Every day is bringing us new information and processes to follow in terms of applying for assistance for companies who are experience business distress and how we can assist employees when we are unable to pay them full salaries, or indeed any salary.
Below is some of the new information that we have in this process.
TEMPORARY EMPLOYEE RELIEF FUND
Having had a long conversation with the call centre this morning we have established the following:
- We cannot force employees to take annual leave during the lockdown, it should be treated as special leave, but the special leave does not need to be paid. The implication is that if staff would prefer to use their annual leave they can. We have changed our letter format to suit.
- The Memorandum of Agreement was meant for Bargaining Councils and not for individual employers applying. This means that:
- You do not need to open a special banking account.
- You do not need to do a proforma invoice attracting VAT.
- The letter of authority is still necessary and the UIF reserves the right to do an audit, but this MOA does not need to be signed, although there might be another document later.
- The application of TERS is meant for employees who will be receiving no funds during the lockdown period and perhaps for some time after this. There is a separate process for employees whose income is affected by a reduction in their working hours. This definition does not include those employees who are still working a full day, but may, due to financial constraints, have had their salary cut by a percentage.
- Employees whose time has been reduced will receive a benefit even if their salary after reduced hours is more than the maximum benefit from UIF of R6,730.56 (I asked this question several times, so really hope the information is correct).
- To claim for UIF benefits for reduced time we are now able to use the same process as TERS, but to include in the leave payment column of the spreadsheet, the value of the payment made to the staff member.
At this stage we are unable to determine what payment the employee will receive
Please don’t let employees use the online system as this will utilise their UIF credits and payment may not be received any time soon.
A draft document has been posted on the SARS Website with proposed assistance to employers to assist them during this time. There are basically two proposals:
- ETI Benefit: the proposal is to extend the Employment Tax Incentive to cover all staff to the age of 65 whose income is below R6500-00 by allowing employers to deduct R500-00 from their PAYE and to increase the benefit for employees with less than 24 months service and who are below the age of 29 by R500.
- Allowing small and medium-sized companies (turnover below R50 million) to defer the payment of 20 per cent of their PAYE liability, without SARS imposing administrative penalties and interest for the late payment thereof.
- The deferred PAYE liability must be paid to SARS in equal instalments over the six month period commencing on 1 August 2020, i.e. the first payment must be made on 7 September 2020.
RETIREMENT FUNDING RELIEF
Responding to calls from Employers wanting relief from the cost of paying over Retirement funding during this period, the FSCA has responded to say that while the risk benefits need to be paid (life insurance, disability insurance, funeral cover etc), with a rule change, which they are going expedite as quickly as possible, companies will not need to pay over the investment portion of the Retirement Funding during this period. The official communique from the FSCA is posted below. Please contact your Retirement Fund Administrator for assistance.
We will inform you when the regulations have been passed into law.