It is important to note that the Temporary Employee Relief Scheme (TERS) has been extended to the 15th of August but with no further extensions likely we need to lay out the options.
As South Africa slowly emerges from the devastating effects of the lockdown, more and more Companies have insufficient work and are overstaffed. Commencing a process of retrenchments is an option but this is generally an expensive process. The option of short time has to be considered, as many employees will be eligible for the Reduced Working Time (RWT) benefit. The RWT is a benefit operating by the UIF in a similar manner to maternity leave. RWT will reduce the employees individual UIF credits and for that and other reasons is less beneficial than TERS.
Section 12 (1B) of the Unemployment Insurance Act stipulates as follows:
“A contributor employed in any sector who loses his or her income due to reduced working time, despite still being employed, is entitled to benefits if the contributor’s total income falls below the benefit level that the contributor would have received if he or she had become wholly unemployed, subject to that contributor having enough credits”.
The Reduced Working Time benefits may be understood as follows: A person who earns R10 000 per month and loses their job will be entitled to roughly a R4200.00 benefit either through obtaining unemployment benefits or through the TERS benefits. Where a person works half the time, he or she usually works due to short-time, and receives a payment of R5000.00 from his employer, that person will still be able to recover the R4200 from the TERS benefit. Thus, he or she would take home R9200.00. The Reduced Working Time benefit, however, does not permit this top of salary. Instead, it calculates the benefit you in a different way. Take the example above, the person who works half his usual hours, and receives R5000 in payment from the employer. That person would be entitled to R0 from the Reduced Working Time benefit. If that person were to work 25% of their usual hours, and their employer were to pay them R2500.00 they would be entitled to R1700.00 (R4200-R2500.00).
The above demonstrates that for high earning employees the reduced working time benefit will not be particularly useful. Rather it is aimed at those who have heavily reduced hours and an average to below average salary. The better option in all cases remains the TERS fund which permits a top of salaries. Given the extension of the TERS fund to the 15th of August, it can be expected that the RWT benefit will need to be considered.
How to apply
Employees can apply for the Reduced Working Time benefit via uFiling. Login to the UFiling portal and select the “unemployment benefit” option, this benefit is for both unemployed benefits and reduced working time benefits.
An employee must complete the following documents
- UI2.1
- UI2.8 Confirmation of banking details
- Employees ID document
The employer must assist the employee completing the following documents:
- UI-19 (Reason for termination must be code 17-Reduced Working Hours)
- UI2.7
- Letter from the employer confirming there is reduced working time as a result of the Covid-19 pandemic.