UIF TERS top-up confusion

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Juanita Steenekamp | Project Director | Governance and Non-IFRS Reporting | SAICA Standards Division | mail me |


With the payment of the first COVID-19 Temporary Employee/Employer Relief Scheme (TERS) benefits, various misunderstandings have come to the forefront.

Following the President’s announcement on 23 April 2020, employers and employees assumed that the UIF would top up salaries to the normal salary that the employee would ordinarily receive. The Directive published by the Minister of Employment and Labour, the COVID-19 TERS as amended states that the total of the benefit together with any additional payment by the employer in any period may not be more than the remuneration that the employee would have ordinarily received (clause 3.5). This lead to the conclusion by employers and employees that the UIF will top up the remuneration of employees.



For example, where an employee receives a normal salary of R6,000 and the employer can now only pay the employee R2,800, the expectation was that the UIF TERS benefit would cover the R3,200 – that is, the difference between the maximum salary of R6,000 that the employee would have received and what the employer can now pay.

Salary paid by employer R2,800
Anticipated UIF TERS benefit R3,200
Total received by employee R6,000

This is unfortunately not the way that the UIF is calculating these benefits.

Based on feedback from the public where UIF TERS benefits were already paid, as well as calculations performed using the UIF formula for benefits, SAICA can confirm that the following is the actual calculation:

For a salary of R6,000 where the employer pays the employee a partial salary of R2 800 the UIF TERS benefit for 35 days is:

The UIF TERS benefit = R3,500 (which is the National Minimum Wage) divided by 30.414 days (which is the average number of days per month used by the UIF) = 115.07 (which is the National Minimum Wage per day), x 35 days (from 27 March to 30 April – all days counted) = R4,027.45

Less amounts paid by employer: R2,800 / 30.414 x 35 = R3,222.20

The UIF TERS benefit to be paid = R805.25

Employers that were calculating it incorrectly need to immediately correct their payroll and engage their staff, especially where staff were under the impression that the UIF TERS benefit would top up their salary, and employers paid them on this basis before receiving the TERS benefit from the UIF.



SAICA is also of the view that employers that claim the UIF TERS benefit without informing the UIF that they are paying a portion of the salary and then later top-up the salary are not acting within the requirements of the legislation as the UIF specifically requires employers to inform them if they can afford to pay a portion of the salary.

Using the previous example, if the employer could not pay the employee at all and therefore only claimed the UIF TERS benefit, the employee would receive the benefit of R4,027.45 for 35 days.

TERS benefit = R3,500 (National Minimum Wage) divided by 30.414 days (which is the average number of days per month used by the UIF) = R115.07 which is the National Minimum Wage per day x 35 days (from 27 March to 30 April – all days counted) = R4,027.45

UIF TERS benefit to be paid = R4,027.45

The employer cannot now top-up this amount with R1,972.55 to ensure that the employee receives a total salary of R6,000.

Employers and employees need to take note of the difference when calculating the UIF TERS benefit and ensure that they account for the UIF TERS benefit correctly.


 



17 COMMENTS

  1. Thank you Juanita,
    Is the UIF paid out, taxable in the hands of the employee?
    Secondly,
    If the employer pays 75% of the salaries during lockdown, would the TERS apply for the remaining 25% ?
    If so, what would the UIF payment be if a salary is say R30,000 per month and the employer only pays R22,500?

  2. My name is Peter mvundla as I’m working for the security company based in Johannesburg my employer applied for me the uif ters money an my application was approved I got the money.so my company deducted my salary saying labour demanded the overpayment of uif ters money without communicating anything with me an they don’t want to give me my payslip to check it pls help

    • Dear Peter,
      The UIF directive does allow for the employer to deduct the TERS monies paid to the employee in some cases.
      If the employee did not work and the employer paid the employee whilst requesting the employee taken annual leave or paid a salary with no work and then claimed TERS, the directive states that the employer can set off the amounts.
      DIRECTIVE:
      5.4 An employer, who has required an employee to take annual leave during the period of the lockdown in terms of section 20(10)(b) of the Basic Conditions of Employment Act, 1997 (Act 75 of 1997), may set off any amount received from the UIF in respect of that employee’s COVID 19 benefit against the amount paid to the employee in respect of annual leave provided that the employee is credited with the proportionate entitlement to paid annual leave in the future.
      5.5 To speed payment of COVID 19 benefits to employees, employers are urged to pay employees based on clause 3.4 of the Directive and reimburse or set off such with COVID 19 benefits claim payments from UIF.

      If you did however work part-time then the TERS payment cannot be set off against work done.
      If you are unsure you can contact the labour department and lodge a complaint.
      Regards

    • Good day, the UIF calculates the benefits in a certain manner.
      The maximum that you can get is R6 380 and the minimum is R3500. I am not sure if your employer declared different amounts or if your employer might have not given you all the TERS funds due to set off against leave or advances. It will depend on the situation.

      Regards

  3. Good day, there is no difference for UIF TERS benefits on when the employee commenced employment at the entity. The TERS Directive states the following:
    3.2 The benefit shall be de-linked from the UIF’s normal benefits and therefore the normal rule that for every 4 (four) days worked, the employee accumulates a one day credit and the maximum credit days payable is 365 for every 4 (four) years will not apply.

  4. Hi,
    I have an employee who worked for 20 days during the first lockdown period from 27 March – 30 April. I declared this on my submission. Their normal salary is R5486.25. I received a UIF refund of R1146.6 for this period and R1015.56 for May. How do I reconcile this? Also, there is a column for “Leave Income” in the TERS spreadsheet. Does this affect the calculation and if so, how?

  5. Hey my name is Victor rampho my company didn’t pay me half of my salary during lockdown level five from April until May… I only received uif ters since from April until until May and month of June they paid us R1100 they were saying that uif didn’t pay us.. and this month of July they paid us only uif R3500 and on top of that they deduct the money that we got in June. We supposed to get uif and their minimum wage?

  6. Hi,
    We finally received UIF Covid Payouts for our 30 Employees for April and May.
    In April all 30 Employees did not work and we have transferred UiF payout to them.
    For May, 15 of our Employees resumed work on 15th and were paid for period worked. They received payslips with normal UIF deductions that were paid over to UIF via SARS.
    The 15 Employees that worked would now have been overpaid by UiF Covid. Should we withold paying these employees the full amount as Department of Labour can easily pick up that some workers have worked part of the month but they have received full 30 days Ters payout?
    The concern is that the UIF may request refunds.

  7. My company has taken my leave money and holiday pay to pay me for Uif ters but they did apply for Uif ters but submit it late..a payout for Uif ters was pay by government but we must pay back the bargaining counsel no but the company has the Uif ters money

  8. Hi,I just want to know if TERS payments were only for July or both July and August as we get less money if its for two months.

  9. Hi there Juanita, Thanks so much for this articles and answering questions about TERS and UIF payouts.

    I received a paycut due to covid-19, and on my payslip this is reflected in total earnings section as my full salary (pre-tax), MINUS my salary cut (stated as TERS on payslip), from which my total reduced salary is calculated. The TERS amount has been paid to me once my company received it. To note, I signed and accepted the temporary salary cut (and the difference has been paid to me by TERS). This all seems like the correct process

    My question is for my partner – On her payslip, in total earnings section it showcases a post-tax amount PLUS TERS payment ( to give a total earnings amount that does not equal pre-tax amount. In her deductions section, it states the usual tax, and in NET salary, it equals what her total salary (without a paycut) would entail.

    She, and her colleagues however did not receive a temporary paycut; employees received full salaries, but on their payslips there is a TERS amount included in it. They have not received any TERS payment (as they received 100% of their salary).

    But as they didnt not actually receive any pay cuts, how is the company able to reduce their salary and top it up with TERS without an agreement between employees? Is this all above board, or is there something fishy going on here?

    As a side note; my partner was served retrenchment in April due to COVID-19, she accepted a different position and a reduced salary. So her salary was originally X – then, through the position change due to retrenchment, her salary dropped to Y (X – reduction amount). Within her payslip it states Y includes a TERS payment, so Y = (X-reduced amount) + TERS. The TERS payment has been paid to the company, but not to the employees, and they have retained that money from government to supplement salaries. From looking online, I found that businesses can only retain the TERS money if they have an agreement between employees that they receive the TERS money as a loan, and then can recoup that cash from TERS. Is this above board once again? Essentailly my partner was forced to be retrenched or accept a drop in salary, the business said they would claim the shortfall from X to Y, but within her salary slip, the TERS payment has been absorbed into the businesss, and she has received no TERS. So the business reduced her salary through retrenchment, and further reduced it and kept the TERs. Is this legal?

    Any assistance or advice would be greatly appreciated.

  10. I have a question
    Can deductions of pension fund be taken from uif ters payment. I was paid uif ters but my company deducted pension fund. Only 2weeks uif ters was paid to me. Balance still outstanding. Were can I file a. compliant.

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