BCHC: Calculation of covid-19 temporary employee / employer relief scheme benefits

The Covid-19 Temporary Employer/Employee Relief Scheme Directive (as amended) requires all employers to apply for the TERS benefit on behalf of their employees if the employer closed its operations or a part of its operations for a 3 month or lesser period due to Covid-19 pandemic. The employees to be included in the application for the benefit are those who have lost income (i.e. did not get paid or only got partially paid) and those who have been required to take paid annual leave during this 3 month or lesser period. It is however not clear to many employers and employees how the TERS benefit should be calculated.

The calculator was agreed to at NEDLAC between the social partners and the UIF. This calculator explains how the TERS benefit will be calculated by the UIF.

It is advisable for employers to do their own calculations of the TERS benefits due to their employees in line with the attached calculator.  These calculations will be useful to double check payments received from the UIF. In the event that incorrect payments have been received from the UIF, the employer’s calculations can be submitted to the UIF via email together with the employees’ payslips from January 2020 to April 2020.

Many employers calculated the estimated TERS benefits that would be due to their employees for 27 March 2020 to 30 April 2020 and paid an advance to their employees based on those calculations which, in many instances, amounted to an overpayment from that which the UIF will pay in terms of  TERS benefits.

Employers who intend to advance payments to employees in the future are advised to require their employees to sign acknowledgements of debt before these advances are paid to the employees. This is to cover the employer in the event that the UIF does not pay out for whatever reason or pays out less than the amount that is advanced to employees. The acknowledgement of debt should provide that the shortfall can be recovered from the employee in question.

It should be noted that the TERS benefit is not a mechanism to be used by employers to foot their salary bills in relation to employees who are in fact working and should thus be paid accordingly. The intention is for it to provide much needed relief to struggling employees and employers by paying a portion of the employees’ salaries for the days that they did not work or for the days that they were instructed to take annual leave. Even if the TERS benefit is applied for and received, many employees will still not receive their full salaries for the period in question as they will only be entitled to a daily benefit amount as per the calculations set out in the calculator.  Employers may top up these TERS benefit payments provided that that which the employer pays to an employee together with the TERS benefit that the employee receives does not exceed the employee’s usual salary, pre the Covid-19 period.