PSIber (Pty) Ltd

TERS & Your Payroll

A comprehensive document outlining how to implement TERS in your payroll

Conditions of Relief option
  • Company closure / Partial Closure of operations.

  • Employer is not able to pay employees

  • Employer in good standing with the UIF regulations, if not the Employer can undertake to bring outstanding declarations up to date within a stipulated timeframe and Acknowledgement of debt.

Application of directive

Process:

  1. Send an email to covid19ters@labour.gov.za informing the department of your Business closure / Shutdown.

  2. You will receive an Autoreply with the submission process and the related prescribed templates. Please ensure that you have received the latest Version (10th of April 2020)

  3. Complete all the required files and documents with the requested information. Use the Guideline document to convert the Excel file into CSV format as required by UIF.

  4. Submit the files to the UIF – Covid19UIFclaims@labour.gov.za

Application to consist of the following (All documents will be subject to verification):
  • Prescribed template that will require critical information from the employer – employees bank details needed here. Refer to section C for more clarity (attachment 1)

  • Employer or Bargaining council applying must complete this (attachment 4)

  • MOA (completion of the agreement between UIF, Bargaining Council and Employer); only applicable to employers that has more than 10 employees.

    • Choose the MOA relating to your role in the process:

      • Employer – Attachment 5

      • Bargaining Councils that can Pay directly to Employees – Attachment 6

      • Bargaining Councils that can NOT Pay directly to Employees – Attachment 7

      • Tourism or Mineral Council – Attachment 8

**NB. Exclude MOA if under 10 employees
  • Confirmation of bank account details for Covid19ters in the form latest bank confirmation letter (no need to certify)

  • Letter of Undertaking (attachment 9)                 

If successful the following conditions will apply:
  • These Funds may not be transferred to any other but the employees / employers / bargaining councils bank accounts, and ultimately to the Employee

  • These benefits must be Distributed to the employees within 2 days, where not specified it is overruled to be working days.

  • Maximum Monthly Salary value will be R17 712.00 per employee

  • These benefit Values will not be subject to any legislative levies

  • Auditable and foreseen but not confirmed SARS income code to be advised as a recon mechanism upon submission of EMP501 and Tax certificates

  • These Benefits May not be paid to employees engaged after the commencement of MOA and no increases may be implemented during this period.

  • You will need to advise the UIF of any termination of services of any employees in writing within 5 days.

  • Recording of the following within the payroll system.

    • Employer Record – Ensure that your Company information is correct

      • UIF Reference Number

      • Trade Name

      • Address

      • Bank Name

      • Account Name

      • Branch Code

      • Account Type

      • Account Number

    • Employee Detail – As per the Prescribed format

      • UIF Reference Number *

      • Shutdown From (YYYY/MM/DD) ONLY* – to simplify the matter it would be the period paying the field mentioned as Leave income, period of short pay.

      • Shutdown Till (YYYY/MM/DD) ONLY*

      • Trade Name*

      • Contact Number*

      • Email Address

      • ID Number*

      • Remuneration (Monthly)*

      • Employment Start Date (YYYY/MM/DD) ONLY*

      • Employment End Date (YYYY/MM/DD) ONLY

      • Sector Minimum wage per month *

        • Domestic: R 124 .56 per day

        • Agriculture: R 149.44 per day

        • EPWP: R 91.36 per day

        • Other Sectors: R 166 .08 per day

      • Leave Income (During Shutdown) * – Value of payment from employer during shutdown.

      • Bank Name*

      • Branch Code*

      • “Account Type *

        • 1 – Current

        • 2 – Savings

        • 3 – Transmission

      • Account Number *

      • Preferred Payment Medium *

        • 1 – Payment to employee direct

        • 2 – Payment to employer

        • 3 – Payment to Bargaining council

  • Although a separate account from an employer’s perspective is not required it is strongly suggested that the administration of the account / monies paid will adhere to accounting best practice in printable or electronic format

  • Accounting records will be available at any time to authorised persons from UIF, full access as deemed necessary!

  • Accounting records must be separate from business or employers’ normal proceedings

  • No cash payments to employees are permitted

  • 5 years of record keeping

Requirements for Payment 1
  • Submission of all required documents to the Department, as indicated on the Autoreply email from covid19ters@labour.gov.za

  • Receipt of the Approval Letter (A3)

  • Sign-off and submission of Letter (A4) acceptance Letter

  • Proof of salary over the last 3 months, may be requested

Requirements for Payment 2
  • Council Invoice supported by proof of payment reconciling to the invoice per grades of all Employees.

  • The Employment status of the Employees.

  • Proof of payment of first monthly payment reconciling to the amount paid by the UIF.

  • Bank statements reflecting payment of the Covid-19 TERS benefits to the Employees; and

  • The Employment status of the Employees.

Requirements for Payment 3 (Final Payment)
  • Council Invoice supported by proof of payment reconciling to the invoice per grades of all Employees.

  • Bank statements reflecting payment of the Covid-19 TERS Allowances to the Participating Employees.

  • The Employment status of the Employees; and

  • Proof of payment of second monthly payment reconciling to the amount paid by the UIF.

What now?
  • Business plan outlining turnaround strategy

  • Reporting on progress of turnaround strategy

Summary
  • The Unemployment Insurance Fund has set aside R40 billion to help employees who will be unable to work

  • To date, it has paid out R356 million.

  • Application Forms can be downloaded from the Department of Employments Labour Website labour.gov.za

  • You can also refer to the “Easy Guide for Electronic Claims” for more information.

4 Benefit options are available during the COVID 19 pandemic
  1. Reduced Work Time Benefit

  2. Illness Benefit

  3. Death Benefit

  4. Unemployment Benefit

Other Conditions to take in consideration:
  • Employee must be in good standing with UIF i.e. employee must have enough credits.

  • Employee is responsible to facilitate the process.

  • Employer in good standing with UIF and issuing of UI19

  • Benefit is subject to income replacement rate sliding scale

38 % (for high earners) up to 60 % (for low earners) as provided in the UIF Act.

  • Normal UIF payment process applies and deposited into employee’s bank account.

PLEASE NOTE:
  • With new amendments made early April one can utilise the TERS process as well.

  • Claiming for reduced Work Time via TERS you will need to submit company financials.

  • Following the UIF route no financials needed.

Conditions
  • Payable to contributors where the company is implementing short time due to COVID 19 and not opting for TERS.

  • Business closed down temporarily

  • Benefits payable is the difference between what employer pays and normal UIF benefits payable should an employee lose employment.

Application of directive

Complete the following documents

  • UI19 (Employer must use reason code 17 ‘reduced work time’)

  • UI2.7 (completed by Employer)

  • UI 2.1 b

  • UI 2.8 (bank form completed by the bank)

  • A letter from the Employer confirming Reduced Work Time is due to the Corona Virus

  • Copy of ID document.

Conditions

Where a contributing employee is in quarantine for 14 days due to COVID 19, the employee shall qualify for an Illness Leave Benefit.

Application of directive

Agreement (between employer and employee) to take special leave in light of COVID-19

In this instance, the confirmation letter (between employer and employee will replace the need of a medical certificate

(Employee Self quarantined without consultation with a medical practitioner)

Should the employee be in quarantine for more than 14 days, a medical certificate from a medical practitioner must be submitted together with the Continuation Form (UI3) for payment.

The benefit is calculated in terms of the UIF Act (i.e. for every 4 days worked, the employee accumulates 1 day credit and the maximum credit days payable of 365 days for every 4 years)

Completion of the below mentioned documents.
  • UI19 (Employer must use reason code 10 ‘illness / medical boarded’)

  • UI2.7 (completed by Employer)

  • UI2.2 (a portion of which is completed by the Doctor)

  • UI2.8 (bank form completed by the bank)

  • Copy of ID document

  • Employer-Letter-Covid19

  • Employee-Letter-Covid19

Conditions

During the unfortunate event where a contributor passes on due to COVID 19, the dependent’s will qualify for a benefit.

Benefits are paid to the beneficiaries of the deceased

People who can apply:
  • Spouse

  • Life Partner

  • Children

  • Nominated person

Application of directive

Completion of the below documents

  • UI19 (Employer must use reason code 02 ‘death’)

  • UI53 (completed by the Employer)

  • UI2.5 or UI2.6

  • Death Certificate

  • ID’s of deceased and applicant

  • UI2.8 (bank form completed by the bank)

  • Copy of dependent’s ID

Conditions

A contributor who loses his/her employment due to retrenchments due to the COVID 19 pandemic.

Application of directive
Completion of the below documents
  • UI19 (Employer must use relevant termination code example 08 which refers to ‘insolvency/liquidation’)

  • UI2.8 (completed by Employer)

  • Copy of ID document

  • Proof of registration as a work seeker

Conditions of Relief option

Employer in good standing with SARS and eligible employees in service prior to date of lockdown.

Employee is paid the minimum wage applicable to that employer or if a minimum wage doesn’t apply, is paid the amount contemplated in the Minimum Wage Act and not more than R6 000 remuneration. If there is no prescribed wage regulating measure or not subject to or exempt from the requirements of the National Minimum Wage Act, a wage of at least R2 000 (where the qualifying employee was employed for 160 hours in a month) must be paid.

Application of directive

Identify individuals within the business that meets the criteria expanded to:

  • 18 to 29 who are no longer eligible for the ETI due to already claimed for within the preceding 24 months; and

  • 30 to 65 who are not eligible for the ETI due to their age.

Reinstate these individuals and allow for additional claim process.

Example as follows:

Example 1

Employer A has 10 workers earning R4 500 per month each. The employer can retain up to an additional R5 000 from the employer’s PAYE liability each month between April and July.

Example 2

Employer B has 3 workers. The employer claims the ETI for Employee A, the employer exhausted ETI claims for 27-year-old Employee B two years ago, and Employee C is 34 years old and has never been a qualifying employee. The employees each earn R4 500 per month. Employer B will be able to retain R2 000 per month. Since these are the only 3 workers, the amount will likely be claimed as a reimbursement from SARS.

   

Standard Ruling

Expanded

 

Remuneration

Age

ETI Period

ETI

ETI

Total

Employee A

R 4,500.00

20

13 Months

R 500.00

R 500.00

R 1,000.00

Employee B

R 4,500.00

27

25 Months

R 0.00

R 500.00

R 500.00

Employee C

R 4,500.00

34

1 Month

R 0.00

R 500.00

R 500.00

The maximum amount of ETI claimable during this four-month period for eligible employees is increased from R1 000 to R1 500 in the first qualifying twelve months and from R500 to R1 000 in the second qualifying twelve months.

During this four-month period ETI can also be claimed for employees from the ages 30 to 65:

The payment of ETI reimbursements will also be accelerated by changing the payment from twice a year to monthly

  1. You can only claim ETI if you are paying your employees, you cannot claim ETI against TERS/UIF payments to employees.

Deferral of employee’s tax

Limited period of 4 months from 1 April 2020 – 31 July 2020

Conditions of Relief option

Identify if you are a Qualifying employer’ – company, trust, partnership or individual.

  • Tax resident – registered before 1 March 2020

  • Employer must be in good standing with SARS.

  • Gross income of R50 Millon or less during the year of assessment.

  • Tax compliant in terms of Section 256(3) of the Tax Administration Act.

Application of directive

Employers are able to withhold 20% of the PAYE liability (Not UIF & SDL) upon payment of EMP201 without SARS imposing administrative penalties and interest for the late payment thereof.

The employer must still declare the full PAYE liability as calculated by their payroll system during this 4-month period. SARS will impose penalties and interest if it is later found out that the employer has understated the PAYE liability for this 4-month period. (Liability generated in April is due May 7th).

It is still unclear as to how these deferral payments must be processed EMP201. We are expecting additional fields to come into play on the EMP201.

The postponed PAYE liability must be paid to SARS in equal instalments over a six-month period commencing 1 August 2020, i.e. the first payment must be made on 7 September 2020, therefor stressing this is a deferral of payment and not exemption. The last payment must therefore be made on the 5th of February.

View our latest webinar on Ters and Your Payroll.

Payroll Managers Checklist A

 
Employer
 Tax Clearance CertificateCompany Covid-19 Start DateCompany Covid-19 End DateRegistered Employer representativePayroll data in electronic formatPayroll Managers Check List A
TERSYesYesYesYesYes
Reduced WorktimeYesYesYesYesYes
Illness benefitYes  YesYes
Death BenefitsYes  YesYes
ETIYesYesYesYesYes
Deferral of employees TaxYesYesYesYesYes
          
Employee
 Certified employee ID documentEmployee Covid-19 Start DateEmployee Covid-19 End DateEmployee Banking DetailsEmployee Dependent DetailsEmployee Residential and Postal detailsEmployee e-mail address if presentOccupationEducation details / highest level
TERSYesYesYesYes  Yes  
Reduced WorktimeYesYesYesYes YesYesYesYes
Illness benefitYes  Yes YesYesYesYes
Death BenefitsYes  YesYesYesYesYesYes
ETIYesYesYes  YesYes  
Deferral of employees TaxYesYesYes  YesYes  

Payroll Managers Checklist B

 
Payroll Manager Check List B
 Tax Clearance / EMP201UI19UI2.7UI2.1BUI2.2UI2.8UI2.5UI2.6UI53
TERSYes        
Reduced Work TimeYesYesYesYes Yes   
Illness benefitYesYesYes YesYes   
Death BenefitsYesYes   YesYesYesYes
ETIYes        
Deferral of employees TaxYes        
 
 Employer ConfirmationEmployee ConfirmationEmployee IDPayroll History in electronic formatEmployers Account DetailsEmployee Master detailsEmployee Remuneration HistoryDeath Certificate 
TERSYesYesYesYesYesYesYes 
Reduced Work TimeYesYesYesYes  Yes 
Illness benefitYesYesYesYes  Yes 
Death Benefits  YesYes  YesYes
ETI   YesYes Yes 
Deferral of employees Tax  YesYesYesYesYes 

Payroll pre-COVID and Payroll Post-COVID

 
ProcessPre-COVIDPost-COVID
Employee Master fileMinimal information – information as required or compulsory for SARS submissionHolistically employee data
Recording of employee BeneficiariesOnly required by 3rd parties and usually maintained and stored on their side.Recording of employee’s beneficiaries to be available and on hand should a claim be required from UIF.
Access to data and maintenanceGenerally, the individual would be on site in a secure environment accessing the payroll application on a locally hosted server and applicationAccess to data to any party at anytime from anywhere.
Data storage employee.The conventional employee file with relevant data / paper-based source.Paper “Less” and not Paperless access to data where source documents are uploaded in the cloud.
Availability (the on and off switch)Very site dependent, power, server, network availability, Speed, Priorities on networkThe IoT DR, fail overs, 99.95% up time concurrent processing, multi-tenant, best of breed and evolving platform.
PlatformLocal installed application, only available within VPN or remote desktop.Cloud, preferred supplier
Delivery and service.Key man dependencyBlueprint framework – introduce, familiarize and start to use framework to eliminate dependencies
CollaborationA very centralized workforce.Decentralized HCM model where multiple users are exposed to what they are accountable for and only that.
WorkflowManual best practice and usualy the central departments preferenceBlueprint driven workflows with spread accountability and a wide casting of net to gather holistic employee data.
Employee / ManagerProcess driven making use of forms and signatures.Workflow / platform driven and validated via electronic workflow and an approval
CommunicationBillboard, Communique and meeting drivenElectronic e-mail, USSD, SMS etc.
RiskAccountable and ResponsibleAccountable but the responsibility of organigram.
Vendor SupportSite dependantAnywhere, anytime.

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