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30 MARCH 2020
Who pays salaries during 21-day lockdown?
by Jan Truter
In a drastic measure to curb the spread of COVID-19, the SA Government has declared a lockdown as from midnight on Thursday 26 March 2020 until midnight on Thursday 16 April 2020. This will be enacted in terms of the Disaster Management Act. During this period all employees, with the exception of a few categories, will have to stay at home. Who pays their salaries? What happens after the 21-day lock-down?

In our newsletter a few days ago, we referred to various UIF options available to employees who work short time or are on temporary lay-off without pay.

While the UIF options still apply in principle, the 14-day agreed quarantine period under the recently introduced UIF provisions, is essentially superseded during the 21-day lock-down. Click here for information on the UIF Claim process.

We have serious doubts about the ability of the UIF to cope with processing the flood of claims in the short term.

There also are several new points for employers to consider.

Forced lay-off

Short time: Before the announcement of the 21-day lock-down, employers would have first considered short time as an alternative to retrenchment. As from midnight on Thursday, short time is not an option unless the business operates in one of the designated industries that are allowed to operate or when staff can work remotely from home.

Annual leave: An alternative option is to grant employees such paid annual leave as is available to them.

Lay-off: Thereafter, the most reasonable remaining option would be the temporary lay-off of staff. Even here the situation has changed. Where an employer would, up until now, have had to negotiate and reach agreement on the terms of a lay-off, this is no longer the case.

Neither the employer nor the employee has control over the situation. The employee will not be permitted to tender his or her services. The employer should therefore be relieved of its contractual obligation to pay remuneration during the lock-down period. But is it advisable to simply inform employees that they are laid off without pay?

Other measures to assist

While employers are encouraged to assist their employees financially, there is no obligation to do so. Most smaller employers are unable to do so. There are of course certain UIF options available (link above).

In his address to the nation, the President stated that:

“We are in consultation on a proposal for a special dispensation for companies that are in distress because of COVID-19. Through this proposal employees will receive wage payment through the Temporary Employee Relief Scheme, which will enable companies to pay employees directly during this period and avoid retrenchment.”

No further details have been provided yet.

The President further stated that:

“In the event that it becomes necessary, we will utilise the reserves within the UIF system to extend support to those workers in SMEs and other vulnerable firms who are faced with loss of income and whose companies are unable to provide support. Details of these will be made available within the next few days.”

We will publish the details mentioned once they are available.

Although nothing is certain, employers and employees should in the meantime try their best to plan ahead.

What happens after the lock-down?

Employers are encouraged to look beyond the 21-day lock down period, with the view of retaining the skills and good labour relations with their employees if business was to resume at a later stage, albeit at a smaller scale. It almost certainly won’t be business as usual.

Considering that work is unlikely to resume as normal after the 21-day lock-down period, there is likely to be a need for an extended lay-off, beyond the lock-down, for at least some employees. Now is the best time to plan and agree on this upfront. Where possible, some assistance may be offered by employers.
Useful resources:

LabourWise
LabourWise provides user-friendly information and documentation about labour relations and labour law in South Africa. Visit our InfoCentre or website.

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