and social components of the package unveiled include:

• The reprioritisation of some R130-billion within the current Budget towards health;
• Additional funding of R20-billion for municipalities for the provision of emergency water supply, increased sanitisation of public transport and facilities, and the provision of food and shelter for the homeless;
• An additional R50-billion allocation for various social grants, which would result in the child support grant rising by an additional R300 in May, and by an additional R500 a month from June to October. All other grant beneficiaries would receive an additional R250 a month for the next six months; and
• A special ‘Covid-19 Social Relief of Distress’ grant of R350 a month for the next six months to be paid to individuals who are currently unemployed and do not receive any other form of social grant or UIF payment.
• The President indicated that the package would be funded through a combination of domestic and foreign sources and confirmed that the National Treasury was in talks with various foreign funders, including the World Bank and the International Monetary Fund.

(Acknowledgment and Source: Creamer Engineering News: 22 April 2020)

There has been some uncertainty regarding whether TERS benefits will qualify for an exemption from income tax.  The South African Revenue Service (SARS) has confirmed that TERS benefits are payable in terms of the Unemployment Insurance Act and thus exempt from income tax.

It is important to keep in mind that it is the employee, and not the employer, who becomes entitled to the payment of TERS benefits.  Accordingly, in those instances where the employer receives the TERS benefits from the Unemployment Insurance Fund (UIF) in order to pay to employees, the employer is merely processing the payment on behalf of the UIF.  It does not constitute remuneration paid by the employer.  Employers should thus not reflect TERS payments as remuneration on employees’ payslips and it should also not be included in their pay-as-you-earn (PAYE) reporting to SARS.  There is no obligation to withhold PAYE from TERS payments paid to employees on behalf of the UIF.

TERS benefits should also not be taken into account as remuneration when considering the calculation of other benefits (such as retirement fund contributions) or when claiming employment tax incentives.  Ideally, the payment of TERS benefits should be communicated separately to employees, and should not be included in their payslips.

On 17 April we communication that the MEIBC has concluded a MOA with the UIF but only to act as an intermediary for the channelling of applications for the TERS to the UIF.

We also confirmed that any employer has the option either to claim directly to the UIF or through the Council, whilst highlighting that the Council is encouraging employers who have the capacity, to lodge their claim directly with the UIF.

We also attached the MEIBC Circular and documentation for any employer who may wish to submit a claim via the MEIBC.

In this regard please note that the MEIBC has circulated a revised Industry Circular and requested that you kindly replace the UIF Application Questionnaires circulated yesterday marked “A” and “C” with the revised ones attached.

Note also that paragraph 3.1 of the Industry Circular circulated yesterday has been amended to align with dates in the UIF Application Questionnaires marked “A” and “C” attached

Industry Circular No. 2020-2 – Applications for Benefits from the UIF Covid-19 Relief Scheme – Final

UIF APPLICATION Questionnaire_ Annexure C

UIF Application Questionaire_ Annexure A