The UIF Commissioner, Mr Teboho Maruping, has confirmed that the UIF will be assisting employers and employees who are affected by the COVID-19 pandemic where employers may not be able to pay employees by implementing the COVID-19 TERS.
When legislation was updated, this created confusion and uncertainty amongst business owners as to what could be claimed and how the application should be made.
Following consultations by the South Institute of Chartered Accountants [SAICA] with the UIF Commissioner some clarity has been obtained for businesses and their members.
Employers can now claim the UIF TERS benefit on behalf of their employees:
- Who have either lost income or
- have been required to take annual leave in terms of section 22(10) of the Basic Conditions of Employment Act.
Points of clarity
Dedicated Bank Account
The update in legislation has not removed the requirement for a dedicated bank account, however the practical application has been to favour a separate employer account in order to apply the set-off or the respective employee accounts.
We have been made aware of a case where the amount was paid into the business bank account and for some reason or the other the amount was paid out instead of going to the employees. The business has to be accountable for the funds and may be subjected to harsh penalties or criminal investigation.
Employers who required employees to take annual leave can now set off any amount received from the UIF in terms of the COVID-19 benefit against the amount paid to the employee in respect of annual leave, provided that the employee is credited with the proportionate entitlement to paid annual leave in future.
Setting-off UIF Benefits
Employers can also pay employees based on the directive and set off the payments with the UIF benefit received.
Benefit > R3500
There are two further important principles:
- Should the amount of the benefit to which an employee is entitled by applying the UIF’s formula be less than R3 500, the employee will receive the minimum of R3 500.
- For employees earning above the threshold amount of R17 712 per month, the benefit that may be received is the maximum of 38% of R17 712, which is R6 638.40.
Salaries above R17 712
Previously the UIF TERS benefits calculation stated that where the employer’s top-up and the UIF TERS benefit exceeded R17 712 the employee did not qualify for a TERS benefit.
The UIF will now pay additional benefits even if the employer has paid the employee a certain portion of his or her salary, provided that the total amount paid to the employee does not exceed his or her normal salary and not the R17712 as previously stated. I.e. the amount paid + benefit is not greater than the employee’s salary during normal times.
UIF confirmed that on the wording of the Directive prior to this correction, the benefit was calculated up to 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 have qualified for a TERS benefit.
South African Institute of Chartered Accountants were informed that the UIF will automatically re-calculate the benefits of employees whose applications were rejected on this basis.
The UIF has confirmed the calculations of UIF TERS benefits, and is indicated in the four examples below:
[See TERS Calculator Below]
For a salary of R6 000 where the employer does not pay the employee a salary, the UIF TERS benefit for 30 days is R2 715
As the UIF TERS benefit of R2 715 is below the National Minimum Wage of R3 500, employee will be paid R3 500.
For a salary of R6 000 where the employer pays the employee a partial salary of R2 800, the UIF TERS benefit for 30 days is R2 715
As the UIF TERS benefit R2 715 is below the National Minimum Wage of R3 500, the employee will be paid R3 500.
But as the employer has paid the employee R2 800, therefor, UIF will only contribute R3 200 because the employee can only receive an amount up to normal salary of R6 000.
For a salary of R18 640 where the employer does not pay the employee a salary, the UIF TERS benefit for 30 days is R6 638.33
Employee will be paid R6 638.33.
For a salary of R18 640 where the employer pays the employee a partial salary of R9 320 (50%), the UIF TERS benefit for 30 days is R6 638.33
As the employee received R9 320, UIF will top-up the payment of R9 320 with R6 638.33 and the employee would receive a total of R15 958.33 which is still less than the normal remuneration of R18 640.
Use the calculator below to calculate the TERS benefit or the amount to pay your employee in order to get the maximum benefit per employee.