Paid leave can be taken by staff if affordable to the business:
- This will assist the business in December 2020 shut down for cash-flow purposes, or
- the business can choose to work through December and try and recoup lost sales.
Unpaid leave is the alternative if paid leave is not affordable.
Unfortunately, if unpaid leave is declined the employee can be dismissed.
- Please seek formal legal advice in this regard.
UIF benefits are available to employees arising out of the Coronavirus pandemic and related reduced work time or business closures.
UIF is available to employees for Coronavirus benefits via a “National Disaster Benefit” UIF scheme.
- This is a separate initiative to the normal UIF benefits scheme with a limit of R3 500 per employee.
- This is available to employees if:
- There is reduced work time,
- The employee is sick due to Corona work virus,
- There is a death.
- If employees remain unemployed for greater than 3 months the normal UIF benefits will apply after the 3-month period.
Documents required other than the formal UI referenced documents will include:
- A letter from the Employer confirming company shutdown or employee’s temporary lay-off” is due to the Corona Virus
- Copy of employee’s ID document
See the link for UIF Easy Aid guide – http://www.labour.gov.za/easy-guide-for-employers-on-covid19
TERS (TEMPORARY EMPLOYER RELIEF SCHEME)
Details of the benefit are as follows
- The benefit is available to businesses who have been required to close or reduce their operations for a 3 (three) months or less and suffers financial distress.
- This benefit will only pay for the cost of salary for employees during the closure of the business.
- The salary will be capped at R17 712 per month per employee using the income replacement rate sliding scale (38% – 60%) as provided in the UI Act. (In the event that amount falls below the minimum wage, the amount will equal the minimum wage)
Does my company qualify?
- The company must be registered with UIF.
- The company must comply with the application procedure for the financial relief scheme.
- The company’s closure must be directly linked to the COVID-19 pandemic.
The data required includes:
- MOA (completion of the agreement between UIF, Bargaining Council and Employer) where applicable.
- The prescribed template that will require critical information from the employer.
- Confirmation of bank account details in the form of a certified latest bank statement.
In order to assist with alleviating the cash flow burden arising as a result of the COVID-19 outbreak, Government proposes the following tax measures for tax compliant small to medium-sized businesses, for a limited period of four months, beginning 1 April 2020 and ending on 31 July 2020:
- Deferral of payment of 35% of the PAYE liability, without SARS imposing administrative penalties and interest for the late payment thereof.
- The deferred PAYE liability must be paid to SARS in equal instalments over the six-month period commencing on 1 August 2020, i.e. the first payment must be made on 7 September 2020.
- The 1st 35 % reduced payment will be made as part of the PAYE payment run date 7th May, effectively for the April payroll month-end.
- Request a 3-month moratorium on all monthly instalments including property, vehicle and equipment finance.
- Interest will still be charged by the financial institution, but the cash flow reprieve will assist greatly.
- This may or may not be granted by your bank, dependant on the specific institution’s liquidity and policy, and any assistance already granted by the institution to date.
SMME DEBT RELIEF FUND
- Go online to http://smmesa.gov.za/ and apply for financial assistance as a result of the Coronavirus impact on your business.
- This is an R500k low interest (prime -5%) working capital loan assistance programme.
REGISTRATION AS AN ESSENTIAL SERVICE
- Register your business on the Biz portal – http://bizportal.gov.za/essential_service.aspx#
SAFT FUNDING FOR SMALL BUSINESSES
The South Africa Future Trust (SAFT) has been funded with an initial contribution of R1 billion by Nicky and Jonathan Oppenheimer. See link – https://opp-gen.com/saft/
The four major South African banks (Absa, FNB, Standard Bank and Nedbank) will administer the scheme. The banks have waived their normal credit fees for all loans approved under the SAFT scheme to maximise the funds available to recipients.
How to apply
- SMMEs need to apply through their main bank.
- Once approved, the funds will be paid directly to the nominated employees, however, liability for the loan remains with the business.
How it will work
- During this initial Covid-19 period, the funds will be disbursed as interest-free loans over a five-year term. Once Covid-19 has passed, any further funds donated or repaid to SAFT will be deployed towards initiatives aimed at accelerating economic growth and employment creation within South Africa.
- The reason for choosing this approach is to allow SMMEs who are suffering from short-term cashflow constraints to continue operations during this time of crisis, whilst retaining their employees
- Interest-free for a five-year period.
- Subordinated to other pre-existing debt.
- If businesses are unable to repay the loan, SAFT will work closely with SMMEs to ensure that repayment plans are in place which is sustainable for the business concerned. Interest-free for a five-year period.
- Annual turnover below R25 million Must have been trading for at least 24 months, Must have been a sustainable business on 29 February 2020, Must have been adversely affected by the Covid-1 outbreak.
- Company identification
- Registration number (for CCs)
- Master’s reference number (for trusts)
- ID number and address (for sole proprietors)
- PAYE number
- Income tax number
- Confirmation of employment status of employees
Industrial Development Corporation (IDC):
National Empowerment Fund (NEF COVID-19 FUND):
Department of Trade and Industry (DTI – Sector Relief):
Business Partners (Sakuma Relief Fund):
South African Council of Shopping Centres, South African Property Owners Association, SA REIT:
Guest Post by Jody Fabre-Financial Advisor