While the government has appealed to employers to pay their workers during the duration of the shutdown, some businesses have already closed and are laying off workers without any proper consultation or are contemplating closure; some might struggle through and be able to partially pay their workers and some might be able to pay workers during the shutdown.
There are various options that employers can explore in trying to find some resolution to this as well as a number of government interventions and measures which have either been put in place during this time or have existed and can be applied under such conditions.
This article explores how all parties from unions/workers to employers and the state can utilise these measures or pieces of legislation such as the Unemployment Insurance Fund, the Occupational Health and Safety Act and the Temporary Employer/Employee Relief Scheme (TERS) to name but a few, to minimise hardships, where possible.
The first consideration is how companies can fund this shutdown in terms of payment to workers.
Companies can explore various options; for example, viewing the shutdown as annual leave; get agreement with the union or employee representatives or in individual consultation with employees (where there is no union) or explore whether agreement could be reached on a pay cut only for the duration of the shutdown or if the employer cannot pay for the full period, perhaps explore part-payment and then the employee can claim from the Unemployment Insurance Fund.
Possible solutions will differ according to each particular situation. However, where companies cannot pay their employees or can do part-payment, the Minister of Employment and Labour, Thulas Nxesi, has announced measures that the department will put in place as required under the current special circumstance relating to Covid-19 and its impact on UIF contributors.
The Unemployment Insurance Fund will compensate affected workers through a new “National Disaster Benefit” and its existing Illness, Reduced Work Time and Unemployment benefits. So, if a business is forced to shut down and is unable to pay employees, they will pay compensation in the amount equal to National Minimum wage for tree months – which is R3,500 a month per employee, or if an employer cannot pay employees during the shutdown then employees can claim up to R3,500 a month.
The UIF has provision to pay a compensatory amount for partial employment or where an employer can only pay a partial amount (and this could be applicable during the shutdown). So, if an employer is reducing the working days from for example five days per week to three days per week, an employee could then claim for the two days that the employer may not be able to pay them for. This is one way of reducing payroll and preserving cash flow. In the same vein, the employee can claim for the amount that the employer has not been able to pay during the shutdown.
So, in summary, an employer who cannot pay his employees for this period can apply for the National Disaster Benefit from the UIF. This benefit will be delinked from the UIF’s normal benefit structure and this benefit will be at a flat rate equal to the national minimum wage (R3,500) per employee for the duration of the shutdown or a maximum of three months, whichever period is the shortest. If an employee is ill, temporarily laid off or unemployed for longer than three months, the normal UIF benefits will apply.
The UIF has a sophisticated online system. Employers can assist employees by completing the correct forms and lodging them quickly. Employees should also be permitted internet access (and where required assisted) to submit such an application online. Employers should of course ensure all UIF payments are up to date.
Turning to a situation where an employee/s were on sick leave at the time of the shutdown or were in their 14 day self-quarantine, the question is does the annual shutdown count as sick leave or what kind of leave is this?
The Minister of Employment and Labour was exploring the implementation of special leave; however, at this point there is no “special” leave provision in these laws. Under normal conditions, the UIF pays out for sick leave after an employee has been on sick leave for seven days. In such a situation, the employee will need to get a doctor’s certificate, but if an employee has been self-isolating, he or she cannot prove they were sick, per se.
Under the new extraordinary provisions, the UIF will pay sick leave if self-quarantined on presentation of a letter from the employer and employee in place of a medical certificate. A confirmation letter from both the employer and employee must be submitted together with the application as proof that both the employer and employee have agreed to the 14 days special leave. Under such conditions, employers must ensure that they assist employees as far as possible to be able to claim.
The outstanding issue here is what kind of leave applies if an employee is still on sick leave or in self-quarantine when the shutdown happens?
The sick leave provisions as set out should apply and the employee would be entitled to claim the quarantine period as sick leave in terms of the UIF extraordinary provisions. If they are then diagnosed with Covid-19 then usual sick leave provisions will kick in after that.
While these provisions now exist, the current UIF infrastructure could be put under severe strain in the current crisis. As a result various unions and employers are exploring whether payment to workers could be made through the bargaining council administered funds such as the sick pay funds, where they exist.
A further provision provided for which is linked to the UIF but is administered by the Commission for Conciliation Mediation and Arbitration (CCMA) where employers could seek some form of relief is the Temporary Employer/Employee Relief Scheme (TERS). This scheme came into effect in December 2019 and applies to companies in distress.
If a company is deemed to be in distress, it can apply to the CCMA to seek a TERS allowance through the single adjudication committee process by the previously mentioned departments. However, under the current conditions, where companies can make a case that they have been directly affected by Covid-19, they could apply for a TERS allowance.
The TERS has its origins in the Training Layoff Scheme which emerged out of the 2008 global financial crisis and has been the subject of negotiations in the build-up to and post the 2018 Presidential Jobs Summit.
In effect, a distressed company – if UIF compliant – can seek to obtain a wage subsidy (and or training interventions) through this scheme. In the event that an application is approved, the UIF could pay out, within five days of the company’s application being successful, TERS allowances for each employee to a monthly amount not exceeding R17,242.
Finally, there is another piece of legislation which parties could explore in the event that certain categories of employees get sick while at work and can seek compensation.
The Occupational Health and Safety Act 85 of 1993 states that an employer has an absolute legal obligation to create a place of safety for your employees. Hence, the law imposes a duty on the employer to ensure employees minimise exposure and, under our current situation, it would be the spread of the virus which would have applied to all employees until the shutdown.
However, this will now apply to employees who are in designated services and are expected to work. The Compensation Commissioner, in terms of the Compensation for Occupational Diseases Act, recently issued guidelines on what they will and will not consider occupational disease. Important to note is the inclusion of employees who may not ordinarily be those acquiring occupational diseases at this time like healthcare workers would be. These medium risk employees include those exposed through ongoing community activities with high density population activities such as doctors’ waiting rooms, schools, large retailers, government advice centres, or if the disease was contracted due to international travel for work.
There is a procedure to follow and if the fund accepts responsibility the fund would pay medical expenses and up to 30 days sick leave/compensation. However, they would NOT be paying the quarantine period. This is for UIF.
What about domestic workers and those workers who are working during this period?
Obviously as an employer the ideal would be to send your worker home to be with their family on full pay. However, there may be instances where employers themselves are losing their jobs as employees and may not be able to do this. Alternatively, they could be employed in one of the essential services and hence they will require assistance at home while they are caring for people or supporting the economy. As with all employment processes, an open discussion and agreement is best practice.
If the employer (of a domestic worker, for example) is facing financial constraints, then he/she should advise his/her employee and agree on an arrangement which could include a temporary layoff during this period. The employee will be able to claim the national minimum wage from the UIF disaster fund. If a company is designated as an essential service, it will need to reach an agreement that does not infringe on the “lockdown” regulations, or labour rights of the employee.
Amid the heightened tensions and anticipated hardships that our society will face, workplace conflict could arise and it will require employers and unions or employee representatives to have some hard and difficult conversations to reduce the impact of what could emerge in the months ahead and not just during the 21-day shutdown. DM
Nerine Kahn is a specialist in labour strategy and labour law while Renee Grawitzky is a public policy researcher.
"Everything is becoming, nothing is" ~ Plato