INSIGHTS

Article updated 09/04/2020

INTRODUCTION

South Africa is currently in a situation which no one anticipated. The Coronavirus, formally known as COVID-19, is an infectious viral disease which is changing life as we know it. It has, to date, affected the lives of millions around the world, not limited to those infected with the virus. The effects of the COVID-19 are so enormous that the World Health Organisation has declared the virus a pandemic.

In South Africa, President Cyril Ramaphosa declared a State of Disaster and the Government began exercising its power and authority in terms of the provisions of the Disaster Management Act 57 of 2002. A raft of regulations and directives have been promulgated by numerous ministries including the Department of Labour.

One measure implemented by the President was to enforce a nationwide lockdown for 21 days effective from midnight Thursday, 26 March up until midnight, Thursday, 16 April 2020.  Periods of lockdown in other countries have, of necessity, been extended beyond 21 days and the possibility of an extension in South Africa is likely. During the present lockdown, employees who provide “non-essential services” in the workplace are required to stay at home. Should the present lockdown period be extended, it remains to be seen whether the “essential services” restriction on business operations will be relaxed.

The reality of the lockdown is that the vast majority of workers in South Africa currently either do not work at all, have to work reduced time or work from home.  In order for employers to survive and recover from this crisis, they must devise a response on how to deal with the lockdown now and immediately thereafter.

Firstly, a business must understand the reciprocal rights and duties created for employers and employees now during the crisis. The Occupational Health and Safety Act, 85 of 1993 (“OHS”) the Labour Relations Act, 66 of 1995 (“LRA”) and the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) remain in force and constitute the statutory framework within which the rights and obligations of employers and workers are defined.  Contracts of employment concluded with workers and policies amplifying such contracts continue to encapsulate the common law rights of employers and employees.   

The definition of “workplace” in terms of the OHS and LRA are very similar. A workplace is the premises, place or places where the employees of an employer work or perform work in the course of their employment.  When employees work from home, it does not mean that they are not working from a workplace as envisaged in terms of the OHS or the LRA. Our Constitutional Court held in the decision of Chamber of Mines of South Africa and Others versus AMCU and Others that location is not the primary feature to define a workplace. The functional organization of workers by a business operating from different workplaces, is by having workers work from home, a business is not absolved from the organizational duties imposed by the OHS. COVID- 19 has been declared an occupational disease and should a worker be confirmed to have contracted the virus while working (including when working from home), the diagnosis must be reported to the Occupational Health Commissioner.

OHS DUTIES OF AN EMPLOYER AND EMPLOYEE

An employer is, inter alia, required to:

1. provide a safe and secure workplace to its employees;
2. implement measures to provide a safe and secure workplace;
3. prevent and mitigate the impact that a disease and/or threatening circumstances and/ or potential hazard could have on workers and clients working at or visiting the workplace;
4. ensure there is compliance with the regulations, legislation, internal company policies and procedures; and
5. provide and give workers sufficient information, training, instruction and supervision with regards to any effect that the disease or threat or hazard would or might have on workers and or clients working at or visiting the workplace.

The employer should formulate a policy and communicate such policy to managers and employees. The policy should direct employees on what measures need to be taken during the lockdown and in anticipation of the lockdown being lifted or amended to allow workers to return to their normal workplace. When workers continue to perform duties as essential services, measures need to be taken to keep workers safe and reduce the risk of such employees contracting the virus in the workplace and the workplace needs to be cleaned at more regular intervals and in terms of a cleaning protocol.

Employees are, inter alia, required to:

1. take reasonable care for the health and safety of him/herself and of other persons;
2. co-operate with his/her employer to enable that duty or requirement to be performed or complied with;
3. carry out any lawful order given to him/her,
4. report any unsafe or unhealthy situation or any incident which may affect his/her health or which has caused an injury to him/herself.

Once an employer or employee has reported a confirmed case of infection to the designated health and safety officer, the employer has a statutory duty in terms of the OHS to take steps to prevent or mitigate further infection of co-workers in the workplace. Should adequate measures not be taken, the workplace is at risk of being declared unsafe and may be closed down. It could potentially take weeks for a workplace to be re-opened.

A clear COVID-19 mitigation and response strategy or plan is required from employers. The plan should be devised in consultation with workers and once devised, be clearly communicated. Such a plan would include, for example, establishing a tracing methodology to determine which other workers may have had close and direct contact or shared equipment with the infected worker in the workplace. The plan would include putting co-workers who had close and direct contact with the infected worker in quarantine, testing co-workers who display symptoms of the virus, identifying non-quarantine workplace locations used or visited by the infected worker and disinfecting or cleaning all workplace locations the infected worker may have come into contact with.  

Measures would need to be put in place to ensure that infected workers or workers who have been exposed to the virus are declared “fully recovered” before they are allowed to return to communal or non-quarantined shared workplaces or have any direct or close contact with co-workers. 

Any infected worker has the duty to comply with any reasonable and lawful instruction issued and communicated by his/her employer in order to prevent and mitigate the impact of the virus on co-workers or any workplace of the business. The refusal by a worker to comply with such an instruction would constitute grounds to implement a precautionary suspension and misconduct charges. Should the misconduct be established, it may justify the sanction of dismissal.    

LEAVE

Workers working from home are entitled, as of right, to their usual leave. An employer is entitled to request employees who are not working or working reduced time to take paid accumulated annual leave or unpaid leave or pro rata reduced worktime leave.

In the event that employees elect to take unpaid leave or do not have sufficient accumulated paid annual leave due to them, they are entitled to apply for reduced worktime benefits from the Unemployment Insurance Fund (UIF). Benefits payable will be calculated on a sliding scale and will amount to the difference between what the employer pays and the normal UIF benefits payable had the employee(s) become wholly unemployed. The benefit is also calculated according to the available UIF contribution credit limits applicable to the particular employee(s).

C19 TERS

On 08 April 2020, the Department of Labour and Employment issued updated directives concerning the C19 TERS relief scheme. The updated directives clarified some industry confusion and significantly broadened the applicability of the relief scheme. C19 TERS is accessible to employers who are registered with UIF and who have to close their operations, or a part of their operations, due to COVID-19. All employees in the employ of the employer as at 27 March 2020, have the added option of agreeing to a temporary lay-off if they are unable to work for the duration of the lockdown and a likely period immediately thereafter. The lay-off will apply for as long as the employer’s operations are closed entirely or partially due to COVID-19. The C19 TERS relief scheme is in effect a Government subsidy to mitigate the impact of COVID-19 on laid-off employees’ salaries. Employers must apply for C19 TERS relief during the lockdown and not later. The relief is available until business operations resume post lockdown and for a maximum of three months. The employer is required to conclude a written memorandum of agreement with the UIF, who will pay the relief funds into a bank account opened by the employer and which is dedicated to processing C19 TERS relief funds. The employer must pay over all relief funding to employees within 2 days of receipt of the funds from the UIF. Employees will therefore not be paid relief funding directly by the UIF, except where a business has less than 10 employees. Applications for C19 TERS relief cannot be made simultaneously with other UIF benefit claims.

Accurate accounting must be maintained by the employer in respect of all C19 TERS funding received and disbursed. A failure to account for C19 TERS funding is a criminal offence.

The C19 TERS benefits are calculated on the usual UIF sliding scale of 38% (for high earners) to 60% (for low earners). A capped salary threshold amount of R17 712.00 per employee per month has been set to calculate benefits. The maximum monthly C19 TERS amount “high earners” would therefore receive is 38% x R17 712.00 = R 6 730.56. Employees who earn less than the threshold amount, will be entitled to a benefit calculated in accordance with the UIF sliding scale calculator. Further directives from the Department of Labour and Employment concerning the calculation of C19 TERS benefits on the sliding scale, are expected soon.  Any benefit may, however, not be less than the minimum wage amount of R3 500.00. Any C19 TERS benefit received may not exceed an employee’s normal remuneration. An employer may top up an employee’s C19 TERS benefit as long as the aggregate of the benefit and the top up amounts do not exceed the employee’s usual remuneration prior to the lay-off.   Therefore, an employee who earned a salary of R20 000.00 can agree, upon closure, to be temporarily laid off on the understanding that his/her employer will claim the maximum C19 TERS benefit of R6 730.56 and the employer will make a top up payment of R13 269.44. 

In the event that the employee is ill, temporarily laid off or unemployed for longer than 3 (three) months, then the normal UIF benefits will apply.

In terms of the directives, an employer must bear the following in mind when administering leave to workers:

1. The provisions dealing with leave in the BCEA remain the primary point of departure unless more favourable leave provisions are agreed between an employer and worker. In such an event the provisions of the contract of employment will prevail and be the primary point of departure;
2. More favourable agreed leave provisions concluded prior to the crisis unfolding cannot be changed unilaterally by an employer;
3. The COVID-19 flu virus has been declared an occupational disease. Confirmed cases must be reported to the Occupational Diseases Commissioner. The COVID-19 TERS has created a special illness benefit for employees. The benefit is available to employees for a period of 14 days or such longer period as declared necessary by a medical practitioner.
4. A worker would be entitled to take family responsibility leave during the lockdown as long as the family member being attended to by the worker is living in the same place of residence or the worker has permission to attend to the family member at another place of residence.
5. Unpaid leave will be applicable in the event that sick leave is exhausted, but the employee remains sick.

TAX AND OTHER RELIEF MEASURES

There is no doubt that businesses will take financial strain during this lockdown period. It must also be considered that this period may even be extended by the President after evaluating the effect of the initial lockdown period. There are, however, relief remedies available to employers and employees to mitigate the financial impact during this lockdown period:

1. The President announced a series of measures to assist those who will be impacted during the lockdown period. These measures include the following:

1. People who earn less than R6 500.00 a month will receive a wage subsidy of R500.00;
2. Businesses with a turnover of less than R50 million a year will be able to delay income tax payments for the next couple of months;
3. Tax-compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months, and a portion of their provisional corporate income tax payments – without penalties or interest over the next six months;
4. The South African Revenue Service (SARS) will pay out employment tax incentive reimbursements every month – instead of twice a year – “to get cash into the hands of compliant employers as soon as possible;
5. Government is also exploring the temporary reduction of employer and employee contributions to the Unemployment Insurance Fund and employer contributions to the Skills Development Fund.

CONCLUSION

Any change in an employee’s terms of employment during or as a result of the lockdown, must be implemented by agreement between the employer and employee.

Government encourages employers to avoid retrenchments during this time. Employers should rather consider implementing measures such as working of shifts, temporary lay-offs, taking of annual or unpaid leave, and/or a reduction in salaries as alternatives to retrenchment. Employers who can continue paying employees will assist by reducing the reliance on the funds made available by Government. Retrenchment is a last resort and must always comply with the consultative process outlined in section 189 of the LRA.