“We’re letting you go.” – Saving jobs during the COVID-19 lockdown

by Simone Soodyall
22nd Apr 2020

“We’re letting you go.” – Saving jobs during the COVID-19 lockdown

In terms of the labour laws of South Africa, an employment contract is a reciprocal contract in which the Employee agrees to work for the Employer who will remunerate the Employee at an agreed rate. Unfortunately, due to the recent COVID-19 lockdown, many non-essential service Employers have had to cease their operations, which results in much uncertainty for many Employees whose salaries and future employment are jeopardised.

As the lockdown is legally classified as a vis majeure (act of God), both Employer and Employee are unable to fulfil their obligations in terms of the employment contract. Therefore, the principal of “no work, no pay” would apply. In this article, we briefly discuss the different options available to Employers and Employees:

  1. ANNUAL LEAVE

Applicable here is Section 20 of the Basic Conditions of Employment Act. An Employee is entitled to 21 consecutive calendar days paid annual leave per 12 month cycle. This annual leave can be taken either by agreement between the Employer and Employee or, where alternatives to retrenchments are considered, by the unilateral decision of the Employer at a time which is suitable to the Employer (forced annual leave).

What is important to note, is that that should an agreement not be reached between the Employer and Employee for forced annual leave, the Employer should offer the Employee alternatives, such as short time, temporary lay-off and/or the alike. Should the Employee not wish to accept forced annual leave nor one of the alternative options available, this must be noted in writing so that the retrenchment process may be correctly followed.

If the Employee has exhausted their annual leave days, other leave may be granted such as sick leave, family responsibility leave or unpaid leave for the duration of the lockdown, if so applicable.

The Employer/Employee must be cautious in using the 21 days annual leave as it will deprive the Employee of their annual leave. Reaching an agreement and placing the agreement in writing is vital to avoid future labour issues.

  • TEMPORARY LAY-OFF / SHORT-TIME

This means a reduction/ decline in work following a temporary closure of business operations, whether in total (full) or in part, due to COVID 19 for the period of National Disaster.

Temporary lay-off / short-time may be used by Employers as an alternative to retrenchment. Some employment contracts contain provisions regarding a temporary lay-off / short-time for the Employee.

This measure cannot be implemented by the Employer unilaterally. Both the Employer and Employee must agree to implement the measure and agree to certain particularities such as duration and remuneration.

On short-time, an Employee may receive a portion of their full salary. However, as a temporary lay-off, the Employee will not receive pay but will have the option to return to work once the Employer is in the financial position to reinstate their employment.

  • RETRENCHMENT

Should there be no other option available to the Employer, he/she may as a last resort, retrench its Employees. Employers are however warned to follow the correct retrenchment process, should this be the only available option to them.

WHAT RELIEF FUNDS ARE AVAILABLE AND WHO CAN CLAIM?

  1. NATIONAL DISASTER BENEFIT FUND (NDB)

Employers who are registered with the UIF, have contributed accordingly but have been forced to shut their businesses as a direct result of the COVID-19 lockdown may apply in terms of this benefit. An Employee will then receive a flat rate salary of R 3500 per month for the duration of the lockdown / a maximum period of 3 months, whichever is shorter.

This benefit, whilst under the umbrella of UIF, is independent to the other UIF benefits and cannot be claimed in conjunction with other UIF benefits such as TERS.

  • TEMPORARY EMPLOYER / EMPLOYEE RELIEF FUND (COVID-19 TERS)

Employers who have been forced to shut down their business due to the lockdown, either partially or totally, and who are therefore unable to pay their Employees their full salaries or have placed their Employees on short-time / unpaid leave / temporarily laid-off / implemented annual leave are encouraged to use this fund.

Employers must be registered with the UIF and have contributed accordingly. Employers will apply online on behalf of their Employees who were employed as at 27 March 2020. Once approved, the benefit will be paid directly to the employer (in cases where the Employer has less than ten (10) staff, the benefit will be paid directly to the Employees) who then has two days to transfer the relevant amount to their respective employees.

The maximum payment amount is R 6 730.56 with the maximum salary considered for the benefit in the amount of R 17 712.00. The employer may use this benefit as a “top-up” to a partially paid salary, but cannot use it in conjunction with any other UIF benefits and the employee cannot receive a total of more than 100% of its salary (which would include the TERS benefit).

The minimum amount payable is the amount of minimum wage, being not less than R 3500.00.

Employers also have the option to be “reimbursed” by the Fund. If they have paid their Employee their full salary, the Employer must reflect the portion of the salary which is a “TERS BENEFIT” on the Employee’s pay-slip and claim that benefit amount directly from TERS.

Employers must set off any amount received from TERS against the amount paid to the Employee for their annual leave, provided that the Employee is credited with the proportionate annual leave accordingly.

  • ILLNESS UIF / TERS BENEFIT

The UIF provides a benefit for those Employees who are sick for more than 7 days and have exhausted their ordinary paid sick leave. The TERS benefit applies to those essential workers who have contracted COVID-19 and are quarantined for a period of 14-days. The Compensation for Occupational Injuries and Diseases Act of 1993 (COIDA) provides an illness benefit for those workers who have contracted COVID-19 during their course of employment (“essential workers”), which typically amounts to 75% of the Employee’s ordinary salary.

  • DEATH UIF BENEFIT

Should the Employee pass away as a result of COVID-19, the Employer is able to apply for a monthly payment for the Employee’s dependents (children, spouse or nominated person) through the UIF. The Employer must be registered with the UIF and have contributed accordingly. The nominated person or spouse must apply to the UIF within 6 months of the death of the Employee. The death benefit will be paid according to the amount that the Employee would have claimed if they were unemployed.

  • UNEMPLOYED / REDUCED WORKING HOURS UIF BENEFIT

This UIF benefit only applies to Employees who were dismissed / their working hours reduced.

Their Employers must be registered with the UIF and must have contributed accordingly. In terms of this benefit, an Employee must suffer a loss of income and must submit the requisite forms with the assistance of the Employer. The Employee will then receive a portion of their full salary according to the UIF sliding scale which will be paid directly into their authorised banking account.

The dismissal of an employee should be the last resort for an Employer. Prior consultation must be held between the parties and alternatives to dismissal must be carefully considered before any action is taken. A dismissal due to the Employer’s operational requirements without prior consultation is an unfair one. The options above provide the necessary assistance to Employers to mitigate the loss of employment due to an uncontrollable global pandemic and are therefore encouraged.

CNG ATTORNEYS is available to assist Employers/ Employees with the above applications or any further information on the above benefits or labour law issues.

Simoné Courtney Soodyall (LLB)

Litigation Attorney at CNG Attorneys

Disclaimer! The above was the legal position as at the date of publishing of this article and the regulations and laws relating to same may be subject to change from time to time.

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