Do employers have to pay workers during lockdown? What South Africa’s law says and how to fix it

10 April 2020

The current Covid-19 crisis has caused a number of employees to stop rendering services as the lockdown means that they cannot come into work or work from home.

This raises questions as to whether  those affected employers are obliged to pay those employees who are no longer rendering services to them.

According to Sandile July, director and labour law specialist at Werksmans Attorneys, the simple answer is that the employment relationship becomes suspended.

“Simply put, there is an intervening impossibility of performance which leaves both the employer and employee unable to meet their obligations.

“As a result, the suspension of an employment relationship has dire financial consequences for both the employer and the employee who will not be receiving income as a result of the lockdown.”

However, July noted that it was expected that those employers who can afford to continue paying employees who are not rendering services should allow those employees to take annual leave which they are statutorily entitled to.

On the other hand, those employers who cannot afford the aforementioned could approach financial institutions for financial assistance on favourable terms, he said.

He added that should the lockdown period be extended – as the president announced on Friday evening – by and additional two weeks – and cause for the employees to exhaust their leave days, those employees should be allowed to further invoke their other leave days (eg compassionate leave, sick leave, annual leave).

“If the employees have exhausted all of their leave, the employer may have to resort to allowing the employees to take negative leave. This means the employer would be advancing the employees with leave days that are not due to them yet,” he said.

“Apart from approaching financial institutions, it is my view that if there ever was a critical time for employers to approach their own pension funds for financial assistance this is the time,” he said.

“It should, however, be those employers who are capable of reliably paying back the borrowed money who should be allowed to engage their pension fund.”

Need to review the laws 

July said that South Africa’s laws were not designed for the current situation.

“The establishment of the Temporary Employee / Employer Relief Scheme (TERS) is in no doubt capable of having immense potential with regards to reducing the adverse consequences of Covid-19. But I am not convinced that it can address the crisis completely,” he said.

He noted that the Basic Conditions of Employment (BCEA) stipulates the minimum conditions of employment and provides that the annual leave that an employee is entitled to take is 15 working days per annum (21 ordinary days).

The Act further provides that an employer is obliged to pay the employee for those leave days, he said.

“Therefore it is high time that legislation be either amended or enacted to compel employers to deduct two leave days, from the 15 that is due to an employee, so as to put them into what is termed a leave bank. This would be a scheme whereby you have both contributors (those who qualify), and donors.”

July said that the donors, in part, would consist of executives who do not qualify to benefit under scheme but rather make a donation towards those employees who would be most at risk of socio-economic devastation following a disaster.

Furthermore, those employees who qualify and are contributors to the scheme would also have the option of donating to fellow co-workers, he said.

“It is important to note that this does not mean the employee forfeits the two leave days,” he said.

“The employee, to the extent that the leave bank reserve remains unused, would be entitled to a payout of the monetary equivalent of the banked days in the event of them leaving the employer.

“Those who have donated their own leave days would not be entitled to the aforementioned payout. In other words, donated leave days cannot be claimed back.”

As an alternative to the leave bank, an employer should be required by statute to deduct money from the employee in the same way that is done for medical aid or the Unemployment Insurance Fund (UIF), July said.

The current Covid-19 crisis has caused a number of employees to stop rendering services as the lockdown means that they cannot come into work or work from home.

This raises questions as to whether  those affected employers are obliged to pay those employees who are no longer rendering services to them.

According to Sandile July, director and labour law specialist at Werksmans Attorneys, the simple answer is that the employment relationship becomes suspended.

“Simply put, there is an intervening impossibility of performance which leaves both the employer and employee unable to meet their obligations.

“As a result, the suspension of an employment relationship has dire financial consequences for both the employer and the employee who will not be receiving income as a result of the lockdown.”

However, July noted that it was expected that those employers who can afford to continue paying employees who are not rendering services should allow those employees to take annual leave which they are statutorily entitled to.

On the other hand, those employers who cannot afford the aforementioned could approach financial institutions for financial assistance on favourable terms, he said.

He added that should the lockdown period be extended – as the president announced on Friday evening – by and additional two weeks – and cause for the employees to exhaust their leave days, those employees should be allowed to further invoke their other leave days (eg compassionate leave, sick leave, annual leave).

“If the employees have exhausted all of their leave, the employer may have to resort to allowing the employees to take negative leave. This means the employer would be advancing the employees with leave days that are not due to them yet,” he said.

“Apart from approaching financial institutions, it is my view that if there ever was a critical time for employers to approach their own pension funds for financial assistance this is the time,” he said.

“It should, however, be those employers who are capable of reliably paying back the borrowed money who should be allowed to engage their pension fund.”

Need to review the laws 

July said that South Africa’s laws were not designed for the current situation.

“The establishment of the Temporary Employee / Employer Relief Scheme (TERS) is in no doubt capable of having immense potential with regards to reducing the adverse consequences of Covid-19. But I am not convinced that it can address the crisis completely,” he said.

He noted that the Basic Conditions of Employment (BCEA) stipulates the minimum conditions of employment and provides that the annual leave that an employee is entitled to take is 15 working days per annum (21 ordinary days).

The Act further provides that an employer is obliged to pay the employee for those leave days, he said.

“Therefore it is high time that legislation be either amended or enacted to compel employers to deduct two leave days, from the 15 that is due to an employee, so as to put them into what is termed a leave bank. This would be a scheme whereby you have both contributors (those who qualify), and donors.”

July said that the donors, in part, would consist of executives who do not qualify to benefit under scheme but rather make a donation towards those employees who would be most at risk of socio-economic devastation following a disaster.

Furthermore, those employees who qualify and are contributors to the scheme would also have the option of donating to fellow co-workers, he said.

“It is important to note that this does not mean the employee forfeits the two leave days,” he said.

“The employee, to the extent that the leave bank reserve remains unused, would be entitled to a payout of the monetary equivalent of the banked days in the event of them leaving the employer.

“Those who have donated their own leave days would not be entitled to the aforementioned payout. In other words, donated leave days cannot be claimed back.”

As an alternative to the leave bank, an employer should be required by statute to deduct money from the employee in the same way that is done for medical aid or the Unemployment Insurance Fund (UIF), July said.

“That money should then go towards a dedicated disaster management fund that can act as a reserve to offset the financial implications of any disaster that may arise.”

“That money should then go towards a dedicated disaster management fund that can act as a reserve to offset the financial implications of any disaster that may arise.”

Source: Businesstech at https://businesstech.co.za/news/business/388055/do-employers-have-to-pay-workers-during-lockdown-what-south-africas-law-says-and-how-to-fix-it/