Coronavirus

Government considers UIF tax reprieve and state aid to prevent layoffs for Coronavirus-hit companies

By Ferial Haffajee 17 March 2020

Employment and Labour minister Thulas Nxesi has outlined new steps for workplaces hit by the outbreak and provided some clarity on leave provisions which are uncertain as workers are quarantined or in a dilemma over how school closures impact work 

As it begins to map the economic and labour market fallout of coronavirus (Covid-19), government is considering a UIF tax reprieve and aid for stressed companies to prevent layoffs. This will not be a general provision but will be done on application, said Employment and Labour minister Thulas Nxesi at Nedlac on Monday.

The coronavirus is putting workplaces in a tailspin as government’s declaration of a State of National Disaster recommended remote work as a measure to protect against infection. 

The prohibition on gatherings of over 100 people has also meant that many workplaces have shifted their staff on to remote work rosters in sectors where this is possible. And because schools close from Wednesday, children need the care of their parents.   

While business organisations are still working out a set of guidelines and protocols, the Department of Employment and Labour has said that special leave provisions can be used. It has not yet mapped out what the leave provisions may be for workers who need to care for children with the unexpected school closures. What happens to leave? We tried to get some answers for you. 

 What happens if you self-quarantine or are quarantined? 

If employees have travelled to viral hot-spots or might have come into contact with infected persons, the special paid leave provisions are applicable, according to Employment and Labour Minister Thulas Nxesi. “Such a leave will be recognised as a special leave which is fully paid as long as it meets quarantine provisions and the employee can apply for Unemployment Insurance Fund (UIF) benefits.”

If the leave required is longer, then special leave will also apply and the employee is eligible to apply for UIF benefits.  “In line with the provisions of the compensation for occupational injuries and diseases act, if employees contract Covid-19 in the course of performing their duties, they will be compensated.”

Nxesi will also consult with Finance Minister Tito Mboweni to consider a reprieve from UIF contributions for stressed companies. He will use the Temporary Employer/Employee Relief Scheme to ensure workers are not laid off. 

Nxesi added that: “In instances where companies decide to close shop for a period as a precautionary measure, the short-term UIF benefit will kick in. If a company contemplates a short-term shutdown, they are required to inform the UIF.” 

Business caught in the storm  

The acting CEO of Business Unity SA Cas Coovadia said Covid-19 had taken the private sector by storm and that its members were meeting later in the week to set guidelines and protocols for the uncharted waters of a State of National Disaster.  

On Monday Finance Minister Tito Mboweni could not yet give details of fiscal support for the economy which is now likely headed into an even deeper recession, but he poured cold water on expectations of monetary policy (interest rate cuts) being used in the way the US is deploying them to safeguard the American economy through Covid-19-hit times. The interest rates decisions rest with the SA Reserve Bank which meets next week.   

In Italy and the UK banks have put mortgage payment on hold for a period to help consumers through the economic downturn. Coovadia, also the CEO of the Banking Association of SA said that banks needed to first get the permission of the Competition Commission to act in concert as strict laws against collusion governed them. Once the sector received this permission, they would consider specific policies related both to workplace practices but also wider economic policy related procedures. DM

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