Covid 19, The Issue of Forced and unpaid Leave and the Submission of Claims to UIF
On 26th March 2020, South Africa was placed under lockdown in an attempt to stem the spread of the COVID-19 virus. This has had the direct result of precluding certain classes of company from trading and forcing employees who are able to execute their work functions remotely, to do so from their residences.
Employers throughout South Africa are unable to continue with business as usual. They are being faced with making difficult business decisions to ensure the liquidity and indeed the survival of their businesses. This sees them having to implement unusual measures to facilitate the combating of the aftermath of the lockdown and manage the long term impact thereof.
This article outlines one such measure i.e. the legality of placing employees on forced unpaid leave and the implications thereof, as well as, some alternatives employers may consider during the National Lockdown.
South African Labour Laws are governed by two key pieces of legislation, namely:
1) The Basic Conditions of Employment Act 75 of 1997 (as amended) (“The BCEA”);
2) The Labour Relations Act 66 of 1995 (as amended) (“The LRA”).
It is important to note that the provision of the BCEA and the LRA have not been suspended or overridden by any of the regulations or statements made by President Ramaphosa or the various ministries under the national state of disaster declaration. Therefore, an employees’ entitlement to leave is dealt with in terms of Section 20 of the BCEA, the relevant provisions being the following:
- Employees are entitled to 21 consecutive days’ annual leave on full remuneration in respect of each annual leave cycle (Section 20(2)(a)). This is, in essence, the same as 15 working days, as “consecutive” includes weekends;
- An employer and an employee can however agree to either giving one day of annual leave on full remuneration for every 17 days on which the employee worked, or one hour of annual leave on full remuneration for every 17 hours on which the employee worked (Section 20(2)(b) and (c));
- An employer must grant an employee an additional day of paid leave if a public holiday falls on a day during an employee’s annual leave on which the employee would ordinarily have worked (Section 20(8));
During the period of the lockdown, Employers are entitled to force their employees to utilize their annual leave, which in accordance with Section 20(10) of the BCEA, makes provision for the employee and the employer to agree on when annual leave can be taken, and if there is no agreement, then annual leave is taken at the time to suit the employer.
Once the employees’ accrued leave has been exhausted, the employer may apply the principle of “no work, no pay”, during which the employer is not obliged to continue remunerating its employees due to the National Lockdown being effective. In reality employees are only entitled to be paid in exchange for hours worked. If the hours are not worked, there would be no legal claim for a wage or a salary.
In the circumstance where an employee is placed on forced unpaid leave, the employee would be entitled to claim relief from the Unemployment Insurance Fund (“The UIF”) i.e. where it is not economically possible for employers to remunerate their employees during the lockdown, either fully or at all, a special benefit has been set up under the auspices of and administered by the UIF. This special benefit scheme is called the COVID-19 Temporary Employer/Employee relief scheme (“TERS”). Under this scheme, employees whose companies have partially closed or who have been put on unpaid leave or who have been temporarily laid off, will be paid out. However, the Employer (company) must apply to the UIF to access the grant on behalf of their employees.
Amounts paid will be a percentage of an employee’s salary, according to a legislated sliding scale from 38% (for the highest earners) to 60% (for the lowest earners). The sliding scale stops at R17,712.00: All workers earning more than this will only get the 38% maximum benefit, which is R6,730.00 a month. In terms of the TERS scheme, no employee shall receive a total remuneration of less than R3500.00. It is important to note that this scheme only pays for the salary portion of one’s total cost to company.
The benefit is furthermore de-linked from the UIF’s normal benefits and therefore the normal rule that for every four days worked the employee accumulates one day’s credit, and the maximum credit days payable are 365 for every four years, will not apply.
The relief fund will cover a period of up to 3 months, during the lockdown, and also afterwards, should companies continue to struggle with cash flow.
The measures enacted are there to assist and prevent retrenchments. Employers must seek alternatives to retrenchment. This may include placing employees on short time or temporary layoffs without remuneration.
To conclude, employees who are unable to retain the services of their employees during the national lockdown, are entitled to place their employees on unpaid leave and to then apply for the relief under the TERS on behalf of the employees to alleviate their loss of income.
Details for the submission of claims:
- For the coronavirus benefit, the employer has to apply. Businesses need to mail covid19ters@labour.gov.za to register their companies for the pay-out. The UIF hotline for the coronavirus benefit is 012 337 1997.
- If you are unemployed or have had your hours reduced, you can claim directly from the UIF. The UIF offices are closed, but you can register online at https://www.ufiling.co.za From the home page, click on the 'Activate my u Filing account' button and follow the on-screen instructions. You will receive a case number to track your progress. Alternatively, you can email Online.BCP@labour.gov.za for guidance.
