Since the national announcement of the 21-day lockdown in South Africa, there is much uncertainty amongst businesses and employers on the effects the lockdown will have on the economy and employment. The lockdown will have a significant impact on many small, medium and micro-enterprises or SMME’s as they are popularly known.
The COVID-19 pandemic has had a detrimental effect on various developed first world countries including Italy, Spain and the United States of America. These countries have implemented far-reaching and efficacious measures to curb the spread of the COVID-19 virus.
South Africa has taken expeditious and decisive measures to curb the proliferation of the COVID-19 virus locally. In as much as these measures are awe-inspiring especially towards disadvantaged and vulnerable groups, the COVID-19 virus is still spreading at an alarming rate.
Taking into cognisance that there is a real possibility that Government may lengthen the duration of the national lockdown it is imperative that employers are proactive in planning and ensure that risk to business and employment is mitigated as much as possible.
This article will deal with some of the most important issues that will require attention in the event of an extension and the legal implications of such an extension.
We urge employers to consider their options, arrangements and contingency plans carefully, being ultimately prepared for whether the lockdown is lifted as expected on 16 April 2020, or not.
So, what are the possible options for businesses and employers:
Ensure that all material decisions are communicated with employees on a regular basis. The benefits of the internet and cellular technology are excellent for this purpose. It is easier to communicate now than ever before in history. Constant communication is an essential tool to ensure a productive and healthy staff complement. Employers are urged to make use of email, short message services (SMS) and social media platforms like Facebook and WhatsApp to get the message across.
- Work from Home:
Employees working from home should continue to do so. Despite remote working arrangements, there must still be communication between employers and employees. Employers must ensure that all the tools required to work from home are provided by the employer. For instance, if employees are required to make telephone calls, the employer must ensure that the employee has the necessary prepaid airtime or cellular contract to enable the employee to perform their duties.
- Reduced Salaries:
The employer and employee can come to an agreement relating to reduced remuneration and benefits. If there is an agreement, this agreement must clearly spell out what the reduction is and for how long will it be in effect.
Employers may reduce the working hours of an employee, with a proportional decrease in the employee’s remuneration. If the employer would like to implement short time to mitigate its losses during the COVID-19 pandemic, the employer should ensure that a proper process is followed, and all decisions communicated with employees.
- Temporary Lay-Off:
Employers may temporarily stop an employee’s work in circumstances where the employer is unable to afford the payment of an employee due to the financial circumstances of the business.
Should an employer consider the retrenchment of one or more of its employees for reasons based on its operational requirements which include the financial position of the business, Section 189 of the Labour Relations Act 66 of 1995 then applies. “Operational requirements” is defined as requirements based on the economic, technological, structural or similar needs of the employer. Extreme caution is required before the employer embarks on a retrenchment exercise, as was discussed in yesterday’s article.
- Temporary Employee Relief Scheme (“TERS” Process):
This entails a process whereby the Unemployment Insurance Fund may fund a financially distressed business directly in relation to the “TERS” allowance. It makes provision for the following relief: Wage subsidy; Wage subsidy and training; and a “turn-around” solution.
A financially distressed business will only be funded through “TERS” if it qualifies in terms of the requirements in its application for such process. The distressed business must also able to demonstrate in its application that it has a “turn-around” plan, or a sustainability programme – which will result in job preservation at the expiry of the funding agreement. Applications will need to be made through the CCMA on the prescribed forms.
We advise that our members and/or prospective members contact us for any advice or assistance in following the correct and appropriate procedures for the above-mentioned processes.
Many employers may have lodged applications with the COVID-19 Temporary employee/employer relief scheme. This scheme will be accessible for a maximum period of 3 months and employers may continue to claim from this fund for that duration.
Although at this stage there is no reason to expect an extension of the lockdown period, we do believe that it would be in businesses’ and employers’ best interests to plan ahead and make the necessary arrangements in the uncertainty of our current circumstances. Stephen Covey states that “Proactive people carry their own weather with them.”