Applying for Coronavirus UIF Benefits? Here’s Everything Your SME Needs to Know

Applying for Coronavirus UIF Benefits? Here’s Everything Your SME Needs to Know

Reading Time: 4 minutes

The Unemployment Insurance Fund has set aside R30 billion to help South African workers in distress due to the coronavirus.

If you’re a qualifying SME, your employees will get no less than R3,500 per month.

However, many business owners are struggling to access the relief.

More than 20,000 valid applications have been received, but only 136 have been processed, according to one news report. Business owners have taken to social media and newspaper columns to express their unhappiness with the process.

So, how do you access the UIF benefits for your business?

We spoke with Gerhard Papenfus, the Chief Executive of the National Employers Association of South Africa (NEASA), to gain a deeper understanding of the process.

Accessing the COVID-19 TERS benefits

The COVID-19 TERS (Temporary Employee Relief Scheme) is a relief package for employers, so you can pay staff salaries during the lockdown.

But a lack of clear information has been the biggest challenge SMEs face when trying to access the scheme, said Papenfus.

One part of the process includes completing a UIF Excel template. The employer must fill out their business details and each employee’s information. Before the document can be submitted, it must be converted to a CSV file. UIF Claims Commissioner Teboho Maruping told Moneyweb the bulk of applications for the relief were incomplete. Now, 23 000 employers will have to resubmit their applications.

To cover the information gap, NEASA, which represents 10,000 employers across South Africa, started publishing multiple updates to its website each day, releasing new information as it becomes available.

Papenpus explained that all employees who were “in employment on 27 March 2020 and who have suffered financial prejudice as a result of the lockdown” were eligible for the UIF benefits. This includes employees who are not South African citizens, provided they have a valid work permit.

The exact amount of the payments depended on their salaries.

“At this stage the benefit will be calculated on a sliding scale between 38% (for high earners) and 60% (for lower earners), calculated on the maximum salary cap of R17 712.00 per employee, per month.”

No worker will earn less than R3,500.

The process was different for SMEs with fewer than ten employees. For one, they do not need to sign a MOA.

“These funds will be paid out directly to the employees and not to the employer.”

However, these small businesses might struggle to recover advance payments, added Papenfus.

“UIF does not allow payment of the benefits to the employer where he employs 10 or less employees. Therefore, the employer cannot set-off these benefits against amounts advanced, which will make the employees hesitant to make advance payments in the first place.”

The UIF was set to make payments after 16 April, the date the lockdown was originally due to end.

“There will be payouts in tranches. Employers will have to apply for the first period of the initial lockdown and then again for the extended period.”

To speed up the process, the Department of Labour and the UIF launched an online platform, said Papenfus.

Looking forward, Papenfus encouraged business owners to think of life after the lockdown.

“If the employer envisages that reduction in staff or changes in conditions of employment will be required post lockdown, we advise to already start with this process during the lockdown period, as a section 189 process can be rather lengthy in nature.”

Frequently asked questions about the COVID-19 TERS benefit

NEASA has put together a COVID-19 TERS FAQ, based on the most common questions it has received from South African employers.

Here’s the summary of the key points.

Who can apply for the UIF’s COVID-19 TERS benefits?

SMEs need to be registered with the UIF to qualify. Your business doesn’t have to be in a complete shutdown for you to apply. Partial closures or any reductions in staff salaries due to COVID-19 are covered by the fund.

Which employees are eligible?

Any employee who was in employment on 27 March 2020 and who has suffered financial prejudice as a result of the lockdown. New employees who were set to start during the lockdown are also eligible.

How does COVID-19 TERS work?

Employees are paid on a sliding scale between 38% to 60% of their salaries. The lower the salary the higher the COVID-19 benefit. Companies apply on behalf of employees. No applications will be accepted once the lockdown is lifted.

How do I apply to COVID-19 TERS?

  1. Companies can email COVID19ters@labour.gov.za.
  2. You will receive an automated email response detailing the next steps in the process.
  3. Next, submit completed applications and supporting documents to Covid19UIF@labour.gov.za

Or, apply online on the UIF COVID-19 TERS Registration portal.

For more information, contact 012 337 1997.

Here is some of the information and paperwork you will need to to apply:

  • Letter of Authority, on an official company letterhead granting permission to an individual specified to lodge a claim on behalf of the company
  • MOA (completion of the agreement between UIF, Bargaining Council and Employer) · Prescribed template that will require critical information from the employer
  • Evidence/payroll as proof of last three months employee(s) salary(ies)
  • Confirmation of bank account details in the form of certified latest bank statement.

Will the scheme affect normal UIF benefits?

No, COVID-19 TERS benefits are not linked to normal benefits.

Do you need to send an invoice to the UIF?

No, this requirement has been removed.

How should employers register with a bargaining council claim? 

If you fall under a Bargaining Council, contact this organisation and find out whether or not they have finalised an agreement with the UIF. You may follow the relevant process with your Bargaining Council if they have reached an agreement with the UIF.

If no agreement has been concluded, or if one is still pending, you can claim directly from UIF on behalf of your employees.

What is included in remuneration for purposes of TERS? 

The amount an employee would normally earn and pay UIF on.

Can individuals claim TERS benefits? 

No, if an employer did not claim, the employee should ask them to claim. But if an employer still does not claim, the employees can claim normal UIF benefits for short-time or unemployment.

Where can I find more information on COVID-19 TERS?

For ongoing updates:

Coronavirus: Here’s how South African SMEs are hit

Coronavirus: Here’s how South African SMEs are hit

Reading Time: 3 minutes

South African business owners are bracing for the potentially devastating impact of the coronavirus outbreak.

Carel Hauptfleisch, who runs a successful online retail store out of Cape Town, imports goods from China. He’s been unable to get new products from his usual suppliers since the coronavirus hit.

“Stock has been paid for, but it’s not coming in,” said Hauptfleisch.

A similar story is unfolding across South Africa.

Cash flow is under pressure

Trade links with China run deep: the viral disease is hurting the South African economy, from large firms to SMEs. Since the onset of the coronavirus in December, most Chinese factories have slowed production, or shut down completely.

Prolonged factory closures are a serious concern for SMEs who import goods from China, said Kayla Field, of the Lulalend credit team.

Field has been speaking with South African business owners over the past few weeks.

Local SMEs are struggling, said Field.

“Businesses have placed bulk orders six months in advance. They’ve already paid for these orders. But because of the virus, they can’t access that stock.”

Declining stock means declining sales, said Field.

“Cash flow becomes an issue. Businesses don’t always have capital to purchase new stock from alternative suppliers.”

Most SMEs are on edge.

“All businesses are left with is the stock they have. They’re quickly running out of the materials they need to do business.”

Hauptfleisch tells us he’s tapped into other networks.

“We are sourcing from alternative suppliers. They have limited supply.”

He remains in regular contact with his manufacturers in China.

“Some of my suppliers are getting back to work, but their suppliers are still shut down.”

Even when operations finally return to normal levels, the effects of the outbreak will stay with many businesses for a few months, adds Hauptfleisch.

Epidemic threatens jobs, growth

Many factories did not resume production after the Lunar New Year holiday, reports the Financial Times.

“With many workers…quarantined at home and supply lines affected, many factories are struggling to reopen or regain full capacity,” states the World Economic Forum.

In South Africa, almost no sector remains untouched, explained Field:

  • Mobile sales: cellphones and cellphone accessories.
  • Automotive industry: China is the world’s largest car market, according to Statistia. Wuhan, where the first case of the virus was detected, is known as a “motor city”, because it’s home to several large car manufacturing plants.
  • Retail: like companies across the globe, many SA retailers are reliant on China for stock.
  • Hospitality: around 100 000 Chinese tourists visit South Africa each year. A PwC report estimates the coronavirus will cause losses of R200 million in the tourism industry.
  • Construction: businesses import steel and concrete from China. Construction projects are stalling because of shipment delays, reports IOL.

SMEs in these sectors have been hit hard.

“Many businesses owners I speak to are worried,” said Field.

“There’s no timeline around this. Businesses are taking a knock.”

The impact of coronavirus on business finance

In some cases, business owners have been struggling to repay their business loans.

“Here’s where lenders need to be sensitive to what people are going through,” said Field.

Though, SMEs should take a proactive approach when it comes to managing their business finance obligations.

“Once you realise you will struggle to make your repayments, contact your lender immediately to make an arrangement,”, said Field.

By taking this route, business owners can avoid defaults or judgements against their name, added Field.