Employers and Covid-19 in South Africa

As we enter the National 21-Day lockdown, business owners are understandably confused and concerned about its economic consequences. Will their businesses go belly up and what happens to employees, if they can’t afford to keep them on or pay them?

Although a business owner would never want to dismiss, retrench or short time its employees, what happens if there is no business – or one that is just surviving – at the end of the lockdown.

What follows is a summary of options open to employers. This is not meant to be legal advice and employers are encouraged to seek legal help during this evolving time.

Employment Contract:

An employer can change terms and conditions of employment by consultation and negotiation. A contract can be varied relating to salary reduction, bonus waiver or reduction, compulsory use of annual leave during the shutdown period and so forth. The point to remember is that there must be consultation with employees and not a unilateral implementation of a change to terms and condition imposed by the employer. In the event the employer and employee do not reach consensus on the variation of contract, the employer may initiate retrenchment procedures if needed.

During the lockdown, and where practical, the consultative processes can be conducted by e-meetings, emails or over the phone. It is important that agreement reached must be reduced to writing (even confirmation via WhatsApp would suffice if the normal conditions of a binding variation of a contract are met).

Retrenchment:

S189 of the Labour Relations Act 66 of 1995 provides inter alia that an employer can dismiss one or more employees based on operational requirements. Employers could safely argue that the impact of COVID-19 on their business negatively impacted its operations on some level. Bear in mind that a S189 process has guidelines that must be adhered to and attracts statutory payments like severance pay, notice pay, outstanding leave pay-out and so forth. To minimise job loss, alternatives to retrenchment may be offered during consultation. Alternatives include but are not limited to, short-time implementation and/ or temporary layoffs. Furthermore, and in accordance with Section 41 (4) of the Basic Conditions of Employment Act 75 of 1997 (BCEA): “An employee who unreasonably refuses to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay”.

Annual leave

Can an employer “force” an employee to take annual leave during the lockdown?

Annual leave is regulated under Section 20 of the BCEA. Section 20(10) provides inter alia that annual leave must be taken in accordance with a written employment contract between an employer and employee. If there is no agreement, annual leave must be taken at a time determined by the employer in accordance with Section 20.

It is therefore our view that employers could during this unprecedented time, engage with employees, where written employment contracts are in place, to vary terms and conditions of employment to have employees take their annual leave during the lockdown period. If there are no contracts in place, an employer can determine when annual leave must be taken and call on employees to take their annual leave during the lockdown period.

This enforced leave will not apply for periods of self-isolation or quarantine and only applies to the statutory portion of annual leave (i.e. 15 business days).

Please bear in mind, should the employee fall ill during the annual leave period, sick leave is applicable.

Relief Schemes:

President Ramaphosa mentioned certain relief schemes which an employer would be able to access.

The Department of Labour has taken measures to accommodate alternatives to retrenching staff over this period by allowing employees to claim from the UIF.

Contact Labour’s , Mr Jaco Lessing discusses the following measures:

• National Disaster Benefit
• Reduced working time and/or forced shutdown
• Death Benefit

National Disaster Benefit

If the company needs to close as a direct result of the Corona virus and the employer cannot pay his employees for this period, the employer can apply for the “National Disaster Benefit” from the UIF. This benefit is paid at a flat rate of R3500 per employee irrespective of income for the duration of the shutdown or 3 months (whichever may be shorter). This benefit cannot be used in conjunction with any other UIF benefit.

Documents to complete:

• UI19 and UI2.7 (Completed by employer)
• UI2.1 (the application)
• UI2.8 (completed by the bank)
• Copy of employee’s ID document
• A letter from the Employer confirming company shutdown is due to the Corona Virus

Reduced working time and/or forced shutdown

Where a Company shuts down for a certain period or implements Short Time, for every 4 days worked the employee accumulates 1 credit day, and maximum credit days payable are 365 for every four completed years of service.

Documents to complete:

• UI19 and UI2.7 (Completed by employer – choose option 17 on the UI19 document)
• UI2.1 (the application)
• UI2.8 (completed by the bank)
• Copy of employee’s ID document
• A letter from the Employer confirming company shutdown is due to the Corona Virus

Death Benefit

Benefits are paid to the beneficiaries of the deceased. People eligible to apply are a Spouse, Life Partner, Children and nominated persons, in that order.

Documents to complete:

• UI19 and UI 53 (completed by the Employer)
• UI 2.5 or UI2.6 (deceased application)
• Death Certificate
• ID of deceased and applicant
• UI 2.8 (bank form completed by the bank)
• Copy of ID documents.

How to apply for these benefits?

Employers must complete the UI 19 Form stating the last date of termination and the reason thereof. The forms can be submitted by emailing the application to the nearest UIF processing Centre. (Reduced Work Time/Death benefits)