As per Schedule 2 of the Unemployment Insurance Act, No 32 of 2003 the benefit due is calculated using the sliding scale as follows:
Daily income for weekly earners =
Weekly rate *52 / 365
Daily income for monthly earners =
Monthly rate * 12 / 365
Benefit = Daily Income * IRR
Where IRR is the Income Replacement Rate corresponding to the contributor’s daily income which is defined as:
The Income Replacement Rate (IRR) determines the percentage of a contributor’s previous income to which the contributor is entitled in the form of benefits. The IRR is a variable, so it is determined in accordance with a sliding scale. A contributor who previously earned a low wage is entitled to receive benefits representing a larger proportion of her or his previous income than a contributor who previously earned a higher wage.
The IRR is at its maximum when income equals zero, and it reaches its minimum where income is equal to the benefit transition income level. The maximum IRR is fixed at 60%. The minimum IRR is currently set at 38%. However, the Minister may vary the minimum IRR in terms of section 12(3)(b).
Using current values, the IRR can be calculated according to the following formula:
IRR = 29.2 + (7173.92 / (232.92 + Yi))
where Yi represents a contributor’s monthly rate of income. (Consistency of units is essential.
To calculate IRR from daily or weekly rates of pay, please refer to the more detailed explanation of the IRR formula in the technical note below.)
For purposes of C-19 TERS Benefits, annual leave days must be regarded as no income days.
Scenario: 1
Employees earning R8,018,79 or below:
In terms of the Directive, the amount of R3,500 per month is the minimum, and depending on the number of days in respect of which the employee was not paid in that month, or had taken leave in that month, the employee shall qualify for the following:
| 30 Days not paid | 21 Days not paid | 16 Days not paid | 12 Days not paid |
| R3500 | R2450 | R1867 | R1400 |
Explanation of calculation:
Daily income = R 8 018.79 x 12 /365 = R 263.63
Formula: 29.2 + (7173.92 / (232.92 + DI)
29.2 + (7173.92 / (232.92 + 263.63)
29.2 + (7173.92/ 496.55)
29.2 + 14.44
43.66
The employee would be paid on an IRR of 43.66% for the number of no pay days:
R263.63 x 43.66% = R115,07 (Daily Benefit Amount)
Example 1:
Employee earning remuneration of R 4 000 per month. This remuneration will also be used as the average remuneration (earned 4 000 for the last 6 months).
Step 1: Determine Daily Income (monthly remuneration X 12/365)
R 4 000 X 12 = 48 000/365
Daily Income: R 131.51
Step 2: Formula: 29.2 + (7173.92 / (232.92 + DI)
29.2 + (7173.92 / (232.92 + 131.51)
29.2 + (7173.92/ 364.43)
29.2 + 19.69
48.89
Step 3: Employee would be paid on an IRR of 48.89% for the number of no pay days.
R 131. 51 x 48.89% = R 64. 29 (Daily Benefit Amount)
Applying the formula, the employee would be entitled to the following:
| 30 Days not paid | 21 Days not paid | 16 Days not paid | 12 Days not paid |
| R1928.70 | R1350.09 | R1028.64 | R771.48 |
However, in terms of the Directive, the amount of R3,500 per month is the minimum, and depending on the number of days in respect of which the employee was not paid in that month, or had taken leave in that month, the employee shall qualify for the following:
| 30 Days not paid | 21 Days not paid | 16 Days not paid | 12 Days not paid |
| R3500 | R2450 | R1867 | R1400 |
Example 2:
Employee earning R6,000 per month. This remuneration will also be used as the average remuneration (earned 6 000 for the last 6 months).
Step 1: Determine Daily Income (monthly remuneration X 12/365)
R 6 000 X 12 = 72 000/365
Daily Income: R197.26
Formula: 29.2 + (7173.92 / (232.92 + DI)
29.2 + (7173.92 / (232.92 + 197.26)
29.2 + (7173.92/430.18)
29.2 + 16.67
45.87
The employee would be paid on an IRR of 45.87% for the number of no pay days: R 197.26 x 45.87% = R90,48 (Daily Benefit Amount)
In respect of 30 days’ unpaid, this will amount to a benefit of R2,714.40. This is less than the
guaranteed amount of R3,500, and the employee will accordingly receive R3,500, or the corresponding amount depending on days not paid.
| 30 Days not paid | 21 Days not paid | 16 Days not paid | 12 Days not paid |
| R3500 | R2450 | R1867 | R1400 |
Scenario 2
Employee earning above R8,018.79but less than R17,712.00 per month (for example R15,000 per month)
Step 1: Determine Daily Income (monthly remuneration X 12/365)
R 15 000 X 12 = 180 000/365
Daily Income: R493.15
Step 2: Formula: 29.2 + (7173.92 / (232.92 + DI)
29.2 + (7173.92 / (232.92 + 493.15)
29.2 + (7173.92/726.07)
29.2 + 9.88
39.08%
Employee would be paid on an IRR of 39% for the number of days not paid:
R493.15 x 39.08% = R192.72 (Daily Benefit Amount)
| 30 Days not paid | 21 Days not paid | 16 Days not paid | 12 Days not paid |
| R5781.60 | R4047.12 | R3083.52 | R2312.64 |
Scenario 3
Employee earning above the threshold of R17,712.00
Employee’s remuneration is R 18 640.76 which is above ceiling and calculations will be discounted as if remuneration earned is R 17 712
Step 1: Determine Daily Income: 17 712 x 12/365 = R 582.31
Step 2: Formula: 29.2 + (7173.92 / (232.92 + DI)
29.2 + (7173.92 / (232.92 + R 582.31)
29.2 + (7173.92/ 815.23)
29.2 + 8.80
38%
Payment to be assessed in terms of sliding scale and in particular 38%
The employee would be paid on an IRR of 38% for the number of days:
R 582.31 x 38% = R 221.28 (Daily Benefit Amount)
| 30 Days not paid | 21 Days not paid | 16 Days not paid | 12 Days not paid |
| R6638.40 | R4646.88 | R3540.48 | R2655.36 |
TOP UPS
Employers are entitled to top up as long as the employee does not receive more than 100% of her/his normal remuneration. Accordingly, if the employer pays the employee’s full remuneration, the employee will receive R0.00 benefit.
Example: From scenario 3:
Employee normally earns R18,640. Employer pays R10,000
Step 1: Determine what employee is entitled to in terms of the sliding scale:
Daily Income: 17 712 x 12/365 = R 582.31
Apply formula to determine daily benefit entitlement: R582.31 x 38% = R 221.28
Step 2: Determine daily income on normal remuneration:
18,640 x 12/365 = R612.82
Step 3: Determine daily income on remuneration actually paid:
10,000 x 12/365 = 328.76
Step 4: Add daily benefit entitlement amount (Step 1) to the daily income amount actually paid (Step 3)
R221.28 + 328.76 = R550.04
Step 5: Determine whether amount at Step 4 is greater or smaller than amount at Step 2 (i.e. daily income on normal remuneration). If smaller, employee qualifies for full benefit; if greater, employee does not qualify.
R550.04 < R612.82
Thus, employee qualifies for benefit.
If expressed in terms of the employee’s monthly salary:
The employee would receive R10,000 (from employer) and R6,638.40 (COVID benefit) = R16,638.30. R16,638.30< R18,640.76 (the employee’s normal remuneration) The employee will accordingly qualify for the COVID benefit of R6,638.40.
B If the employee was paid R16,000. Then the employee would receive R16,000 (from employer) and (18,640.76
[salary]
– R16,000 [top up]) = R2,640.76 as the COVID benefit.
C If the employee was paid R18,640.76, the employee will receive R0.00 as a COVID benefit