Many of our customers have asked us whether they are eligible to claim TERS and how it works. Although everyone has access to the Gazette and other official documents, people often want re-assurance that they are “on the right track”. There is also an information overload, with many websites and businesses offering advice. I have tried to sum up the most common questions we have been asked, and to explain it in laymen’s terms:


    1. Which businesses/employees qualify for the Covid-19 TERS (Temporary Employee/Employer Relief Scheme)
      • Businesses who were registered with UIF before the 15th of March 2020 and were up to date with their UIF payments.
      • Businesses who suffered financial distress due to the Covid-19 pandemic. Financial distress means a loss of income due to the complete or partial shutdown of the business. For services businesses partial shutdown could be interpreted as a loss of customers.
      • Businesses must not have been able to pay their employees their normal salaries/wages due to the financial distress they suffered and the employees must therefore have suffered a loss of income due to the reduced salaries/wages.
      • Businesses who paid full salaries/wages are therefore not eligible to claim.

    1. How are TERS benefits calculated and what can people expect to be paid?
      • TERS benefits are calculated according to a UIF sliding scale. It ranges between a maximum percentage of 60% of an employee’s monthly earnings to a minimum percentage of 38% of an employee’s monthly earnings.
      • Monthly earnings for purposes of this calculation is further capped to a maximum of R17,712 per month.
      • The minimum TERS pay-out is R3,500 per month. The maximum pay-out is R6,730 – 38% of R17,712 per month.
      • The TERS benefit payment is further capped to the loss of income that the employee suffered. If an employee earns R20,000 per month and the employer pays R15,000, the loss of income suffered by the employee was R5,000. Although the calculated TERS benefit would be R6,730 (38% of R17,712), it would be limited to R5,000 – the actual loss of income suffered by the employee.
      • It is important to note that TERS benefits are exempt of income tax.

    1. Can businesses calculate how much they need to pay their employees to get the maximum TERS benefit whilst ensuring that employees are in the same cash position as always?
      Yes, this means that the TERS benefit plus the net pay the employee receives during lockdown would be equal to the net pay she/he normally received before lockdown. These calculations will have to be done for each employee individually because each employee’s TERS benefit would be a different percentage of her/his normal salary/wage.

    1. Are employees who earn above a certain amount excluded from TERS?
      No, an employee who earns R100,000 per month and now “only” earns R90,000 per month due to the Covid-19 pandemic, has suffered a loss of income of R10,000 and is therefore eligible for TERS benefits. I believe this was an oversight because surely the intention cannot be to utilise UIF funds to sustain the lifestyles of the wealthy. The bottom line is that nobody is excluded from TERS benefits, as long as they suffered a loss of income.

    1. How long can businesses claim TERS for?
      • Businesses can submit claims from 27 March 2020 and for as long as the lockdown period lasts but limited to three months – therefore up to 26 June 2020
      • So far UIF has only processed claims for 27 March 2020 to 30 April 2020. UIF has not yet opened TERS claims for May 2020.

    1. Why does the employer claim on behalf of its’ employees?
      This is purely an administrative arrangement to make it easier and quicker for UIF to make payments – rather pay thousands of employers than millions of employees. These benefits belong to the employees and upon receipt, the employers must pay it over to the employees. The employer is merely a conduit through which the payments are channelled.

    1. Can claims be submitted for previous periods?
      Yes, claims can be submitted for the lockdown period that started on the 27th of March 2020.

    1.  Can employers Claim TERS for employees who were paid in full, but forced to take annual leave?

Yes. The employer is entitled to keep the TERS benefit if the employee had already been paid in full. However, the employer has to give the employee a leave credit which is equivalent to the TERS benefit. The rationale behind this is that although the employee did not lose income, she/he lost leave which has a monetary value. Also keep in mind that the TERS benefit is an after-tax value. For purposes of calculating the equivalent leave credit, the TERS benefit would have to be converted to a pre-tax value.

  1. More advice
    • Submit your May claims as early as possible. We expect the number of claims in May to be substantially higher than in April. This might cause a bottle neck and delay in payments.
    • Start preparing now. Doing calculations per employee can take a lot of time.

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