In today’s blog we have an important update on how best to interpret employee TERS benefit entitlements and the effect of additional payments by employers to employees participating under the scheme. We shall also touch base on tracking of UIF applications, updates from SARS and cast our eyes forward with respect to ETI.
Please note: This information is a reiteration of information provided by the Department of Labour on 30 April. It is provided for informational purposes only and is to the best of our knowledge correct at the time of publication.
Our previous blog based on information posted by SAICA on 29 April, suggested that employer contributions may greatly reduce the amount employees receive from the TERS benefit, as well as underestimating TERS benefit amount. The Department of Labour has since published its own FAQ document (linked below), which has shown that this was not correct. We unreservedly apologise for any inconvenience and angst this has caused you.
The following information is based on the Department of Labour FAQ (referenced as the DoL FAQ going forward), published 30 April 2020.
The amount that will be provided to each employee ranges between a minimum of R3 500.00 and a maximum of R6 638.40. This is further explained at the top of page 5 of the DoL FAQ.
Calculating an Employee’s TERS Payout
On pages 5-7 of the DoL FAQ, they explain how to calculate the TERS payout amount for an employee, before taking into account employer additions.
Benefit amount = Daily income x Income Replacement Rate (IRR)
To calculate the benefit amount, the above formula must be used. How to calculate the daily income for your employee and their own IRR, are shown on pages 5* and 6 of the DoL FAQ above. However, note that, if your employee is paid R17 712 or more, then there is no need to follow this calculation, as the entitlement will be R6 638.40.
*At the base of page 5, the term “Yi” may lead to confusion as it is a different format to the worked examples found on page 6. If at all confused, we would recommend following the method shown on page 6, using the daily income for both the amount put into the IRR formula, and for the value which you multiply with the IRR.
Effect of Additional Payments from the Employer
According to the above DoL FAQ, the correct interpretation of employer contributions is that they will not affect the employee’s benefit amount, unless the reduced salary and the TERS benefit amount would result in the employee receiving more than their normal remuneration if there were no lockdown.
For further explanation of this please refer to Page 7 of the DoL FAQ.
Submissions of Electronic UIF Declarations
Since the lockdown came into force, there has been an influx of applications to the UIF, which has caused a delay on their end.
To help inform you on the progress of your application when using the SimplePay UIF Declaration function, we have updated our system to give you an expected time period for reply from the UIF when:
- You make the submission on the SimplePay Website.
- When your submission appears in the UIF list as awaiting_response.
When you go to your submission, under the “Electronic Status” heading, you will see a question mark in a blue circle. Hover your cursor over the question mark to show the expected response time, based on the up to date average processing times.
For all the latest information from SARS, we would suggest following them on twitter (@sarstax). They are releasing nice bite-sized tweets on the various COVID-19 support measures, providing seemingly straightforward guidance for employers.
Annual Employer Reconciliation Period
SARS has not announced an extension to the annual employer filing period, meaning currently the deadline remains at 31 May. We are happy to announce that all of the necessary arrangements have been made on our end for you to proceed with your annual filing on the SimplePay site.
The system has now been updated to cater for the expanded ETI, in effect from 1 April 2020 and covered in this post from 6 May. We would like to thank all of you who held off on doing April EMP201 submissions while we made the necessary updates.
The new draft Disaster Management Bills propose a further widening of ETI by relaxing the requirement that employees have an employment date before 1 October 2013. As this is still in draft form, we will not be making further system changes yet – as soon as there is confirmation of it passing into law, we will communicate this and make the necessary updates to the system – please keep an eye on our blog and in-system notifications.
We hope that this information gives clarity on the TERS payout and helps you in understanding what is a very complex subject, as well as keeping you in the loop on UIF and SARS. Should you have any queries over the content or processes to follow within this blog, please contact our support team via [email protected].
Keep well. Stay home. Stay safe.