How to calculate the UIF-Ters for employees.
Melitta Ngalonkulu / 20 May 2020 00:01
Image: Shutterstock
The government-initiated Temporary Employer-Employee Relief Scheme (Ters) is now paying out a day or two later after a successful claim.
Ters provides emergency relief for employers to claim benefits on behalf of their employees during the Covid-19 lockdown. This is to avoid employees losing income or being placed on annual leave as a result of the temporary closure of their employer’s operations.
The rules of the scheme stipulate:
Rule 1: The benefit will be de-linked from the UIF’s normal benefits and therefore the normal rule that for every 4 days worked, the employee accumulates a 1 day credit will not apply. The benefit will only pay for the cost of salaries of the employees for the duration of the temporary closure.
Rule 2: The maximum salary benefit to be taken into account in calculating the benefits will be capped at a maximum amount of R17 712 per month per employee and the benefit payable to an employee will be calculated using the income replacement sliding scale (38%-60%) under the UIF. In other words the maximum salary benefit is R6 638.40 per month per employee.
Rule 3: If an employee’s income is determined by using the scale falls below R3 500, the employee will be entitled to a benefit amounting to R3 500. In other words, the minimum salary benefit will be R3 500 per month per employee.
Rule 4: If the employee is being paid in full by the employer during the period of closure, the employee is not entitled to benefit under TERS. However, the employer is permitted to pay TERS benefits to employees in advance and then retain those amounts once the UIF makes payment of the TERS benefits to the employer.
Rule 5: An employee may only receive TERS benefits on condition that the total benefit together with any additional payment (ie top up) by the employer is not more than the normal remuneration that the employee would have received for working during that period.
However, the main frustration for employers claiming benefits under the scheme relates to the constant changes to the system, system errors and only some employees getting paid despite their companies having gone through the same application process and submitted the same documents for their employees.
Unemployment Insurance Fund (UIF) Commissioner Teboho Maruping says although several issues with the application and processing of Ters have been resolved, many challenges remain.
“Our commitment is to improve all the time and to pay back the trust that has been placed in us as a public insurance fund,” Maruping says.
He says so far, the Department of Employment and Labour has paid 2 551 236 workers, bringing the total value disbursed since April 16 to over R14 billion.
“We are now more confident in saying that we are on track to achieve our vision of a caring, accessible and customer-centric UIF that contributes towards poverty alleviation,” Maruping says.
Challenges
Shane Johnson, a professional support lawyer at Webber Wentzel, says that it has found that there is an administrative challenge for many of the foreign nationals working in restaurants.
“What we have picked up is that Zimbabwean-born employees who have applied for the UIF-Ters benefit seem to get rejected. There seems to a system error,” Johnson says.
He says that should an employer be unsuccessful in its Ters application, [due to a system error ] individual employees may apply for the reduced work time benefit under the UIF.
The UIF has also made a special illness benefit available to employees who are quarantined due to Covid-19.
“Ters benefit can assist an employer for a maximum period of three months,” Johnson says.
Treatment of Ters benefit payments
When considering the tax treatment of Ters benefit payments, it’s important to note that it’s the employee who is entitled to the Ters benefits and not the employer, Johnson says.
“Although the employer receives the payment of Ters benefits from the UIF, the employer is merely responsible for processing the payment on behalf of the UIF.”
The payment of Ters benefits should ideally be communicated separately to employees and not included in payslips.
He adds that Ters benefits do not constitute remuneration paid by the employer.
“Employers should not reflect Ters payments as remuneration on employees’ payslips and it should also not be included in their PAYE reporting to Sars.”
This is because the Ters benefit paid in advance is technically exempt from normal tax.
“This means no PAYE should be withheld from the Ters benefit advance in the payroll,” Johnson says. The payment of Ters benefits should be communicated separately to employees and not included in payslips.
However, for employers who pay Ters benefits in advance, it is probably best for employers to process PAYE in the normal course and then to make adjustments at a later stage after receiving the Ters benefits from the UIF. This is a recommended approach given that there is no guarantee that the employer will receive the Ters benefits from the UIF.
Employees who are exclusively commission-based earners are generally not registered with the UIF, therefore they will not be entitled to benefit from Ters.
“However, there are employers who pay a basic salary to commission-based earners. In this instance, the employer’s application for relief from Ters should be linked to basic salaries,” Johnson says.
How to calculate the UIF-Ters for employees
Johnson cites the following example:
If an employee earns R20 000 per month normally, but for the lockdown period the employer implements reduced remuneration and they then earn R15 000 per month, they can use the following formula to calculate how much they can expect to receive from the benefit:
Step 1
Calculate daily income for the employee:
R17 712 x 12 ÷ 365 = R582.31
Step 2
Calculate Income Replacement Rate (IRR) using UIF formula:
The TERS benefit per employee will be calculated by the UIF in accordance with the rules of the scheme and by the UIF applying IRR to the employee’s daily income. The maximum IRR is fixed at 60% and the minimum IRR is fixed at 38%.
IRR = 29.2 + 8.80 = 38%
Step 3
Calculate the daily Ters benefit amount:
Daily income x IRR = Daily Ters benefit amount
Step 4
Calculate the total Ters benefit amount:
Daily Ters benefit amount x number of lockdown days = Total Ters benefit amount
R221.28 x 30 days = R6 638.40
R582.31 x 38% = R221.28 (Daily Ters benefit amount)
“The total Ters benefit (R6 638.40) added to the amount paid by the employer during the lockdown period (R15 000) should not be more than that the employee would have received for working during that period (R20 000),”
If the employee receives the R6 638.40, this will contravene rule 5 of the UIF-Ters benefit as shown in the table above.
Read the original article on MoneyWeb
コメント