COVID-19: TERS Funding: DEL - Has the bottom fallen out?

COVID-19

TERS-FUNDING

DEPARTMENT OF EMPLOYMENT AND LABOUR

HAS THE BOTTOM FALLEN OUT?

What if the Department does not fulfill its mandate timeously?

PRESS RELEASE
by Gerhard Papenfus

The TERS Funding Scheme was touted by Government to be one of the mainstays of its efforts to cushion the impact of the Covid-19 lockdown on the most vulnerable employees.

The Department of Employment and Labour (DEL) has, among others, urged employers to advance payments to their employees and to recover such advanced payments from the TERS Funding Scheme, once payment is received from the UIF.

The system has, however, been inundated with problems right from the outset. A myriad of complaints have been surfacing from employers in respect of the difficulty of the claim process, poor communication, ever changing requirements and claims not being processed.

The Minister of Employment and Labour has now admitted that the Unemployment Insurance Fund (UIF) is overwhelmed by the current demand and strain on the process. According to the Minister, the UIF’s system was not built to deal with the present number of claims and will not “deliver as it was supposed to”.

It is almost incomprehensible that the DEL could not foresee this. The capabilities (or lack thereof) of the UIF system was surely well known prior to the introduction of these measures and, given the current situation, the number of claims could certainly not have come as a surprise. Why did the UIF not take this into account from the outset? Why was this responsibility not given to SARS?

Although we must guard against criticising without taking into consideration the complexity of the task the UIF faces, the urgency and severity of this matter absolutely demand that the UIF fulfills its mandate on time.

It baffles the mind that the DEL expects employers, who have no income, to continue paying employees in advance with only a seemingly forlorn hope that they will be able to timeously recover such payments from the UIF. It will be a very irresponsible employer who will continue with these payments only to find itself in a severe cash flow predicament due to non-payment by the UIF. A survey published yesterday by NEASA revealed that 78% of SMMEs are already battling with cash flow difficulties.

A survey conducted among employers (just hours before the issuing of this statement) who submitted claims to the UIF, has indicated that only 5.5% of these employers have in fact received any payments from the UIF. Furthermore, in the few instances where payment was received, the payments were simply made in bulk, without any schedule indicating how much was awarded to each individual employee.

This presents these employers with another conundrum. In terms of the regulations, where no advance payments were made by the employer, they need to pay funding received from the TERS to employees within 48 hours from receipt. However, without a schedule or a benefit calculator, which, despite many promises has not materialised, there is simply no way the employer can comply with this requirement as it would not know how much should be paid to each employee.

It is therefore, due to the conduct of the UIF, an objective impossibility to comply with the regulations set by the DEL.

The Minister has also indicated that the Department is engaging with other institutions to assist the UIF if needed. At this stage it instills absolutely no confidence in the process, especially for employers who must know for certain if they will receive the UIF monies, before paying their employees.

It is inevitable that employers who, in the short term, intended to assist employees with advance payments, will simply no longer do so in the absence of an absolute unequivocal guarantee from the Minister of Employment and Labour that the UIF will honour its commitments and refund these payments timeously.

Should those employers, in these circumstances, cease making these advance payments, or should the UIF not pay benefits to employees where no advance payments were made, the DEL would have failed the most vulnerable members of our society, those whom they have vowed to protect. This further increases the risk of social instability.

For more information:

NEASA Media Department
Marietha Thirion
marietha@neasa.co.za

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