Government offers further relief for businesses in South Africa – but warns it won’t be a ‘free for all’

29 July 2021

Since the onset of the Covid-19 pandemic in March 2020, the Unemployment Insurance Fund (UIF) has rendered relief against income loss to approximately 5.4 million workers with over R61.2 billion disbursed, according to South African labour minister Thulas Nxesi.

A further extension until 15 March 2021 assisted up to 74,000 workers where over R703 million was paid, he said in a media briefing on Wednesday (28 July).

Under the recent adjusted level 4 lockdown, the fund has extended this relief further with an estimated budget of R5.3 billion for which applications have been opened, the minister said.

The Department of Employment and Labour said it is committed to assisting with the various government interventions for businesses and workers affected by the recent unrests in the country, as announced by president Cyril Ramaphosa on Sunday evening.

“According to our own assessment about 75,000 employees have been affected by the latest unrests in (KwaZulu Natal and Gauteng) and this may mean temporary work stoppage or an outright retrenchment,” Nxesi said.

The Unemployment Insurance Fund has a basket of benefits that can serve as an intervention mechanism to the affected workers and companies as a result of the unrest.

“It should be mentioned up front that there is currently no benefit quite suitable for the current situation, and Covid-19 TERS cannot be applicable as it was established as an intervention for a disaster situation.

“Therefore, the current benefits under the Unemployment Insurance Act are the only interventions available to cover the affected workers; however, in order to ensure that some of the basic tenets of the Act are not violated, the department is going to draft a special directive dealing with the affected workers in the two provinces.”

The spirit of the directive, Nxesi said, would be to ensure that workers who would normally not qualify for these benefits due to non-compliance with the Act are able to access the benefits.

“However, I should emphasise that it will not be a free for all, the criteria to determine who qualifies is going to be very stringent and payments will not be generous. While it is our desire to pay all affected workers; it should be borne in mind that finance is a limited resource.”

Nxesi said he has instructed officials to gather data of businesses that have been affected, and also perform an analysis of those who will afford to carry their employee’s salaries during this period.

“On the basis of this analysis we shall be able to indicate the benefit calculation that we will follow; whether it is a flat rate across the board, an Income Replacement Rate, or a combination of the two – depending on the nature of the application.”

The minister said that details pertaining to who qualifies, payment structure, the application process and the duration of the payment period will be outlined in the direction.

“We are mindful of the urgency of the matter, therefore we commit to expediting the process of drafting and approval of the directive. The UIF already has a system in place that will help fast track the payments.”

The department said that businesses or companies in distress following the unrests can also apply for the normal Temporary Employer/Employee Relief Scheme (TERS). TERS is designed to assist companies who are temporarily in distress, but with a plan in place to turn the business around within a period of 6 to 12 months, said Nxesi.

Applications for TERS are made via the Commission for Conciliation, Mediation and Arbitration (CCMA), and an independent adjudication committee evaluates all proposals and makes a recommendation to the Director-General of the Department of Employment and Labour.

Upon approval by the DG, the UIF then process the claim and monitor the implementation of the programme.

“It is a reality that some of the businesses will not fully recover from the damage of the unrest, which will result in retrenchments. The UIF will ensure that it prioritises those retrenched employees in some of the Labour Activation Programmes that are designed to place retrenched workers in employment opportunities,” Nxesi said.

Source: Businesstech at