COVID-19 TERS Relief Scheme and other employee benefits

One of the notable highlights of the State of the Nation address delivered by the President on Thursday evening, 11 February 2021, was the announcement of the extension of the COVID-19 TERS relief scheme from 16 October 2020 to 15 March 2021. This comes after applications for the last payment period (16 September 2020 to 15 October 2020) closed on 31 December 2020, with prior signals from the unemployment insurance fund (fund) being that there was to be no further COVID-19 TERS relief scheme.   

15 Feb 2021 3 min read Employment Law Alert Article

At a glance

  • The State of the Nation address announced an extension of the COVID-19 TERS relief scheme from 16 October 2020 to 15 March 2021, although the specific beneficiaries are yet to be clarified.
  • Sectors operating at reduced capacity, such as tourism, hospitality, and liquor, are expected to be eligible for the extended scheme.
  • Employers should also be aware of other financial assistance options, such as short-term / reduced work time benefits and illness benefits, offered by the Department of Employment and Labour to help affected employees during the ongoing financial impact of the pandemic. The normal TERS scheme is also available to distressed businesses for up to 12 months to prevent retrenchments.

Although the extension is a welcome development, who can benefit from the extended period has yet to be clarified. It is anticipated that the extension will apply only to employees in those sectors of the economy that are currently not operating to full capacity, such as tourism, hospitality, and liquor.

Given the limitation on the beneficiaries of the extended scheme, employers also need to keep abreast of the other benefits which exist to assist qualifying employees as the crippling financial impact of the coronavirus continues to ravage business. The Department of Employment and Labour (Department) continues to offer a measure of financial assistance to employees who contribute to the fund, outside of the COVID-19 TERS relief scheme.

Employers who are forced to reduce the working time of their employees as a result of the pandemic and in turn, reduce their employees’ salaries, can apply to the fund for short term / reduced work time benefits. The fund has streamlined the application process to assist employees, enabling employers to apply for the benefit by means of bulk applications on behalf of their affected employees. It is important that employers are alive to this benefit where there is a continued down scaling of business activity.

The benefits from the fund are calculated in terms of a sliding scale from an income replacement rate of 38% (for higher income earners) up to 60% (for lower income earners). The payments are made directly into the affected employees’ bank accounts.

In addition to the short term / reduced work time benefits, employees who have no sick leave due to them and who are forced to self-quarantine / isolate for 10 days in order to curb the spread of the virus, can apply to the fund for illness benefits. This application process has also been simplified. Employers are required to assist employees by completing a declaration confirming that they have agreed with the employee that the employee must self-quarantine / isolate and not report for duty, and that the employee has used all of their sick leave entitlement.

The Department has also reminded employers of the normal TERS scheme (different from the COVID-19 TERS scheme) which remains available to employers whose businesses are in distress. This scheme which was in place before the pandemic afforded employers relief from the requirement to pay their employees (other than contributions to social security e.g. pension fund, death benefits and medical aid) and time to develop and implement turn around strategies. The employees undergo training at the cost of SETA and receive a training allowance paid by the fund. The objective of the scheme is to provide temporary relief for no more than 12 months and in so doing, avoid retrenchments. Employers and employees can agree to apply to the CCMA for approval from the Department, to benefit from this scheme. The scheme pre-lockdown in our experience has had successes and should be considered by employers involved in a restructuring exercise.

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