Lexicon News Blog

TERS COVID-19

The Corona virus, or COVID-19, has firmly entrenched itself in the South African way of life and is going about changing practices and habits in a way that none of us could have imagined. It is no longer business as usual.

The only certainty emerging from the mass of uncertainty is that unfortunately many an enterprise will not survive the virus. Some will, sadly, perish before expiry of the lock-down period. Others will fail as debtors default and cash reserves dry up. Business Rescue Practitioners will no doubt be weighed down by applications, some to be successful and others, unfortunately, doomed because of the dire state of the applicants.

South Africa’s problem is that it is already suffering under the yoke of a weak economy, increasing unemployment, Moody’s downgrade, the list goes on.

Unfortunately, it appears that things may well get worse before better. As the unemployment figures increase and employers fold, the national economy is going to be deprived of money. Those who do not have, cannot spend, and those who have will cut back on spending. This situation, like the virus, will increase exponentially.

The question can be asked so what are the rights of employees who depend on their jobs to not only sustain themselves and their immediate family, but also extended families.
In terms of employment law, more particularly the laws governing the creation and termination of employment relationships, employees are faced with a situation of impossibility of performance.

Unless you are employed in an essential service or are employed in the production of essential goods, you may not by operation of law tender your services nor may your employer accept tender of said services for the duration of the lock-down --- unless a plan to be able to work remotely is at hand.

In a sense the respective reciprocal rights and obligations of the employer and employees are suspended --- although this suspension is not complete as there are aspects of the relationship which continue ie the accrual of annual leave, sick leave, family responsibility leave, etc. However, most importantly, a major impact is the suspension of the obligation of the employer to pay the employee for the duration of the lock-down.

In an attempt to revive this obligation, unions had been engaging employers in collective bargaining for the conclusion of agreements that would result in the employees being paid in part or full for the three week period that makes up the lockdown.

However, given the fact that many employers are already financially stressed and are in no way able to fund the payroll for the duration of the lockdown, it is unlikely that employers’ generosity will win the day – employees may ask “what now?”.

Enter the Government. 

Appreciating the plight of the employees, the government by way of the Temporary Employee Relief Scheme (TERS) COVID-19 has cobbled together a scheme for the paying of employees in an attempt to mitigate the impact of the lockdown to the employee, in particular, and the economy in general. 

The government has made much of this initiative, claiming that TERS COVID-19 is an effective way of compensating employees for loss of wages. The primary functionary is still the Unemployment Insurance Fund, but the scheme is unique for the following reasons: 

• It has an expedited payment process; accordingly it is claimed it will release funds within 10 days of the application being completed and submitted.
• Employers can apply on behalf of employees and pay these employees on receipt of money from the Fund.
• Employers may pay employees for the period of the lock-down and claim their expenses in this regard by submitting an invoice as part of the application for reimbursement of paying their employees, or payment could be done through a Bargaining Council which then becomes responsible for payment to employees employed within its jurisdiction. 

Currently the above is the theory, the reality is uncertainty relating to the completion of the application forms and in particular who the employer may claim for and what happens where the employees have taken leave during the lockdown period.

We hope to clarify this position once government provides an accurate and final directive concerning an application for the benefits.  Contact our Labour Law expert Mark Oosthuizen mark@lex-icon.co.za for help with this or any other workplace matters.