It is clear. Covid-19 has propelled us deep into uncharted waters. For us entrepreneurs, this means juggling a number of pressure points and ‘unknown unknowns’ as a result of South Africa having gone into a 21-day lockdown on Thursday, 26 March.
There is rent to think about, there are debts to think about, and then there are staff members to think about. Do I force my people on leave? Paid or unpaid? But I can’t pay. Maybe I just lay them off? Retrench or dismiss? Is that even legal? And if this lockdown lasts longer than 21 days, what do I do then?
For the past few days, the only reference point we’d had was President Cyril Ramaphosa’s Monday, 23 March 2020 speech, which pretty much told us that for 21 days "all South Africans must stay at home; all businesses must close - except those involved in providing essential services; and those businesses that can continue to operate remotely should do so".
This created lots of confusion when it came to how employers should deal with employees during this time. If your business is still operating and employees are still working, obviously you must continue to pay them. But what about businesses that cannot operate via Zoom, WhatsApp or Skype – say for example a restaurant? And even if your staff can work remotely during the 21 days, what if this period is extended? How long can your teams keep working at home? What if you run out of work for them? What then is your obligation to staff versus your responsibility to keep the business afloat?
Thankfully the confusion is no more. Just two days after the president’s speech and a day before the official lockdown started, a Government Notice was issued by the Department of Employment and Labour on Wednesday, 25 March 2020 entitled "The Temporary Employer/ Employee Relief Scheme". You are forgiven if you have not seen or read it. There is a lot going on.
The government directive acknowledges that during the national lockdown, "companies will have to shut down, and employees laid off temporarily" and this means that "employees are compelled to take leave, which is not out of choice" which may lead to loss of income for them.
In short, if you cannot keep your people employed during the national lockdown (and therefore pay them their normal salaries), and you cannot afford to pay them their normal salaries, you are to place them on temporary unpaid leave for 21 days and apply for this special scheme on their behalf to alleviate their loss of income.
The special benefit
The scheme is done through the Unemployment Insurance Fund, so the employee must’ve been contributing to UIF while employed. The employer is the one that makes the application on behalf of the employee and all applications are online.
Under the special benefit, all the normal UIF rules fall away and employers can claim up to R17 712 per month per employee and the employee will be paid "in terms of the income replacement rate sliding scale (38% - 60%) as provided for in the Unemployment Insurance Act", provided that if this calculation leads to the salary being below the minimum wage of the sector the employee belongs to, the scheme will pay such employee the minimum wage.
It is also important to note that this scheme only pays for the salary portion of one’s total cost to company.
In addition to the this salary benefit for those who are not being paid during the national lockdown, employees who are receiving their salary but have to go into a 14 day pre-cautionary self-quarantine will qualify for an illness benefit. This is welcome support for small businesses who would otherwise have had to grant paid sick leave to such employees during quarantine.
I think these are very sensible provisions from our government and I encourage all small business owners to apply right away and save as many jobs as possible. Even if you have already laid off your staff without being able to give them hope on how they will earn a living during this time, well here is your chance to help them. Reinstate them, get on your computer and apply.
All that employers need to do is ensure they are up to date at SARS with the UIF contributions deducted from their employees, and that the closing of their business is a direct consequence of the Covid-19 pandemic. I’d suggest that you also make sure your business is tax compliant before applying as I don’t see the state providing support to tax dodging employers, even though the ultimate beneficiaries of the scheme are the employees.
Please send your application right away to firstname.lastname@example.org and give your staff an opportunity to earn a living during this difficult time, which will in turn allow them to #StayHome and #StaySafe and curb the spread of Covid-19 without the anxiety of how they will provide for their families.
Andile Khumalo is a CA(SA) and Founder of I AM AN ENTREPRENEUR. Views expressed are his own.