In these unprecedented times, our offices have had numerous clients contacting us regarding the position and options for both employers and employees due to the lockdown, which was imposed on Thursday 26 March 2020 at midnight.
One of the relationships greatly affected by this lockdown, is the employer-employee relationship. It is of great importance that neither the employer nor the employee can unilaterally change the terms of a contract of employment, therefore, during these unprecedented times, consultation between the employer and employee is absolutely key.
It is therefore important to take notice of any law (labour law) and regulations (as published from time to time) regarding the position of both the employer and employee and any possible recourse available.
Contracting the Covid-19 virus and sick leave
In short, the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) must still be followed. In terms of section 22 of the BCEA "sick leave cycle" is defined as a period of 36 (thirty six) months’ employment with the same employer immediately following an employee’s commencement of employment. An employee is entitled to an amount of paid sick leave equal to the number of days he or she would normally work during a period of 6 (six) weeks. This means that such an employee is entitled to 30 (thirty) days' sick leave per 36 (thirty-six) months of employment cycle. The employee should still produce a medical certificate to support sick leave to avoid misuse of the current situation.
In the event that an employee tests positive for the Covid-19 virus, and have not used up his or her sick leave, they will be entitled to their normal remuneration and benefits. An employer is not required to pay employees for sick leave taken when the sick leave entitlement has been exhausted. It should also be noted that employees who have been placed in quarantine for 14 (fourteen) days shall however qualify for illness benefit which can be claimed from the Unemployment Insurance Fund (“UIF”).
Working from home
Employees do not have a right to work from home as it is in the sole discretion of the employer. Working from home may be considered by employers but should not be implemented by employees without the employer's consent. We encourage employees to rather speak to their employers about their concerns. Should employers consider this option, we recommend that clear guidelines be set for employees, such as logging of time, meetings by means of electronic devices, daily report etc.
Retrenchments due to the impact of the Covid-19 virus:
The majority of business have to “shut its doors” for the duration of the lockdown, which have a substantial effect on the finances of the business and will force employers to consider possibly retrenching employees.
If an employer is opting to dismiss one or more of its employees as a result of operation requirements in should be done in accordance with section 189 of the Labour Relations Act 66 of 1995 (“LRA”). Operational requirements are defined in the LRA as requirements based on the economic, technological, structural or similar needs of the employer. A retrenchment is as a result of no fault on the part of the employee. It can be argued that the lockdown will negatively impact most businesses operations on some level. However, prior to considering retrenchment, an employer should consider alternatives such as short-time implementation and/or temporary lay-off (dismissal).
In the instance where an employer cannot pay his employees for the duration of the lockdown, the employer can either apply for the National Disaster Benefit from the UIF or Temporary Employee/Employer Relief Scheme (“TERS”).
National Disaster Benefit’ from the UIF
This benefit is paid at a fixed rate of R 3,500.00 per employee regardless of the income of the employee for the extent of the lockdown or a 3 (three) month period (whichever may be shorter). This benefit cannot be used in conjunction with any other UIF benefit.
The following documentation must be completed and submitted:
- UI19 and UI2.7 (completed by employer stating the last date of termination and the reason thereof);
- 1 (the application);
- 8 (completed by the bank);
- A copy of employee’s identity document (ID); and
- A letter from the employer confirming company shutdown is due to COVID-19.
The forms can be submitted by e-mailing the application to the nearest UIF processing centre.
Temporary Employee / Employer Relief Scheme (“TERS”)
The Minister of Employment and Labour has published a directive (“Directive”) clarifying certain aspects of the Regulations to the Disaster Management Act 57 of 2002 dealing with employees who are temporarily laid off as a result of COVID-19.
In terms of this Directive, published on 26 March 2020, “temporary lay-off" means a temporary closure of business operations due to Covid-19 pandemic for the period of the National Disaster. For the duration of the lockdown, there are companies that are forced to temporarily close down for this period and temporarily lay off employees.
The Department of Labour has created a special benefit under the Unemployment Insurance Fund (UIF) known as the Temporary Employee/Employer Relief Scheme. Should an employer, as a direct result of the Covid-19 virus, cease its operations for a period of 3 (three) months or lesser, and suffer financial distress, the company shall qualify for a Covid-19 temporary relief benefit. This benefit is de-linked from the UIF’s normal benefits and therefore the normal rule that for every 4 (four) days worked, the employee accumulates a one-day credit and the maximum credit days payable is 365 for every 4 (four) years will not apply.
It is important to note that this benefit will only apply to the salaries of employees during the temporary closure of the business operations. The salary benefits will be capped to a maximum of R17,712.00 per month, per employee. Employees will furthermore be paid in terms of the income replacement rate sliding scale (38%-60%) as provided in the Unemployment Insurance Act. It is important to note that all salaries paid will not be less than the minimum wage provided for in each particular sector.
Employers can apply for such assistance by reporting its closure by emailing email@example.com and there shall be an automatic response outlining the application process. Employers should provide the UIF with a letter of authority from the company and a signed Memorandum of Agreement from the employer or a Bargaining Council with the UIF.
We as a country are facing uncertain times, however united we can work together to limit the after math of the Covid-19 virus. We urge employers and employees to follow the correct procedures and to avoid unfair treatment towards each other. We at Cavanagh & Richards Attorneys are available to provide expert legal advice and to assist both employers and employees with all labour related matters during this time.
Written by Herman Brönner