Mitigating the financial impact of #Covid-19 and the nationwide #lockdown on employers and employees

Mitigating the financial impact of #Covid-19 and the nationwide #lockdown on employers and employees
04 May 2020

When the initial 21-day nationwide lock down was announced by President Cyril Ramaphosa in March 2020, the financial impact on South African Employers and Employees at that stage had not yet been evident to the extent that it is now as we enter the final days of what seemed to be the never ending month of April 2020. As the nation enters the month of May 2020, ironically with Workers Day, a fresh perspective with the gradual uplifting of the lock down is aimed at salvaging the economy. At the time of the initial lock down announcement, both Employers and Employees were entering into an unprecedented unknown ‘new normal’ so to speak, whereby working from home would be a first-time trial for many. In addition, short time work or reduced salaries had for the most part not yet been implemented whilst retrenchments did not appear to be an immediate consideration at that stage.

The gradual phased uplifting of the lock down

Fast forward a few weeks into the lock down, with the President subsequently announcing the extension of the lock down and the gradual uplifting of the lock down in 5 (five) strictly monitored stages depending on the working sector and various other precautionary measures that would need to be implemented, the reality for many Employers whose businesses will remain closed for the foreseeable future may be that working from home or short time work or even salary deductions may no longer be financially viable until the nation reaches the final low risk stage.

What can Employers do to mitigate the effects of the lock down on their businesses?

On the evening of 21 April 2020, the President addressed our nation once again, with several revised action plans to ensure the economy survives this pandemic. Of importance to Employers who are the only source of income for millions of Employees who require said income to survive, often paycheck to paycheck, is the Temporary Employee/Employer Relief Scheme (hereinafter referred to as “the COVID-19 TERS benefit”). The President in his most recent aforementioned address to the nation stated that “since the declaration of a State of National Disaster over a month ago, government has put in place a range of measures to support workers’ wages and assist companies in distress. By the end of today, the Unemployment Insurance Fund’s special COVID-19 benefit has paid out R1.6-billion, assisting over 37,000 companies and 600,00 workers”.

It is quite clear, that despite there being mass concern about the turnaround time of payment and allegations by many that the COVID-19 TERS benefit has not been of assistance, the President’s report on this matter is clear. In a matter of a few weeks more than one billion rand has been paid from the COVID-19 TERS benefit to Employers who in turn make the payment to their Employees in line with the process.

According to the President, there are billions of rands in the fund still to be utilized and therefore, Employers and businesses who will not be able to trade in the initial stages of the uplifting of the lock down, such as restaurants, hotels, bars, spas, theatres, etcetera, must be proactive and apply for relief from the COVID-19 TERS benefit as a matter of priority. Employers are encouraged to apply for the COVID-19 TERS benefit on behalf of their Employees not only to ensure their Employees are able to survive this period, but also to maintain the employment relationship so that when they are cleared to open for business their Employees will return to work and they will not have to go through the process of hiring new Employees and in essence, starting over.

To apply for the COVID-19 TERS benefit, an Employer must first send an email to [email protected] which will trigger an automated response that will inform the Employer of the required steps and documents needed to complete the application process.

What can Employees do to mitigate the effects of the lock down?

Employees need to be proactive during this period. The employment relationship is a two-way street and if Employers are not informed or educated about temporary relief measures then Employees should request that the Employer apply for the relief. There is certainly no harm in engaging the Employer and informing them that these funds are available and that it would stand the Employer in good stead to apply for the COVID-19 TERS benefit on behalf of their Employees. Should the Employer not apply and Employees’ salaries are temporarily reduced or they are placed on short time work or as a last and unfortunate resort are retrenched then the Employer may have to face claims of unfair labour practices and unfair dismissals by those Employees who feel they have merit to refer such claims.

These are unprecedented times, and what the outcome of these potential claims will be cannot be pegged or guaranteed at this stage. However, it is highly likely that the Employer will be questioned by a Commissioner at the Commission for Conciliation, Mediation and Arbitration (CCMA) or Bargaining Councils or a Judge of the Labour Court, as to why the Employer did not apply for the COVID-19 TERS benefit in alignment with the pleas of the President and the Department of Employment and Labour to do so. The answer the Employer submits may very well have some bearing on the rulings which will be made by the Commissioners and Judges in due course.

Conclusion

We have published various articles on the application process for the COVID-19 TERS benefit on our website www.schoemanlaw.co.za/publications and we encourage Employers to educate themselves and apply for the COVID-19 TERS benefit prior to resorting to reducing salaries, placing Employees on short time work or resorting to retrenching Employees and increasing the already staggering unemployment rate in South Africa. Despite the Employer having the right to embark on retrenchments for reasons relating to operational requirements, as mentioned, it may not stand them in good stead to not apply for the COVID-19 TERS benefit if they are later faced with legal action by Employees. Similarly, we encourage Employees to inform and educate their Employers by quite simply sharing this article with them and requesting that they apply for the COVID-19 TERS benefit, which purpose is to assist both Employers and Employees during these times.

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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