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BCHC: Options to consider during and after the national lock down

BCHC: Options To Consider During And After The National Lock Down

The national lock down in response to the Covid-19 pandemic will have a huge impact on employers and employees.

While a number of government interventions providing relief to businesses and employees have been proposed and Gazetted in Regulations, there is still a great deal of uncertainty in relation to exactly what these measures will entail and when it will be available.

As far as employees are concerned, the principle of no-work-no-pay will apply to employees who are not able to work as a result of the lock down.  However, some employers are adopting a more holistic approach in an attempt to relieve the burden on both employers and employees.  Some of the measures being considered include the following:

  • Employees working from home during the lock down are covering their own costs for stationary, WIFI, phone calls, electricity etc. As they are working, the employer will cover their salary.
  • Employees taking their accumulated annual leave during the lock down period with the balance of the period covered by unpaid leave. Many employers are also considering not closing over the year-end holiday period to try and make up for lost time caused by the lock down.
  • Employers not paying discretionary increases or bonusses. Where employers are contractually entitled to an increase or bonus, agreement is being sought with them that these entitlements will not be paid or will be deferred.
  • Some employees have been given the option of taking an unpaid sabbatical for one or two months to cut costs.
  • More senior employees have also been asked to agree to reduced or deferred salaries to be able to pay more junior employees.
  • Unnecessary office expenses that do not form part of employees’ contractual terms and conditions of employment are being done away with.
  • Contracts with independent contractors are being terminated subject to the terms of those contracts.
  • Contracts with non-essential suppliers are being terminated subject to the terms of those agreements.

The following options may also be available to qualifying employers and employees:

  • Employers can apply for assistance from the Temporary Employer/Employee Relief Scheme (TERS) for funding from UIF for wages if an employer had to close its operations for 3 months or less as a direct result of the Covid-19 pandemic. There are however certain requirements that the employer will have to meet including a turnaround or sustainability programme overseen by the CCMA. To apply for this benefit, an email reporting the closure must be sent to Covid19tersa@labour.gov.za.
  • Employers who had to close their business for a period as a direct result of Covid-19 can apply for the “National Disaster Benefit” from the UIF. This is for a flat rate equal to the minimum wage of R3500 per month per employee for the duration of the lock down or a maximum period of three months, whichever period is the shortest.
  • Funding can be applied for in specific circumstances from the Industrial Development Corporation. The information can be found at https://www.idc.co.za/2020/03/24/idc-interventions-in-response-to-covid-19/.
  • Employers can request assistance directly from the Solidarity Fund which is funded through voluntary donations.
  • SMME employers can register for further government assistance on https://smmesa.gov.za/.
  • A tax subsidy of up to R500 per month for the next four months for those private sector employees earning below R6 500 and tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liability over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months.
  • Additional sick leave in terms of the COIDA for employees who contracted Covid-19 in the course and scope of their employment.
  • Special leave paid by the UIF for employees who have to be self-quarantined for 14 days or longer. Confirmation from both the employer and the employee must be submitted together with the application as proof that the employee was in an agreed pre-cautionary self-quarantine for 14 days. A medical certificate from a medical practitioner must be submitted for quarantine for longer than 14 days.

Some businesses will fold during the lock down.  Of those that survive, many will have no choice but to consider retrenchments.  In so doing they will have to ensure that they follow the procedures as prescribed by the Labour Relations Act. Undoubtedly there will be many disputes flowing from retrenchments as employees try and hold on to their jobs or secure a better severance package.

From all of us at BCHC, stay safe.

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