Home Community As expected, TERS funding for small employers hits a speed bump

As expected, TERS funding for small employers hits a speed bump

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Small companies employing 10 or fewer workers are at risk of being pushed to the back of the UIF (Unemployment Insurance Fund) queue during lockdown.

That’s according to the National Employers Association of SA (Neasa) in a recent communique to its members, which outlines the process for TERS (or Temporary Employer/Employee Relief Scheme) announced in March by the government.

The Department of Employment and Labour (DEL) finalised the regulations and documentation relating to TERS-funding claims last week.

The TERS fund is aimed at assisting employees by allowing employers to claim benefits for employees who are not being paid, or being partially paid, during the lockdown.

The application and payment process, however, differentiates between employers with 10 or less employees and those who employ more than 10 employees, says Neasa.

“In terms of the process, employers employing more than 10 employees are required to sign a memorandum of agreement in terms of which the funding will be paid directly to the employer, who, in turn, will pay it over to the employees or, if the employer had advanced payments to employees, recoup such payments from the fund.

“The aim of allowing a set-off in respect of payments already made, is to expedite payment to employees as UIF has indicated that it will only start making payments after 16 April.

“However, the process in terms of employers employing 10 or less employees is somewhat different. These employers are not required to sign the MOA, as per the last communication received from DEL, as they are not allowed to receive or pay over the funds to employees. The benefits will be paid to the employees by the UIF directly.

“It is assumed that the reason behind this is to lighten the administrative burden on small employers in that payment and auditing trails will not be required.

“However, the possible unintended consequence of this is that these employees will have to wait for payment from UIF, sometime after 16 April, as the employer is not in a position to advance payment to its employees and recover such payment from the funding received from UIF. This is highly prejudicial to these employees.”

The only possible way for the employers to achieve this would be to loan the payments to his employees, insist that they sign acknowledgments of debt, and try and recover the amounts in terms thereof later on. This may prove to be difficult in itself as employees are not currently at work.

This situation will not only lead to a possible breakdown of the employment relationship, but will undoubtedly lead to an even heavier administrative burden for the employer than simply receiving and paying over, or setting off, the funding.                     

Although there is no obligation on the employer to advance payment to employees, employers should, at the very least, be given the option to assist their employees in this manner, says Neasa.