With applications for Phase 2 now open, the UIF is working to ensure it can pay out benefits for TERS applicants as swiftly as possible.
At the start of South Africa’s lockdown just over a year ago, it was announced that the country’s Unemployment Insurance Fund (UIF) would be supporting the Temporary Employer/Employee Relief Scheme (TERS).
According to the UIF, TERS has, to date, paid out R61 billion in claims. However, deployment of this money been a challenge that has left many companies and individuals frustrated at the perceived slow and inconsistent manner in which funds are being received.
“Lockdown was a response to the virus and TERS is a response to the lockdown.” – Allan Ragavaloo
On Wednesday, 15 April 2021, the Tourism Business Council of South Africa (TBCSA) invited Allan Ragavaloo, who is the director of provincial support at the UIF, to talk on how employers and employees can claim from TERS, and to address just some of the challenges that they are encountering when claiming benefits.
Where is TERS currently?
In mid-February this year, President Cyril Ramaphosa announced a welcome extension of TERS, which is now in Phase 2 of the programme. This means that, as of 6 April 2021, further benefits can be claimed by employers and employees for 16 October 2020 to 15 March 2021. This is split into two periods; the first being from 16 October to 31 December 2020, and the second from 1 January to 15 March 2021. The UIF is presently only focusing on claims for the first period of Phase 2 and will process applications for the second period at a later stage.
Although applications for Phase 1 are closed, with all claims processed and benefits paid for the period from 27 March to 15 October 2020, the UIF opened its appeals process from 6 April 2021 and it is working through rejected claims for Phase 1. It aims to ensure a turnaround of five working days to pay out benefits from the date of all applications being successfully lodged.
Backlog to manage issues of non-compliance
Employers can claim benefits from TERS on behalf of their employees only if they have declared their employees as contributors to the UIF. As Allan points out, a large number of employers only registered their employees with the UIF at the beginning of lockdown, and not when the employee first started working for the company. This has been problematic as it resulted in a massive influx of employee declarations together with TERS claims. The UIF is working to correct this but it has impacted the processing of other already-compliant claims.
Compliance of registered employees “is not even close to 100%”.
“Employers did not declare timeously prior to lockdown and only declared when they wanted TERS payments. In terms of the law, this should not be the case,” explains Allan, highlighting that compliance of registered employees “is not even close to 100%”.
What is needed for claiming TERS?
Among letters of authority and acceptance, as well as other supporting documentation relevant to the UIF, employers also need a successful bank verification, which can take anywhere between 24 hours to 14 days depending on the type of verification. Additionally, employers need to input a standard industrial classification (SIC) code. Assigned to a company to describe the nature of the entity’s business, SIC codes are another verification and are particularly important if employers are claiming benefits because they fall into a sector that has been affected by the pandemic and lockdown.
SIC codes given to the UIF must match what the South African Revenue Services (SARS) has on its system, as this is what is used for verification. Previously, a major challenge for claimants was ensuring they have the correct SIC code, as some of these were not corresponding on the TERS portal, which resulted in applications being rejected and unable to be processed. While this has reportedly been resolved, TERS applicants are encouraged to confirm these details prior to submitting claims.
There have been accounts of many fraudulent claims, with employers claiming on behalf of deceased individuals, or those who are minors below 16 years old and the legal age of employment.
Since the launch of the UIF’s TERS, there have been accounts of many fraudulent claims, with employers claiming on behalf of deceased individuals, or those who are minors below 16 years old and the legal age of employment. This has seen the UIF put in place much stricter controls to ensure that both national as well as foreign citizens can be compensated, with the UIF cross-checking all identifying particulars across other government entities’ databases, namely the Department of Home Affairs as well as SARS.
Employers are also required to prove that funds have been disseminated to employees.
Who can claim for TERS?
Benefits will be granted if an employer’s business forms part of a sector that has been affected by the lockdown. As agreed by the National Economic Development and Labour Council (Nedlac), this was extended to the hospitality, tourism and liquor sectors in Annexure A of the TERS directive. Businesses whose operations are directly linked to and are impacted by these sectors, such as farmers who grow raw materials to produce liquor products, or transporters moving liquor goods specifically, can also now apply for benefits.
As of 22 April 2021, employers are able to claim benefits on behalf of employees who are either elderly, living with comorbidities, or who have had to go into isolation or quarantine. This is not specific to any sector.
Any employee who has been retrenched or had their services terminated, must rather claim in their individual capacity by applying through the traditional UIF u-filing portal, and not through TERS.
Employees who have experienced temporary lay-offs or who have been placed on short time will also be able to claim for compensation of lost income.
Meanwhile, any employee who has been retrenched or had their services terminated, must rather claim in their individual capacity by applying through the traditional UIF u-filing portal, and not through TERS.
In its efforts to ensure that all claims are processed and benefits paid, it is anticipated that by May, the UIF will be able to send letters to each of the employers on its database to explain why their TERS claims were unsuccessful.
“We have to be accountable for who is paid and who isn’t.”
“Every non-payment is accompanied by a description,” notes Allan. This, he adds, is where employers have an opportunity to take action, however, co-operation and compliance on the part of the employer is a hurdle the UIF is trying to overcome.
To manage the approximately 15 million entries it has received during the lockdown period, the UIF has employed more agents at its call centres to assist with the high volumes of queries. It has also put in place provincial u-filing champions to guide employers and employees on their TERS claims. The UIF is in the process of establishing a case management system so applicants can track their claims, which is expected to be up-and-running by mid-May.
In a bid to have a watertight process that is completely above board, the UIF utilises the services of seven audit firms and an investigative unit to ensure claims are being paid out correctly.
“We have to be accountable for who is paid and who isn’t,” says Allan.
Possible further extension
Despite it being too early to tell whether another extension of TERS is on the horizon, the TBCSA is determined to get this right and ensure all claims are paid.
“As for whether TERS is going to extended, as Allan said, we will work through the Nedlac process. I do sit in on that process, as [has been] done in the past, to get this extension. There’s of course a lot of negotiation that goes into it… Everyone who has applied and everyone who qualifies to be paid, will be paid. The process may take a little bit longer, but we will do whatever we can to make it happen,” stated Tshifhiwa in closing.