Catalyst Solutions: COVID-19 Relief Measures
COVID-19 RELIEF MEASURES
A number of relief measures were announced by President Cyril Ramaphosa on 23 March 2020 with more information on the specific workings of each made available over the course of the past two weeks. The majority of available relief measures are allocated and set aside to benefit “Small Business”. Catalyst would however like to specifically highlight three opportunities also available to the larger entities who are negatively affected by the epidemic and who needs support in paying the salaries of their employees.
• Temporary Employee / Employer Relief Scheme (TERS) – Businesses temporarily closed as a direct result of Covid-19 can submit a claim to the Unemployment Insurance Fund (UIF) on behalf of its employees. The UIF will make a payment to the company who can then pay the amounts over to the employees.
The benefit will be calculated using the income replacement rate sliding scale of 38% for high-income earners and 60% for low-income earners and be subject to the current maximum UIF threshold of R17 712 per month. The maximum monthly benefit will thus be R6 730 (R17 712 * 38%) per employee. The benefit will not be less than the monthly minimum wage during the “shutdown” or a maximum period of three months. After this period, an employee might receive less than the minimum wage based on the above mentioned sliding scale.
• Training Layoff Scheme – Companies facing economic distress and considering retrenchments can claim a training allowance to replace the employee’s normal wage. The training allowance is financed by the National Skills Fund (NSF) and the different SETAs and may be up to 50% of the employee’s normal wage up to a maximum of R6 239 per month or R1 440 per week. The training layoff is thus seen as a temporary suspension of an employee or group of employees and that period must be used for training purposes to re-skill employees for future economic recovery.
A full layoff must last for a continuous period of at least four weeks or a partial layoff for at least two days a week (or 16 days) and last for at least eight weeks in order to qualify.
• Employment Tax Incentive (ETI) Expansion – The ETI programme will be expanded for a limited period of four months beginning 01 April 2020 and ending on 31 July 2020 (“the Period”). The expansion include increasing the maximum amount claimable during the Period from R1 000 to R1 500 during an employee’s first qualifying 12 months and from R500 to R1 000 during the second qualifying 12 months. An additional R500 will also be claimable on employees who are no longer eligible because the employer previously claimed a benefit on the employee for 24 month or employees who are not eligible due to their age.
In addition to this, ETI reimbursements from SARS will be accelerated to monthly payments opposed to bi-annual payments.
• Other Relief Measures – Various loan funding options are available to businesses of any size who manufacture or import essential supplies that are urgent to combat Covid-19 or manufacture essential products that have become scarce due to the high-demand as a result of Covid-19. Essential supplies include: any Food product, Cleaning and Hygiene related products, Medical products, Fuel, other basic goods or any chemicals, packaging and ancillary products used in the production of any of the above mentioned products.
A range of measures available to SME’s / SMME’s, including a deferment of their Pay As You Earn (PAYE) and Provisional Tax liabilities and various loans to assist in paying permanent employees, provide working capital and buy equipment to continue their operations and benefit from supply opportunities resulting from Covid-19.
It is important for companies to consider the available relief measures to minimise the impact of Covid-19 on their employees and the future sustainability of their operations.
The measures provided above is in no means an exhaustive list and only a high-level description of each were provided. Each measures also has its own restrictions and application process.
For additional information please feel free to contact:
Christo Engelbrecht: email@example.com, +27 84 513 8177