Whilst the world and indeed South Africa continues to monitor the ongoing Coronavirus (COVID-19) pandemic and it’s far reaching consequences, HJW Attorneys have taken the time to present some insight into a number of workplace issues, which can now be considered to be relatively commonplace.
Please reach out to HJW Attorneys at [email protected] should you experience any of the issues below.
CAN EMPLOYERS FORCE EMPLOYEES TO UTILIZE ANNUAL LEAVE DURING COVID-19 LOCKDOWN?
On 26 March 2020, the Director-General of the Employment and Labour Department, Mr Thobile Lamati, in a radio interview prohibited employers from requiring that their employees take unpaid leave or utilise their annual leave credits during the nation-wide lockdown.
However, a subsequent Directive issued by the Department on the same day stated that, “During the lockdown period, an employee may be requested by the employer to take annual leave from his/her annual leave credits. The BCEA allows employers to determine the time that employees can take their annual leave.”
The Directive went on to state further that, “in as much as employers are within their rights to insist that employees take annual leave during the lockdown, as the Department, we encourage employers not to request employees to utilise their annual leave credits for the lockdown, but to rather utilise the financial assistance that the department has placed at their disposal through the COVID-19 Temporary Employer/Employee Relief Scheme (TERS) in cases where companies cannot afford to pay employees”.
Despite these somewhat contradictory statements, in our view, the position at this time is that section 20 of the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) envisages that the timing of statutory annual leave (i.e. your 15 business days in your annual leave cycle) ought to be, ideally, the subject of an agreement between the employer and employee, including in so far as is possible reasonable notice. However, in the absence of an agreement, the employer may determine the time at which statutory annual leave should be taken (this type of arrangement being typical to businesses that experience an annual shut-down over the December period).
Of course, in these unprecedented times, employers are urged to show compassion. Employers should not as a first port of call seek to reduce employee’s statutory annual leave credits. It follows that employers that are unable to pay their employees during the lockdown period are encouraged to use the mechanisms that have been put in place by Government, in particular, the Temporary Employee/Employer Relief Scheme (“TERS”) and the National Disaster Benefit, rather than use up an employee’s annual leave credit (which may have negative implications on future leave arrangements and employee retention).
WHAT IS TERS?
TERS is a special benefit that was developed by the Commissioner of the Unemployment Insurance Fund (“UIF”). TERS aims to provide emergency relief to employers in order to enable them to continue paying their employees in the event that a temporary lay-off has to be implemented in respect of some or all of its employees during the lockdown.
Broadly speaking, if an employer has no alternative but to close operations as a result of the COVID-19 outbreak and subsequent lockdown, it may be entitled to temporarily lay-off some or all its employees. The implication being that an employee will not receive an income for the duration of the temporary lay-off. However, whilst many Bargaining Council Agreements, as well as contracts of employment make provision for temporary lay-offs, in the absence of such provisions, employers may not impose these measures unilaterally and same would need to be conducted through a consultation process with the affected employees.
HOW TERS WORKS
In an effort to ensure that payments in terms of TERS are attended to expediently, it is envisaged that an employer lodges its claim with TERS and if the claim is successful the funds will be paid to the employer who will then make payment to its employees, albeit at a reduced amount to their ordinary salaries.
It is important to note that the benefits available under TERS are delinked from the normal UIF benefits available. The implication being that the requirement that “for every 4 days worked, the employee accumulates 1 credit day” does not apply.
APPLYING FOR TERS
Broadly, in order to be eligible to participate in TERS the employer must:
- have been registered with UIF prior to the commencement of the lockdown and must comply with the online application procedure as set out in the Department’s media statement;
- be in financial distress or facing financial distress;
- be contemplating the retrenchment of employees;
- have the potential of becoming sustainable through short term economic relief; and
- be compliant with its statutory obligations.
The employee must:
- be at risk of being retrenched by the employer; or
- be subject, or likely to be subject, to reduced working hours or an income reduction.
The salary to be taken into account in calculating the benefits will be capped at a maximum amount of R17 712, 00 (seventeen thousand seven hundred and twelve Rand) per month, per employee and an employee will be paid in terms of the income replacement rate sliding scale (38 % – 60 %) of their salary as provided for in the Unemployment Insurance Fund Act 63 of 2001.
Should an employee’s income on the replacement sliding scale fall below R3 500, 00 (three thousand five hundred Rand) per month, the employee will be paid a replacement income equal to that amount.
Employers are encouraged to apply for the TERS Benefit by sending an email to [email protected] or contacting 012 337 1997 for further assistance.
ILLNESS BENEFITS FOR 14-DAY QUARANTINE PERIOD
Employees may also apply for the illness benefit under TERS. However, employees may only apply for this benefit in instances where they have taken leave due to being quarantined for 14 days as a result of the Coronavirus outbreak, irrespective of whether the employee has contracted the virus or not.
The employee is not required to produce a medical certificate for the first 14 days of leave, however the employer and employee have to submit a letter of proof that they have agreed to “special” leave during this period.
It is important to note however that the TERS illness benefit is not available during the 21-day lockdown and thus it would appear that it may be relied upon only after the lockdown has ended.
THE NATIONAL DISASTER BENEFIT
Whilst the National Disaster Benefit has also been put in place to assist employers in paying their employees during lockdown, unlike TERS, it does not appear to require that an employer be in financial distress in order to lodge a claim.
Therefore, if a company closes as a result of the lockdown, but is not necessarily in financial distress, it may claim the benefits provided for under the National Disaster Benefit in order to pay its employees’ salaries, albeit at a reduced rate. In order to apply for the benefit an employer needs to submit the following to the Department of Labour:
- UI19 and UI2.7 completed by the employer;
- UI2.1 application form;
- UI2.8 completed by the bank;
- a letter from the employer confirming that the business is being shut down and that the employees are being temporarily laid off as a result of COVID-19 and subsequent lockdown; and
- a copy of the employees ID.
However, it is important to note that the amount payable in respect of the National Disaster Benefit is limited to R3 500.00 per month, per employee, for a maximum duration of 3 months and, like TERS, the benefits in terms of the National Disaster Benefit are delinked from the ordinary UIF benefits.
ARE EMPLOYERS PERMITTED TO LAY-OFF EMPLOYEES TEMPORARILY WITHOUT CONSENT / UNILATERALLY?
No. In general and in circumstances where employment contracts are silent on temporary lay-offs or no agreement has been reached with the employees, an employer will be required to embark on a consultation process with the effected employees relating to the employer’s legitimate operational requirements. The aim of these consultations is to reach consensus with the employees, and the outcome may be an agreement on temporary time off without pay, or the necessity for the employer to embark on a retrenchment process in terms of the Labour Relations Act 66 of 1995 (“LRA”).
ALTERNATIVE WORKING ARRANGEMENTS, SHORT TIME AND RETRENCHMENTS
Despite the relief measures mentioned above, an employer may still find itself in a dire financial position and needing to reduce costs where it can, including, where it has no alternative but to contemplate dismissing one or more of its employees as a result of its operational requirements (i.e. retrenchment).
In such circumstances, employers must follow the ordinary process as envisaged in section 189 and where applicable 189A of the LRA, and cannot use this as an opportunity to dismiss an employee on the basis of ill health.
Section 189 of the LRA aims to avoid retrenchments, and as such the employer and employee are encouraged to explore alternatives such as reduced working hours and reduced pay. These arrangements however cannot be implemented by an employer unilaterally and require the employee’s agreement.
In the event that an employee is dismissed, be it for operational reasons or otherwise, or is temporarily laid-off for more than 3 months, the ordinary UIF benefits will apply and the employee will be placed in a position to claim from UIF in the ordinary course.
However, the benefits provided for by the Government, as set out above, cannot be claimed simultaneously with the ordinary UIF benefits.
Varusha Naidoo | Associate Partner | HJW Attorneys
Rowan Bauer | Associate Partner | HJW Attorneys
Tarin Page | Associate Attorney | HJW Attorneys
Meegan Reddy | Candidate Attorney | HJW Attorneys
*The general answers to these questions are subject to the facts of each matter and should not be substituted for legal advice on any specific matter. Any opinions expressed herein are subject to the law as at the time of writing and will change in accordance with any change in the law. We recommend that you contact HJW Attorneys at [email protected] directly for advice applicable to your specific matter.