Employers – What are your options during lockdown?

As the novel coronavirus continues to spread, employers across the globe are attempting to manage the workplace effect of the Covid-19 pandemic. Governments are implementing a range of measures to contain the spread of the virus. This invariably impacts on business continuity and the employment relationship and employers are faced with making difficult decisions to ensure the survival of their businesses.

In South Africa, the nation-wide lockdown has seen many businesses having to shut down operations. The lockdown drastically impacts all businesses across every sector. Even businesses allowed to operate (essential services) have had to alter operations and staffing requirements in line with increasing regulations issued as government comes to grips with the pandemic. The aftermath of the lockdown will have lasting consequences.

Employers and government alike are seeking to find ways to manage the disruption caused to business operations and in effect, the economy. Employers unable to continue with business as usual may need to reduce their workforces and implement pay reductions or reduced working time. The employment law landscape has undergone a number of changes, and remains fluid as the crisis continues. This articles outlines these changes thus far.

Forced annual leave

Employers may require their employees to take their accrued annual leave during a temporary shutdown. Employees cannot refuse this request, as the employer may unilaterally require employees to take their annual leave (section 20(10) of the Basic Conditions of Employment Act).  However, the Chief Director of Labour Relations has encouraged employers “not to request employees to utilise their annual leave credits for the lockdown, but to rather utilise the financial assistance that the department has placed at their disposal through the COVID-19 Temporary Employer/Employee Relief Scheme (TERS)  in cases where companies cannot afford to pay employees.”

Unpaid Leave

In light of the Covid-19 pandemic and the government lockdown that has been implemented in South Africa, employers may implement the principle of “no work, no pay”. Where employees are able to work from home, they ought to be remunerated. Employer’s may apply the principle of “no work no pay” during the forced lockdown period. In such a circumstance, the employer is not obliged to continue remunerating its employees due to such forced lockdown by government.  Employers may require its employees to take their accrued annual leave. Where annual leave is exhausted, employers should attempt to agree with employees to alternative arrangements. For example, employees may agree to reduced working time, a salary decrease or a period of unpaid leave. Should such agreement not be forthcoming, the principle of “no work no pay” can be applied.

Short Time / Reduced Hours

Should an employer have to implement short time or reduced working time (in agreement with the employee) as a result of COVID-19, the employee may be able to claim relief from the UIF. This benefit is only available where an employee and employer have contributed to the Fund and is subject to the employee having accumulated enough credits to be paid during this time. Credits are accumulated at a rate of 1 day for every 4 days worked by the employee up to a maximum of 365 days in a 4-year cycle. The employee will be entitled to be paid the difference between what the employee is being paid and the normal UIF benefits payable, should an employee lose employment (subject to a capped threshold of ZAR178k/annum).

Retrenchments

Employers are entitled to commence with a redundancy process due to operational requirements. The South African government has not imposed a moratorium on retrenchments. However, government has encouraged employers not to retrench employees, but rather to have recourse to the Temporary Employer/Employee Relief Scheme.

Temporary Employer / Employee Relief Scheme (TERS)

The Minister of Employment and Labour in South Africa recently amended several aspects of the Temporary Employee Relief Scheme (TERS). This scheme was one of the relief mechanisms put in place to aid employers who have to shut down or had to reduce hours of work at their businesses due to COVID-19, as it helps employees to recoup some of the employment income they will lose out on as a result of these changes.

According to the amendments, if an employer has a full or partial closure  as a direct result of the pandemic, the company may qualify for the TERS. For an employer to qualify for the temporary relief, it must satisfy a number of requirements, including that it must be registered with the Unemployment Insurance Fund (UIF), that it must comply with the application for the financial relief scheme; and that its closure must be directly linked to the COVID-19 pandemic. The UIF reported that it has ZAR 30 billion available to make payments to employees.

In terms of this scheme, employees are entitled to a salary benefit, which will be calculated on a capped salary of ZAR 17 712/month. This means that if an employee earns more than ZA R17 712, they will only receive 38% to 60% of this amount. Further, if an employee earns less than the capped salary, the employee will receive 38% to 60% of their normal salary. When an employee is eligible to receive less than the minimum wage of R 3 500, based on the calculation, the employee will receive at least the minimum wage from the UIF. The normal rule – that for every 4 days worked, the employee accumulates one day of credit and the maximum credit days payable of 365 days –  will not apply in this instance. The UIF has also set up a dedicated hotline for any enquiries about the Covid-19 benefits. The number is 012 337 1997.

The scheme allows employers to partially pay their employees. Employees will still be entitled to receive benefits via the TERS, however they may not receive more than 100% of their salary. This feature is not  available in the normal scheme.

All employers must apply for the benefits on behalf of their employees and bargaining councils will also be able to apply on behalf of those employees that it represents. Benefits must be paid over to employees within 48 hours of receiving the funds from the UIF.

Employers need to let the Department of Employment and Labour know that they have closed their operations in the lockdown period by emailing covid19ters@labour.gov.za, and they will then be guided on how to apply for the benefit.

Occupationally acquired COVID-19

Employees who occupationally contracts COVID-19 are covered by the Compensation for Occupational Illnesses and Diseases Act (COIDA). Where the Compensation Fund has accepted liability, the Total Temporary Disablement benefit will apply from date of the diagnosis, and continue for a maximum of 30 days. In addition, the employee will also be entitled to 30 days of medical aid should they occupationally-contract COVID-19.

Working from home

Staff who can work from home should be instructed to do so. Working from home entitles employees to remuneration for the period. Employers may consider reaching agreement with staff who work from home on reduced hours for reduced pay.

Johan Botes is a Partner and Head of Employment & Compensation at Baker McKenzie Johannesburg.

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