Q&A'S COVID19 Temporary Employee/Employer Relief Scheme (C19 TERS)

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Q&A'S COVID19 Temporary Employee/Employer Relief Scheme (C19 TERS)

• 13 May 2020
• Payroll
• The Tax Faculty

Important: The answers provided to the questions asked is based on information available on 1 May 2020.

Labour Law

Question:

Does a company need to get confirmation from their employees to reduce their salaries during this time?

Answer:

These are exceptional times and neither the Basic Conditions of Employment Act nor the Labour Relations Act provide guidance on this operational requirement.  There are some provisions for lay-off and short time in Bargaining Council Main Agreements. 

The employee has a right to be advised in writing of the reduction in their salary, but companies are generally not asking for their agreement.  However, the CCMA has provided a guideline for short time which suggests that agreement should be reached, but essentially the lockdown is being regarded by the Department of Labour as unpaid special leave and any payment that the company can make is more than the Department of Labour requires.

UIF Legislation

Question:

The question I have is whether the normal UIF maximum benefit is still R14,872 or has it changed to the TERS maximum benefit of R 17712?

Answer:

The current UIF benefit amount was changed to R17 712 on 1 April 2017.  The contribution amount is still based on R14 872-00. The Finance Minister is responsible for the UIF Contribution Act and has not yet amended the Act such that the maximum premium for UIF matches the maximum benefit.

Please note that UIF is a multi-risk insurance for employees, not a savings or investment fund. For UIF benefit details see https://www.ufiling.co.za/uif/

Payroll Processes

Question:

In terms of covid 19 TERS benefits What happens with the payroll for April if TERS benefits are claimed and the employer tops up the salary to the “normal remuneration”? On what amount is paye / UIF payable and how will this be processed in the payroll?

Answer:

The C19 TERS payment must be shown as a tax-free payment.  The top-up salary amount should be reflected as remuneration and is subject to normal tax and deductions.  There are, however, company tax concessions for the delayed payment of PAYE in the planned stages, at the time of writing, and Retirement and Medical Aid companies are prepared to discuss how their contribution and premium payments can be treated during the period Apr-20 to June-20.  UIF is calculated and payable on the top-up salary portion.

Question:  

Payslips have been distributed, however I understand that the TERS benefit paid to employees must reflect on the payslip as a non-taxable income and the portion not paid by TERS as the normal remuneration.  Will I have to roll back the two pay cycles to correct the payslips? My payroll company is not in a position to advise me on this.

Answer: We do not suggest a payroll roll back but rather to correct the year-to-date PAYE deductions in subsequent payslips. In doing so, it will be necessary to explain the adjustments to the employees to avoid conflict and mistrust.  Most payroll companies have developed a code for the C19 TERS payment.  You will need to check with the payroll provider.

C19 TERS Directives

Question:           

To claim for Covid19 Ters UIF – should I reflect that annual leave payment now as Remuneration received during lock down or do I leave it blank? If I leave it blank , then employees will receive “full” remuneration from the DOL – we will use the option paid to employer. May the employer then set the annual leave off against benefit receive from DOL. Which will result leave back to the 15 days entitlement.

Answer:

The C19 TERS submission spreadsheet “Annual Leave Payment” column title has changed to “Remuneration Received during Shutdown Period”.

You will only receive the maximum C19 TERS benefit for the individual employee which amount will not equate to the value of his/her 15 days leave. 

Example:

Employee was allowed to take 10 days annual leave and currently earns R20 000-00 per month.  The daily rate is therefore R922-93.  The C19 TERS benefit received from UIF = R6 638.40.  The days leave to be credited to the employees accumulated annual leave balance = R6 638.40 ÷ 922.93 = 7.19 days.

Question:

I believe that when the leave pay is paid back from TERS that the leave credit must be given back to the employees.  Would the payment which we received on 18 April 2020 constitute the leave pay reimbursement which must be credited back to the employee's leave credits?

Answer:              

Yes, it would be seen as repayment for leave initially taken and must be credited back to the value of the individual employees C19 TERS benefit.

Example:

Employee was allowed to take 10 days annual leave and currently earns R20 000-00 per month.  The daily rate is therefore R922-93.  The C19 TERS benefit received from UIF = R6 638.40.  The days leave to be credited to the employees accumulated annual leave balance = R6 638.40 ÷ 922.93 = 7.19 days.

Question:

Employees are paid Bi-weekly. The period ended on 25.03.2020 (perfect before the lockdown). So I use the 26.03.2020 – 30.04.2020 for lockdown period, however the employer paid the employee 5 days annual leave, which was included in the period's wages. To claim for Covid19 Ters UIF, should I reflect that annual leave payment now as Remuneration received during lock down or do I leave it blank? If I leave it blank , then employees will receive “full” remuneration from the DOL – we will use the option paid to employer. May the employer then set the annual leave off against benefit receive from DOL. Which will result leave back to the 15 days entitlement.

Answer:

Yes, the paid leave should be reflected as remuneration received.  Employees will receive a standard C19 TERS benefit from UIF based on their income level, UNLESS the total of the C19 TERS benefit plus the payment made by the employer is more than the salary the employee would normally have received, in which case the standard C19 TERS benefit will be reduced.

Example:

Normal Remuneration is R 18 640.76.

The amount to be paid by C19 TERS to the client will be R6 638.40.

Salary during lockdown: R15 000.00

The amount to be paid by UIF to the client will be R3 640,76 (R18 640.76 – R15 000.00)

NB: The benefit amount (R6 638.40) Which UIF must pay as per the directive added together what the employer paid (R15 000.00) Should not be more than the employee remuneration if there was no lockdown

If you have asked employees to take annual leave during the lockdown period, you are required to credit the leave back in proportion to the C19 TERS benefit payment made by UIF. 

Question:

If I work through the TERS tax calculator and we have an employee whose remuneration is R20,000 and the employer paid the employee R16,000 and the employer claims the differential of R4,000 from TERS. Based on R20,000 remuneration, the TERS benefit is R6 638.38. If I insert the R16,000 paid into cell C20, the TERS amount payable is now nil. Does that imply TERS will not pay the differential between normal remuneration and reduced amount paid by employer of R4,000 as a TERS benefit?

Answer:

C19 TERS not paying the differential between normal remuneration and reduced amount paid by employer, was the case until 30 April 2020, on which date the rules changed and UIF will now pay the difference between the employee’s normal salary and the reduced salary amount paid in April 2020.  Employees who have had their C19 TERS claim rejected will be automatically reassessed under the new Directive.

Question:

How should top-ups made by employers be dealt with and how does that impact the TERS benefit calc?

Answer:

This has been clarified by a change to the C19 TERS Directive announced on 30 April 2020.  DoL have given examples of the calculations in their FAQ document which is available as a banner on their website at www.labour.gov.za. 

UIF will pay the full C19 TERS benefit to employees (on a sliding scale of between 60% and 38% of salary dependent on the employee’s earnings in the month with a minimum benefit of R3,500 and a maximum benefit of R6 638-40.)  If the amount paid by the company + the UIF benefit exceeds the salary amount the employee would normally have received, UIF will pay a reduced C19 TERS benefit such that the normal salary amount is not exceeded.

Question:

If an EMPLOYER has already paid the full salaries for April 2020, can they still claim TERS for April?

Answer:

C19 TERS is for companies who either have not been able to pay salaries due to a full shutdown or a partial shutdown (short time) of their businesses due to COVID19.  If the company is in a position to and has paid full salaries or is in a position to still be fully trading (e.g. essential service), then they would not be entitled to a C19 TERS claim.

Question:

Can all schools also apply for the TERS benefit? (Can government schools apply?)

Answer:

Any organization that contributes to UIF on behalf of their employees can apply for the C19 TERS benefit.  However, they must be unable to pay employees full salaries or part of their salaries.  If the employee is not going to receive pay (i.e. perhaps their salary is not covered by the DOE), then this would be grounds for a C19 TERS claim.

Question:

Can a business providing essential services claim TERS?

Answer:

If their ability to pay full salaries is a problem, for instance, even though they are an essential service, there may not be the normal level of work or they are unable to collect payment from customers due to COVID19, these would be grounds for a C19 TERS claim.

Question:

Will foreigners qualify for TERS benefits?

Answer:

With regard to Foreign Nationals, as at the time of writing, they have not been paid yet.  They will be paid if the UIF are able to confirm that they are legally in the country and assuming their employers have been contributing to UIF on their behalf.  The DoL is working on a system to speed up payments to foreign nationals but need to review their processes.  Foreign Nationals who have been told they do not have a claim will be automatically reassessed.

Question:

If my client (Garden Services) register as an essential service for the cleaning/refuse removal side of the business, could he still claim? He would only bring in the janitorial staff and at reduced hours. Most of the staff won’t earn a salary at all, which would be a straight COVID19 TERS claim. Then, the staff with reduced hours, could he claim this via COVID19 TERS as well? As far as I am aware he could, the UIF would just pro-rata the payment according to the amount earned. Then, the UIF is asking for ID Numbers on the Excel template - what about Foreign employees with a passport? Would no payment be processed for them by UIF?

Answer:

With regard to Foreign Nationals, as at the time of writing, they have not been paid yet.  They will be paid if the UIF are able to confirm that they are legally in the country and assuming their employers have been contributing to UIF on their behalf.  The DoL is working on a system to speed up payments to foreign nationals but need to review their processes.  Foreign Nationals who have been told they do not have a claim will be automatically reassessed. If salaries or full salaries cannot be paid, even essential services companies can claim the C19 TERS benefit. 

Question:

If an employer does an application for TERS from UIF and UIF pay the amounts to the employer, I understand that the employer is than obliged to pay the whole amount over to the employee and that department of labor will ask for proof of this. My questions is this: Will these payments need to be brought into payroll and if yes how will this affect PAYE, UIF and Provident fund deductions. Because if these deductions are done it will mean that the employee will not get the total amount paid out by UIF and my understanding is that they want the whole amount to be paid to the employee.

Answer:

The full C19 TERS benefit must be shown on the payslip as a payment from UIF and treated as a tax-free amount.  The Payroll companies are providing codes to use on payslips.

Question:

What about garnish orders and other deductions like medical aid which normally get deducted from salaries?

Answer:

By pre-arrangement with the Retirement Fund, deduction of the investment portion of the employee’s Retirement Fund contribution may be avoided to increase the employees take-home pay in the reduced salary scenario, subject to a fund rule change being agreed by the Fund administrators.

Certain Medical Aids are also allowing premiums for this April to be paid out of the members medical savings account (MSA), but to secure this concession requires an engagement in with the Medical Aid by either the employee or the employer.  With regard to garnishee orders, it rather depends on what it is for, but again, the employee needs to have that conversation with the debtor to seek any temporary relief.  Payment holidays can be requested, and some have been granted.

Question:

Can an employer pay an advance to the employees with perhaps doing a bank reference mentioning it is an advance on TERS grant and pay only the balance due once the payment was received from UIF?

Answer:

We understand that this is possible, but for employees who earn below R17712-00 per month, the calculator is not that accurate.  The mechanism for this will be in the new directives which have not yet been published.

Question:

Is the TERS payout subject to UIF?

Answer:              

No.

Application Issues

Question:

Can we submit another claim to claim back the leave pay already paid to the employees, and if so how would it work, please?

Answer:

No. You can only submit one claim. 

Question:

We have 4 new employees that started with us on 25 February 2020, and the UIF declarations were submitted to UIF with the rest of the employees, however, it formed part of the pay cycle which was submitted to UIF on 3 April 2020 using the  declarations@uif.gov.za e-mail address. These 4 did not receive any benefit reason being "no declaration submitted". Can I re-apply for these 4 as the declarations were submitted on 3 April 2020, and obviously not processed as yet? How, does one proceed with a dispute for these 4?

Answer:

The Department of Labour is managing the problems and developing new systems every day.  At this stage we need to be patient and they should be reviewing the information that was sent to the e-mail address provided.  

Question:

I need some help.  Department of Labour is not answering their phones. I prepared my documents to submit a TERS UIF application. I followed all the steps to convert the National Disaster Payment Template, no problems. What must we do with the Employer Account Information Template.  How must we name it and must we also convert it to CSV.  There is no indication in the correspondence of what must happen with this particular document.  Just say attach?

Answer:

One needs to upload the Employer Account Information Template as per the prompts on the system.  The phone lines are significantly overloaded at the moment and one needs to just keep trying.  UIF are improving the call centre on an ongoing basis and now have a toll-free phone number: 080 003 0007.

Question:

Do we need to re-submit the claims on the new platform and will it be process faster?

Answer:

You do not need to re-submit, but you can go onto the system periodically and check to see the status of your application.  If it shows that there are no employees loaded, only then will you need to resubmit.  The system was upgraded again on 28 April 2020 and does seem to be working better. 

Question:

There is not a contact number for UIF – Labour – etc that my college and I have not tried and none of them is working.

Answer:

The call centre has been very overloaded.  The normal phones are not working, but they have been providing a number of additional communication solutions over the last few weeks and now have a toll free number.  Phoning is a challenge and when calling the toll-free number, 080 003 0007, one will often get the recorded message that there are too many callers to be able to transfer you to a consultant.  One must just keep trying until you are past the recorded message and then hold on until the call is transferred to a consultant.

Question:

What is the procedure to complete CSV file/the info of employees & their remuneration correctly?

Answer:

The Department of Labour has provided a detailed guideline for completing the system which is available for downloading from their website at http://www.labour.gov.za/easy-guide-for-employers-on-covid19.

Question:

When asking for the ID documents of employees to be uploaded – must these be certified and should the IDs of all employees be uploaded?

Answer:

In my experience they are only asking for ID’s where their records and the ID provided by the employer do not agree.  The uploaded ID does not need to be certified.

Question:

What is the deadline for TERS applications?

Answer:

We have not been given a deadline yet but anticipate that there will be a closing date for applications soon, this so that they can start accepting applications for the month of May.

Question:

Is it possible to apply for TERS based on a different top-up by employers for each month? E.g. May less 10%, June less 30% or do I have to decide in April and keep it at the same level as per my first month?

Answer:

The top-up amount/percentage can be changed in each month’s application and there is actually no requirement to pay any salary.  The benefit will, however, be paid according to the formula provided in the Directives

Question:

Do you have any way of contacting UIF to determine whether employee UIF claims have been received and are being processed for payment? (not TERS applications)

Answer:

This is an enormous problem as the call centre can help with some questions, but they are unable to check on process and we are not getting responses from the e-mail addresses provided.  It is something that is being worked on.

If you have uploaded files and received a message that the upload has been successful, but have not yet received payment or cannot see the employees loaded on the system, resubmit your claim to covid19compliance@labour.za with an explanation of the steps you have followed to date.

This article was prepared by: Connold & Associates and The Tax Faculty

Webinar Commentary

For answers to the most common questions posed by members and stakeholders about TERS and a discussion about the practical difficulties and problems experienced access our Webinar-on-Demand here.

For an explanation of the COVID-19 TERS online application process access our Webinar-on-Demand here.

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