The novel Coronavirus has put a lot strain on many employers’ finances. Due to the imposed lockdown companies have found themselves laying off workers, cutting working hours, and cutting salaries.
According to the National Unemployment Insurance Act, you can claim for payment if you’ve lost income due to reduced hours. But can you claim if your salary has been cut even though the working hours have not been reduced?
In this part of the of the Covid-19 content series we find out if you’re eligible for UIF if your salary has been cut.
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Since the president declared Covid-19 a national disaster, government departments have taken measures to reduce the impact of the virus on people. The Department of Labour issued a directive called Covid 19 Temporary Employee/Temporary Relief Scheme (Covid 19 TER). The scheme is meant to help workers who have been laid off because of the virus.
According to the directive, if the company closes for three months or less and is severely impacted by Covid-19, it has the right to apply for the Covid 19 TER benefit. The benefit is not linked to the UIF's normal benefits and therefore whether you have UIF credits or not, you’ll qualify for a payment – as long as the company you’re working for was impacted by the Coronavirus.
The benefits will only pay for the cost of your salary during the temporary closure of the business operations. The salary you’ll receive will be capped to a maximum amount of R17,712, 00 per month, and you’ll be paid in terms of the income replacement rate sliding scale (38 % -60 %) as provided in the UIF Act. If your income falls below the minimum wage of the sector you work in, you’ll receive an income equal to the minimum wage of the sector concerned.
Who must apply for the benefit?
According to the statement issued by the South African Payroll Association (SAPA), if the company has had to reduce employees’ hours, cut salaries, or both, it’s the employer’s responsibility to start the application process so that employees don’t have a reduced salary during these uncertain times.
“If you’re working for a company that isn’t prepared to claim from the TERS, then you need to notify the Department of Labour so that they can follow up on this,” says Arlene Leggat, executive committee member of SAPA.
What do you need to apply?
Your employer must report the closure of the company to Covid19tersa@labour.gov.za and you’ll receive an automatic response outlining the application process.
After reporting, the employer will be required to provide the Unemployment Insurance Fund with the following completed documents:
- Letter of authority from the company
- Signed memorandum of agreement (MOA) from the employer or bargaining council with the UIF
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