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Increased Earnings Threshold 2021

On 8 February 2021, the Minister of Labour and Employment passed new regulations increasing the earnings threshold from R205 433.30 per annum to R211 596.30.  The new threshold will be effective from 1 March 2021.

In the Regulations, earnings are defined as: the regular annual remuneration before deductions, i.e. PAYE, pension or provident fund, medical aid and similar payments, but excluding employer contributions to these benefits.  The regulations also state that transport allowances received, achievement awards and payments for overtime worked shall not be regarded as remuneration.

The earnings threshold has increased by 3% from R17 119,44 per month (basic salary) to R17 633.03.  This threshold is not to be confused with the maximum benefit threshold for UIF which remains R17 712.00.

Why is the earnings threshold important?

Employees who earn below the threshold are more protected by the labour laws than those that earn more than the threshold.  This threshold forms part of the Basic Conditions of Employment Act, (section 6.3) which states:

6.3    The Minister must, on the advice of the Commission, make a determination that excludes the application of this Chapter or any provision of it to any category of employee earning in excess of an amount stated in that determination.

This comes from the part of the act that deals with the Regulation of Working Time.  It states that the employees earning more that the earnings threshold are excluded from certain rights in terms of this Act.  These are:

Clause 9: Ordinary hours of work

This means that people earing above the threshold can have variable hours whereas those below the threshold should have defined hours of work.

Clause 10. Overtime

Employees earning above the threshold are not entitled to overtime pay or time off in lieu of overtime worked.

Clause 11. Compressed working week

The rules around working a compressed working week are not applicable to employees earning above the threshold (i.e., working a 12-hour day without overtime being paid). Typically, staff working in this manner work 4 days at 12 hours and 3 days off (security industry for example)

Clause 12. Averaging of hours of work

This clause allows overtime worked to be averaged over a three-month period.  Again, these rules do not apply to employee who earn above the threshold.

Clause 14. Meal intervals

Employees earning above the threshold are not entitled to a fixed lunch hour.

Clause 15. Daily and weekly rest period

Employees earning above the threshold are not entitled to the daily rest period or the weekly rest period of 36 hours.

Clause 16. Pay for work on Sundays.

Employees earning above the threshold are not entitled to additional pay (1.5 or double time depending on the nature of the work) when asked to work on a Sunday.

Clause 17(2). Night work

Employees earning above the threshold are not entitled to a shift allowance or transport when working night shift.

Clause 18 (3) Public holidays

Although the act says that employees earning above the threshold are not entitled to additional pay when working on a public holiday, the Public Holiday Act does require pay for all employees who are required to work on a public holiday or time off in lieu.

Labour Relations Act

Amendments to the LRA in 2014 have made reference to the earnings threshold, with specific reference to protections for specific employees.  These are:

  • Temporary Employees employed though a Temporary Employment Service
  • Fixed Term Contract Employees
  • Part Time Employees

Employees in these categories who earn more than the earnings threshold are not protected by the provisions of section 198 of the LRA.  This section of the act is aimed at preventing the abuse of employees who are never given the opportunity to become permanent employees.

In addition to this, the CCMA undertook to assist administratively any employee whose earnings fell below the earnings threshold.  This included:

  • The preparation of dispute documentation
  • The serving of dispute forms to the employer
  • Assistance with collecting awards (the CCMA will pay the sheriff of the court to execute collections)

Over the threshold, employees have to do all of this themselves.

Employment Equity Act

Amendments to the Employment Equity Act also in 2014 makes reference to the earnings threshold in terms of access to the CCMA.  The amendment ruled that the CCMA had jurisdiction to arbitrate sexual harassment matters while other disputes relating to discrimination could be referred to arbitration if the employee earned below the threshold and, unless otherwise agreed, disputes where the employee earns more that the threshold would be referred to the Labour Court.

Access to the Department of Employment and Labour

Perhaps the most problematic provision is that if an employee earns above the threshold the Department of Employment and Labour will not give them access to an inspector if they believe that your employer is not complying with the acts.  The employee would have to use the Labour Court or their own legal representatives to fight for their rights.

Conclusion

Essentially the Earnings threshold is the divide between those employees who have the necessary skills and abilities to negotiate their own working conditions and those who need the full protection to the law to ensure that they are not exploited.

2021 Skills Development Submissions

By submitting your Training Skills Plans to the SETAs, levy paying companies are able to claim up to 20% of the paid Skills Development Levies from SETA for that period as well as an additional Pivotal grant for qualifying companies.

All training reports and training plans are to be submitted to the relevant Seta by the end of April 2021.

Companies who submit training plans and training reports become eligible for additional opportunities which exist for the training and development of both existing employees and the unemployed in order for the employers to gain funding.  These Discretionary grants are in the form of Learnerships, Apprenticeships and approved funding’s as decided by the SETAs in line with their industry strategies.

If you would like Connold and Associates to process your Skills submission to the relevant Seta that you are registered with, please will you contact Tessa Lourens using the form below or by calling 011 452 1707 before 15 March 2021 and we will then assist/ guide you through the submission process.

Contact Form for Tessa Lourens

What to Do After TERS

It seems that the Department of Labour is not going to extend the Temporary Employee Relief Scheme (TERS), beyond June 2020, although many companies are not yet able to have their employees return to work. Many companies have not yet been paid for the June TERS as submissions have only really been possible since the implementation of new security measures were completed for the online system on Sunday 12 July 2020.

Please note that if you had submitted a claim before this date (for April, May or June) and it has not yet been processed, you must enter your Company Registration Number and update the system.  If you do not, none of the outstanding claims will be processed. 

Where employees have not yet been able to return to work or where they are working a very reduced short time, they are able to claim the Reduced Work Time Benefit.  This benefit was promulgated on 1 November 2019 and it is this legislation which allowed for the TERS benefit.

The Unemployment Insurance Act says in clause 12(1B):

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.

This means that employees will only be eligible if their earnings fall below the amount, they have been receiving from TERS and then they will only be given the difference between their actual earnings and the benefit from TERS.

Example: an employee earning R6 000-00 per month is currently working 2 days per week. 

  • His monthly earnings during short time will be:                                  R2 397.78 
  • His benefit from the UIF Fund for the month of July would be:         R3 657.12 
  • UIF would pay him the difference, i.e.                                                R1 259.34

If they earn more than R3 657.12 then they are not eligible for a benefit.

This benefit is only going to be truly beneficial for employees who are laid off and not earning at all as they will be able to claim the same benefits as they did from TERS. 

However, this benefit does use the UIF Credits.  This means that an employee claiming Unemployment, Ill Health or Dependents Benefits uses credits.  They get one day of UIF for every 4 days that they have contributed to a maximum benefit of 12 months UIF Payments.  In order to “earn” the full benefit an employee must have contributed for 48 months. However, if the employee enters a claim and then starts working again, they start earning back their credits.

The UIF benefit for retrenched employees will pay out the same amount, so there is no UIF benefit for being retrenched at this time.

How to Claim Reduced Working Time Benefits

Employers Responsibility

Step1:Employers must complete the UI19 form for their employees citing code 17 (Reduced Working Hours) as the reason for not earning.
Step2:Prepare a letter stating that the employee is not able to return to work or is earning short time as a consequence of the COVID 19 Disaster Management Act Lock Down.
Step3:Complete the Remuneration whilst in employment Form UI2.7.

Employee’s Responsibility – On line (ufiling)

Step1:Use Unemployment Benefits tab to claim Reduced Work Time On-Line
Step2:Use cover sheet of “other” to scan a UI 19, UI 2.7, a letter from the employer confirming a shutdown and copy of identity document under or email the supporting documents to online.BCP@labour. gov.za fax to E-Mail 0864397297
Please Note: The subject line for scan/email must be the employee’s identity number or the Case Number once one has been allocated.
Step3:Assessment to be conducted once claim is complete/correct/valid and applicant will be advised of the outcome via SMS/email.
Step4:If claim is approved, employee will be advised to submit a request for payment. Submit request for monies to be paid into a Banking Account, UI2.8
Step5:If further claims are required submit Continuation of Payment UI6A (COP).
Step6:Applicant is paid

Employee’s Responsibility Manual Claims

Step1:Download and complete the UI2.1 (application for Reduced Work Time and, UI 2.7 and UI 2.8 forms.
Step2:Attach the abovementioned forms, a letter from the employer confirming a shutdown and copy of identity document as well as a UI19 from the Employer.
Step3:Reason for termination code must be 17 (Reduced working hours)
Step4:Email all the attachments to the relevant province

MAILBOX FAX TO EMAIL NUMBER

OfficeEmail AddressFax Number
GautengGermiston.BCP@labour.gov.za086 439 7295
GautengJohannesburg.BCP@labour.gov.za086 439 7294
GautengPreotia.BCP@labour.gov.za086 439 7290
Kwa-Zulu NatalPetermari.BCP@labour.gov.za086 439 7296
Kwa-Zulu NatalDurban.BCP@labour.gov.za086 439 7297
Eastern CapeEastLondon.BCP@labour.gov.za086 439 7299
Eastern CapePortelizabeth.BCP@labour.gov.za086 439 7298
Western CapeCapet.BCP@labour.gov.za086 439 7300
Western CapeGeorge.BCP@labour.gov.za086 439 7301
North West ProvinceNorthWest.BCP@labour.gov.za086 439 7302
LimpopoLimpopo.BCP@labour.gov.za086 439 7303
MpumalangaMpumalanga.BCP@labour.gov.za086 439 7304
Free StateMpumalanga.BCP@labour.gov.za086 439 7305
Northern CapeNorthernCape.BCP@labour.gov.za086 439 7309

Alternatively, the employee can visit their nearest labour centre taking all the documentation with them.  More details are listed in the Electronic Claims Pamphlet which also outlines how to claim for ill health or unemployment benefits.

Remember that when employees die in service, their dependents are entitled to a benefit from UIF which is equal to the full 12-month benefit that they would have received if they had been unemployed.

A word of Caution:  Employees who have been claiming TERS and have tried claiming unemployment or maternity leave benefits are finding that they cannot submit a claim until the TERS claims have been finalised.  It may be best to wait until all the TERS claims have all been paid out before making application.

Please contact the office if you have any questions or require any assistance.

Downloads

Breaking News 2020/04/30

Department of Labour – TERS

The Department of Labour has recognised that the manner in which they have been paying out the benefit for TERS is at odds with the intention originally.

The FAQ issued today clarifies that an employee is entitled to their full benefit (in terms of the calculation as a percentage of salary of between 60% and 38% of salary up to a maximum benefit of R R6 638.40).

All those companies who have paid their employees less than their normal salary can now submit claims.  Those who did submit and were rejected will automatically be reassessed and payment will be made to the employer.

The calculation which applies to this is Scenario 2 in the pamphlet COVID 19 FAQ.

The FAQ can be downloaded here.

New Regulations

TERS Regulations

The TERS regulations were amended on 16 April 2020.  Essentially they have recognised that many employers have allowed employees to take annual leave during the lockdown.  They are now allowing such employers to claim the TERS benefit and when the UIF payment is made to the Company to then credit the employee for the leave taken proportionately.

We are urging all employers who have applied to contact us.  We have agreed with the Chief Inspector of UIF to be the communication hub for all our clients so that UIF has one point of contact if they have any queries.  The process for queries is for them to issue compliance orders and we want to streamline this process as effectively as possible.  If you want to be added to the list, please fill in the form below. 

Selected Value: 0

Disaster Management Act

Regulations for the Disaster Management Act were passed on 18th March 2020 (Regulation 318).  These regulations were amended on 25 March 2020 (Government Gazette 43148), 26 March 2020 (Government Gazette 43168), 1 April 2020 (Government Gazette 43199) and 16 April (Government Gazette 43232).  The document on the website combines all these regulations for ease of use. 

Downloads

BREAKING NEWS (2020/04/09):

The Department of Labour has amended the regulations with regard to the TERS Fund.  The amendments have clarified the following:

  1. Eligible companies can include those who have had a partial closure of the business operations
  2. Employees who are receiving short-time will have their salaries capped at a maximum amount of R17712.  The maximum benefit remains 38% of the maximum amount, i.e. R6730-56.
  3. The minimum benefit will be R3500 if their salary after short-time, falls below this figure.  We no longer need to worry about Sector minimum salaries
  4. The scheme will only pay out if the total of the benefit together with any additional remuneration that the employer pays is less than the remuneration they would normally have received.
  5. Employers will be able to top up salaries where this can be afforded.

COVID-19 Combined UIF TERS Regulations

Covid-19 Temporary Employer/Employee Relief Scheme (TERS)

The Department of Employment and Labour has made money available to companies who are experiencing difficulty paying staff as a consequence of COVID-19.  They will also pay benefits to employees who are ill as a consequence of COVID-19.  To streamline the process they will sign an MOA with the company and once information has been provided they will pay the company who can then reimburse the employees.

Unfortunately, the benefits remain the same, i.e. The salary benefits will be capped to a maximum amount of R17 712, 00 per month, per employee and an employee will be paid in terms of the income replacement rate sliding scale (38 % -60 %).  They have said that there will be a minimum amount of R3500-00 which is the current minimum salary.  This means that anyone earning above R17 712-00 will only be reimbursed at R6 730.56.

If you would like us to assist with the claiming process please contact the consultant you normally deal with or contact Debbie Mason here.

Employment Equity Submissions 2019

According to the Employment Equity Amendment Act 2013, a designated employer must submit a report to the Department of Labour once every year.

Please remember that a designated employer is defined as:

  1. an employer who employs 50 or more employees;
  2. an employer who employs fewer than 50 employees, but has a total annual turnover that is

equal to or above the applicable annual turnover of a small business as defined in the table below:

Sector Or Subsections In Accordance With The Standard Industrial ClassificationTotal Annual Turnover
AgricultureR 6 million
Mining and QuarryingR 22.50 million
ManufacturingR 30 million
Electricity Gas and WaterR 30 million
ConstructionR 15 million
Retail and Motor Trade and Repair ServicesR 45 million
Wholesale Trade, Commercial Agents and Allied ServicesR 75 Million
Catering Accommodation and other tradeR 15 million
Transport, Storage and CommunicationsR 30 million
Finance and Business ServicesR 30 million
Community, Social and personal servicesR 15 million

Failure to comply could result in a fine of between R 1 500 000.00 and R 2 700 000.00 or between 2% and 10% of turnover – whichever is greater.

In the event that you would require our assistance in the submission of the required reports and in order for Connold and Associates to accurately determine whether your company is classified as a designated employer, please can we request that you provide Tessa at our offices with:

  • The projected number of employees on your payroll as af 1 August 2019
  • The company’s current annual Turnover
  • Confirmation of Sector company is registered under

Please contact Tessa Lourens at our office if you would like us to assist with the relevant submission of your EE report to the Department of Labour.

Notice Of Possible Repudiation of Workmen’s Compensation Claims

The Department of Labour has posted a letter on their website urging claimants who registered work -related injuries or illnesses before 1 August 2014 and which still remain open to ensure that all documents still outstanding are submitted before 31 October 2019.  They have indicated that any claims which are not resolved by this date will be repudiated and closed.

If you are aware of any outstanding claims that are still awaiting medical reports or please ensure that they are sent to the Workmen’s Compensation Commissioner.  We have attached the letter with the contact details to be used to our website.

Should you have any questions please contact Debbie at our offices.