The Covid-19 pandemic resulted in a Level 5 hard lockdown from 27 March 2020 to 30 April 2020, easing to Level 4 from 1 May 2020 to 31 May 2020, and Level 3 from 1 June 2020. By and large, only individuals and companies providing essential services or those involved in the sale of essential goods could work during the Level 5 lockdown.
During the Level 4 lockdown between 1 May 2020 to 31 May 2020, domestics and gardeners were largely still not able to work. Fortunately, under Level 3 lockdown, all domestic workers and gardeners could return to work.
Many employers paid their domestics and gardeners in March, and many continued to do so in April. However, many domestics and gardeners that could not work were not paid in May. Many in this vulnerable group were also retrenched as their employers, faced with devastating financial pressures themselves, had no choice but to terminate their services.
This article discusses the benefits available for domestics and gardeners during the lockdown under the Temporary Employer - Employee Relief Scheme (TERS) administered by the Unemployment Insurance Fund (UIF) where they received no or reduced income.
In addition to the TERS benefits, domestics and gardeners could also claim for illness benefits if they were ill or required to self-isolate and could not work. If they were retrenched, then they could claim for unemployment benefits under the Unemployment Insurance Act 63 of 2001 (UI Act).
Purpose of the UI Act and the TERS
The UIF was set up in terms of the UI Act and provided for the payment of unemployment, illness, maternity, parental, adoption benefits to certain employees, and commissioning parental and dependants' benefits related to the unemployment of such employees.
The purpose of the TERS was to enable the UIF to assist employers to pay their employees who have no income or lost some income, or required to take annual leave during the lockdown. The TERS was a special benefit introduced in a directive issued by the Minister of Employment and Labour (TERS directive).
The UIF recognised that allowing each employee to apply for UIF benefits would be inefficient, and thus employers were allowed to claim for their affected employees in the online process. Employers would then administer the TERS benefit payments to their employees, in certain instances in the tens of thousands. The payments to the employees could be facilitated much faster by the employers as banking information and payroll processing were already in place for normal monthly payrolls. Employers were requested to pay the TERS benefits as advances to avoid delays and for employers to recover those advances from the TERS benefits received from the UIF.
How to claim TERS
Applying as employees
Employees who wish to apply for TERS benefits themselves can do so by registering their profile on uFiling, the secure UIF website providing for employers to register, declare and pay the monthly UIF contributions.
An employer will still need to complete the employee declaration to be submitted as part of an employee's TERS application on uFiling. Therefore, the TERS benefits submission process by an employee is not completely without the employer's involvement.
Applying as employers
An employer who wishes to claim TERS benefits should do so by registering online here. Employers should first send an email to email@example.com to receive an Autoreply which sets out the online application process and template spreadsheet to be populated. Notably, the column for remuneration during shutdown for the March/April applications in the template spreadsheet should exclude any TERS benefit advances or leave pay. For the May applications and onwards, this column requires the remuneration for work done or works to be done in May 2020, also excluding leave pay and payments in advance.
The completed spreadsheet will then need to be converted to a very specific csv format file which will then be uploaded online. Alternatively, employers can upload details of their employees one at a time using the "Add employee" function online. The manual uploading of employees is the preferred method of submission by the UIF, has a higher success rate and results in much faster payments.
Some of the reasons where employees submitted by employers online have been rejected include foreign individuals without South African identity numbers, individuals with historic or ongoing UIF claims reflected on the system, and where employers or employees are not registered and have not submitted the relevant declarations. All these issues will first need to be dealt with on uFiling before the TERS benefits will be processed on the UIFECC website.
Employers must also check that the csv file which was uploaded then results in the employee details captured on the website. All too often, even though the csv file reflected as uploaded and the employer received an email confirming this, the employee details were not captured on the website to be processed and no payment could be made by the UIF.
Employers should check the website every day after uploading the csv file to ensure that the employee details are captured. It may take a few days before the employee details are captured. In the interim, the employer should check the format of the csv file and where this is correct, continue to upload the files. The employer should also send emails to the various UIF support email addresses. However, these are not currently responded to. The employer should also try to contact the call centre number at 0800 030 007 and request that their issue be escalated.
Differences between TERS and other UIF benefits
Illness and reduced work time benefits
The UI Act provides for employees to claim illness benefits where the contributor is unable to perform work due to illness for at least seven days. The TERS directive has expanded the scope of the illness benefits to allow domestics and gardeners to claim this benefit even when they are not sick but are quarantined for 14 days due to the Covid-19 pandemic.
A confirmation letter from the employer and employee may be submitted as proof that the employee was in agreed pre-cautionary self-quarantine for 14 days. If the employee is quarantined for more than 14 days, then a medical certificate from a medical practitioner should be submitted. (The recent health and safety guidelines suggest that paid sick leave should be exhausted first before requiring quarantined employees to apply for illness benefits.)
Likewise, domestics and gardeners can also apply for reduced work time benefits where they have lost income due to their inability to work or work normal days due to the lockdown. However, this should only be done if their employers are not successful with a TERS benefit claim for them.
The above benefits are calculated using a sliding scale formula in Schedule 2 of the UI Act where any remuneration paid by their employers will effectively reduce the calculated UI Act benefit.
Only one UI benefit possible in a period
Notably, the domestics and gardeners can only apply for one type of UIF benefit in the same period. The UIF uses the South African identity number to check for applications and payments in a period. As a result, if an employer applies for TERS benefits for an employee, and the employee also applies for the TERS benefits in the same period, this will result in either or both TERS applications being rejected. Further, the employee can only receive one type of UIF benefit for one period. Therefore, the employee can receive the TERS benefit or the reduced work time or illness benefits in the same period.
The TERS benefits provide better benefits to employees
An employer should ideally apply for TERS benefits for domestics and gardeners as this will result in faster payments to them and also greater amounts of benefits as any top up payment by the employer does not reduce their calculated benefit. This is provided that any additional payment by the employer plus the TERS benefits received by the domestic or gardener does not exceed their remuneration ordinarily received.
Further, the TERS benefit is de-linked from the UIF's normal benefits and therefore payment of the TERS benefit will not use any credit days accumulated (i.e. 1 credit day for every 4 days worked). The domestic and gardener will also receive the national minimum wage of R3 500 as the minimum TERS benefit, which is not available for other UIF benefits.
The maximum salary benefit taken into account in the sliding scale formula is R17 712 per month per employee, and the benefit payable will be calculated using the income replacement sliding scale of between 38% to 60%. Effectively, this means that the domestic or gardener can earn a minimum of R3 500 and a maximum of R6 638.40.
An employer will then also download the payment allocation schedule for the breakdown of payments for all its employees and process the payments on the payslips. The proof of payment of the TERS benefits will need to be provided to the UIF.
Applying for unemployment benefits
Where domestics and gardeners are retrenched, they will need to apply for unemployment benefits on uFiling. The illness benefits, unemployment benefits and reduced time benefits will be applied in the same manner, which is on "Benefit Application and Payments" section and "Apply for Benefits" tab. The employee will need to verify bank details with part of the UI2.8 form completed by the employee's bank and the other part by the employee. The completed UI2.8 bank form and contact details will then need to be emailed to VOsupport@labour.gov.za.
Personal details including physical and postal addresses will need to be confirmed or updated. Information on occupation and qualifications will need to be updated, and Work Seeker information will also need to be updated. The application history can be viewed at the "View Application History" section. An employee can lodge a notice of appeal if their application for benefits was declared by selecting "Notice of Appeal" and completing the section accordingly.
Ideally, employers should assist their domestics and gardeners to claim TERS benefits, and if they are retrenched, unemployment benefits on uFiling. Payments can be made directly into the bank accounts of the domestics or gardeners, or to the employers, if the employers had paid the TERS benefits as advance payments. Payments for unemployment benefits can only be made to the bank accounts of the domestics and gardeners.
Joan Chong is a partner at Webber Wentzel. Views expressed are her own.