TERS & your Payroll

A comprehensive document outlining how to implement TERS in your payroll

View a recording of our latest webinar which goes through the process of the below and how to implement it into your payroll:

Conditions of Relief option

  • Company closure / Partial Closure of operations. (Partial closure of operations does not constitute short time or layoffs, although provision is made to make a 12.1 (b) claim through TERS)
  • Employer is not able to pay employees
  • Employer in good standing with the UIF regulations, if not the Employer can undertake to bring outstanding declarations up to date within a stipulated timeframe and Acknowledgement of debt.
  • Employee has a valid Passport or ID number.
  • Employee has a bank account.
  • Employee is an active contributor to UIF.
  • Not employed after lock down start date.

The right thing to do.

When faced with completing column “O” “REMUNERATION RECEIVED” in the spreadsheet it is of utmost importance that you on the behalf of your business / employer complete the information required accurately and with the best intention of assisting your employee.

“O” “REMUNERATION RECEIVED” are defined by the Unemployment Insurance Contributions Act.

 

The below scenarios will guide you through the decision making.

 

Scenario

Intention of Employer

Description

Remuneration received
Column “O” in TERS File

TERS Refund Amount

Total Income received

Shortfall

Legal vs illegal

A

Funds are available to pay workforce

100% of salary

R 6000.00

R 0.00

R 6000.00

R 0.00

Well intended

B

Only 50% of funds are available to pay workforce

50% of Salary, claim for difference on other 50% (up to limit UIF “12.1. B”)

R 3000.00

R 1027.40

R 4027.40

-R 1972.60

Well intended –  from 12.1.B (up to UIF limit)

OR via UIF

UI19 (Employer must use reason code 17 ‘reduced work time’)
UI2.7 (completed by Employer)
UI 2.1 b
UI 2.8 (bank form completed by the bank)
A letter from the Employer confirming Reduced Work Time is due to the Corona Virus
Copy of ID document.

C

0% of liquidity although provision for Leave available

50% of salary as advance (to leave that will be recovered) and balance to be paid to employee

R 3000.00 (As Leave Pay)
Not on TERS File

R 4027.40

R 4027.40

-R 1972.60

Well intended with the option to recover Leave days upon reimbursement

E

Funds are available to pay workforce but not declared

100% of salary and 100% of UIF limit claimed

R 6000.00 (Not declared)
Not on TERS File

R 4027.40

##########

R 4027.40

Well intended

Post TERS Claim

F

Good faith

Excracia Payment to employee (based on unforeseen income & in good faith of Employer)

R XXXX.XX

 

 

 

Well intended

 

 

 

 

 

 

 

 

 

 

 

Application of directive

Process:

  1. Go to https://uifecc.labour.gov.za/covid19/covid19
  2. Complete the online registration to register your company making use of your UIF electronic submission reference number.
  3. Accept MOU’s and upload employee details relevant to claim.
  4. Look out for approvals and communications.       

If successful the following conditions will apply:

  • These Funds may not be transferred to any other but the employees / employers / bargaining councils bank accounts, and ultimately to the Employee
  • These benefits must be Distributed to the employees within 2 days, where not specified it is overruled to be working days.
  • Maximum Monthly Salary value will be R17 712.00 per employee
  • These benefit Values will not be subject to any legislative levies
  • Auditable and foreseen but not confirmed SARS income code to be advised as a recon mechanism upon submission of EMP501 and Tax certificates
  • These Benefits May not be paid to employees engaged after the commencement of MOA and no increases may be implemented during this period.
  • You will need to advise the UIF of any termination of services of any employees in writing within 5 days.
  • Recording of the following within the payroll system.
    • Employer Record – Ensure that your Company information is correct
      • UIF Reference Number
      • Trade Name
      • Address
      • Bank Name
      • Account Name
      • Branch Code
      • Account Type
      • Account Number
    • Employee Detail – As per the Prescribed format
      • UIF Reference Number *
      • Shutdown From (YYYY/MM/DD) ONLY* – to simplify the matter it would be the period paying the field mentioned as Leave income, period of short pay.
      • Shutdown Till (YYYY/MM/DD) ONLY*
      • Trade Name*
      • Contact Number*
      • Email Address
      • ID Number*
      • Remuneration (Monthly)*
      • Employment Start Date (YYYY/MM/DD) ONLY*
      • Employment End Date (YYYY/MM/DD) ONLY
      • Sector Minimum wage per month *
        • Domestic: R 124 .56 per day
        • Agriculture: R 149.44 per day
        • EPWP: R 91.36 per day
        • Other Sectors: R 166 .08 per day
      • Leave Income (During Shutdown) * – Value of payment from employer during shutdown.
      • Bank Name*
      • Branch Code*
      • “Account Type *
        • 1 – Current
        • 2 – Savings
        • 3 – Transmission
      • Account Number *
      • Preferred Payment Medium *
        • 1 – Payment to employee direct
        • 2 – Payment to employer
        • 3 – Payment to Bargaining council
  • Although a separate account from an employer’s perspective is not required it is strongly suggested that the administration of the account / monies paid will adhere to accounting best practice in printable or electronic format
  • Accounting records will be available at any time to authorised persons from UIF, full access as deemed necessary!
  • Accounting records must be separate from business or employers’ normal proceedings
  • No Cash payments to employees are permitted
  • 5 years of record keeping.

Summary

  • The Unemployment Insurance Fund has set aside R40 billion to help employees who will be unable to work

  • To date, it has paid out R356 million.

  • Application Forms can be downloaded from the Department of Employments Labour Website labour.gov.za

  • You can also refer to the “Easy Guide for Electronic Claims” for more information.

4 Benefit options are available during the COVID 19 pandemic

  1. Reduced Work Time Benefit

  2. Illness Benefit

  3. Death Benefit

  4. Unemployment Benefit

Other Conditions to take in consideration:

  • Employee must be in good standing with UIF i.e. employee must have enough credits.

  • Employee is responsible to facilitate the process.

  • Employer in good standing with UIF and issuing of UI19

  • Benefit is subject to income replacement rate sliding scale

38 % (for high earners) up to 60 % (for low earners) as provided in the UIF Act.

  • Normal UIF payment process applies and deposited into employee’s bank account.

PLEASE NOTE:

  • With new amendments made early April one can utilise the TERS process as well.

  • Claiming for reduced Work Time via TERS you will need to submit company financials.

  • Following the UIF route no financials needed.

Conditions

  • Payable to contributors where the company is implementing short time due to COVID 19 and not opting for TERS.

  • Business closed down temporarily

  • Benefits payable is the difference between what employer pays and normal UIF benefits payable should an employee lose employment.

Application of directive

Complete the following documents

  • UI19 (Employer must use reason code 17 ‘reduced work time’)

  • UI2.7 (completed by Employer)

  • UI 2.1 b

  • UI 2.8 (bank form completed by the bank)

  • A letter from the Employer confirming Reduced Work Time is due to the Corona Virus

  • Copy of ID document.

Conditions

Where a contributing employee is in quarantine for 14 days due to COVID 19, the employee shall qualify for an Illness Leave Benefit.

Application of directive

Agreement (between employer and employee) to take special leave in light of COVID-19

In this instance the confirmation letter (between employer and employee will replace the need of a medical certificate

(Employee Self quarantined without consultation with a medical practitioner)

Should the employee be in quarantine for more than 14 days, a medical certificate from a medical practitioner must be submitted together with the Continuation Form (UI3) for payment.

The benefit is calculated in terms of the UIF Act (i.e. for every 4 days worked, the employee accumulates 1 day credit and the maximum credit days payable of 365 days for every 4 years)

Completion of the below mentioned documents.

  • UI19 (Employer must use reason code 10 ‘illness / medical boarded’)

  • UI2.7 (completed by Employer)

  • UI2.2 (a portion of which is completed by the Doctor)

  • UI2.8 (bank form completed by the bank)

  • Copy of ID document

  • Employer-Letter-Covid19

  • Employee-Letter-Covid19

Conditions

During the unfortunate event where a contributor passes on due to COVID 19, the dependent’s will qualify for a benefit.

Benefits are paid to the beneficiaries of the deceased

People who can apply:

  • Spouse

  • Life Partner

  • Children

  • Nominated person

Application of directive

Completion of the below documents

  • UI19 (Employer must use reason code 02 ‘death’)

  • UI53 (completed by the Employer)

  • UI2.5 or UI2.6

  • Death Certificate

  • ID’s of deceased and applicant

  • UI2.8 (bank form completed by the bank)

  • Copy of dependent’s ID

Conditions

A contributor who loses his/her employment due to retrenchments due to the COVID 19 pandemic.

Application of directive

Completion of the below documents

  • UI19 (Employer must use relevant termination code example 08 which refers to ‘insolvency/liquidation’)

  • UI2.8 (completed by Employer)

  • Copy of ID document

  • Proof of registration as a work seeker

Conditions of Relief option

Employer in good standing with SARS and eligible employees in service prior to date of lockdown.

Employee is paid the minimum wage applicable to that employer or if a minimum wage doesn’t apply, is paid the amount contemplated in the Minimum Wage Act and not more than R6 000 remuneration. If there is no prescribed wage regulating measure or not subject to or exempt from the requirements of the National Minimum Wage Act, a wage of at least R2 000 (where the qualifying employee was employed for 160 hours in a month) must be paid.

Application of directive

As from the 1rst of May An increase in the expanded employment tax incentive amount will be available whereby the below mentioned amount of R500 will be increased to R750 per month till final confirmation the below will remain the status quo and process to follow.

 

Identify individuals within the business that meets the criteria expanded to:

  • 18 to 29 who are no longer eligible for the ETI due to already claimed for within the preceding 24 months; and
  • 30 to 65 who are not eligible for the ETI due to their age.

Reinstate these individuals and allow for additional claim process.

Example as follows:

Example 1

Employer A has 10 workers earning R4 500 per month each. The employer can retain up to an additional R5 000 from the employer’s PAYE liability each month between April and July.

Example 2

Employer B has 3 workers. The employer claims the ETI for Employee A, the employer exhausted ETI claims for 27-year-old Employee B two years ago, and Employee C is 34 years old and has never been a qualifying employee. The employees each earn R4 500 per month. Employer B will be able to retain R2 000 per month. Since these are the only 3 workers, the amount will likely be claimed as a reimbursement from SARS.

 

April 2020.

 

 

 

Standard Ruling

Expanded

 

Remuneration

Age

ETI Period

ETI

ETI

Total

Employee A

R 4,500.00

20

13 Months

R 500.00

R 500.00

R 1,000.00

Employee B

R 4,500.00

27

25 Months

R 0.00

R 500.00

R 500.00

Employee C

R 4,500.00

34

1 Month

R 0.00

R 500.00

R 500.00

 

The maximum amount of ETI claimable during this four-month period for eligible employees is increased from R1 000 to R1 500 in the first qualifying twelve months and from R500 to R1 000 in the second qualifying twelve months.

During this four-month period ETI can also be claimed for employees from the ages 30 to 65:

The payment of ETI reimbursements will also be accelerated by changing the payment from twice a year to monthly

  1. You can only claim ETI if you are paying your employees, you cannot claim ETI against TERS/UIF payments to employees.

 

 

Identify individuals within the business that meets the criteria expanded to:

  • 18 to 29 who are no longer eligible for the ETI due to already claimed for within the preceding 24 months; and
  • 30 to 65 who are not eligible for the ETI due to their age.

Reinstate these individuals and allow for additional claim process.

Application of directive May 2020 – Proposed and to be confirmed.

Example as follows:

Example 1

Employer A has 10 workers earning R4 500 per month each. The employer can retain up to an additional R5 000 from the employer’s PAYE liability each month between April and July.

Example 2

Employer B has 3 workers. The employer claims the ETI for Employee A, the employer exhausted ETI claims for 27-year-old Employee B two years ago, and Employee C is 34 years old and has never been a qualifying employee. The employees each earn R4 500 per month. Employer B will be able to retain R2 000 per month. Since these are the only 3 workers, the amount will likely be claimed as a reimbursement from SARS.

 

April 2020.

 

 

 

Standard Ruling

Expanded (May 2020)

 

Remuneration

Age

ETI Period

ETI

ETI

Total

Employee A

R 4,500.00

20

13 Months

R 500.00

R 750.00

R 1,250.00

Employee B

R 4,500.00

27

25 Months

R 0.00

R 750.00

R 750.00

Employee C

R 4,500.00

34

1 Month

R 0.00

R 750.00

R 750.00

 

The maximum amount of ETI claimable during this four-month period for eligible employees is increased from R1 000 to R1 250 in the first qualifying twelve months and from R500 to R1 000 in the second qualifying twelve months.

During this four-month period ETI can also be claimed for employees from the ages 30 to 65:

The payment of ETI reimbursements will also be accelerated by changing the payment from twice a year to monthly

  1. You can only claim ETI if you are paying your employees, you cannot claim ETI against TERS/UIF payments to employees.

 

Deferral of Company Legislative Obligations (SDL and PAYE)

PAYE.

Limited period of 4 months from 1 April 2020 – 31 July 2020

Conditions of Relief option

Identify if you are a Qualifying employer’ – company, trust, partnership or individual.

  • Tax resident – registered before 1 March 2020
  • Employer must be in good standing with SARS.
  • Gross income of R50 Millon or less during the year of assessment.
  • Tax compliant in terms of Section 256(3) of the Tax Administration Act.

Application of directive

Employers are able to withhold 35% of the PAYE liability (Not UIF & SDL) upon payment of EMP201 without SARS imposing administrative penalties and interest for the late payment thereof.

Amendments where proposed on 21/04/2020 relating to SDL contributions and this will be added once approved.

The employer must still declare the full PAYE liability as calculated by their payroll system during this 4-month period. SARS will impose penalties and interest if it is later found out that the employer has understated the PAYE liability for this 4-month period. (Liability generated in April is due May 7th).

Completing your EMP201

Complete the monthly EMP201 return as per normal declaring the full amount liable for PAYE for the month. Do not reduce the value with your COVID benefit at this point.

External to completing your return calculate the relevant subsidy / deferral applicable to be paid to SARS

Example as follows:

Determining the deferral amount

  1. Where the result of the total PAYE liability less the ETI utilised (claim) is more than the deferral percentage on the PAYE liability, the full deferral percentage will be allowed.

Payment Calculation

PAYE liability (1 above)                    5000.00 X 20% deferral calculation = 1000.00

Less: ETI utilised (2 above)            -2000.00

PAYE payable                                   3000.00

Less: 20% deferral                           -1000.00

PAYE due after deferral                 2000.00

Plus: SDL liability                              600.00

Plus: UIF liability                               1400.00

Payment due to SARS                    4000.00

Although the EMP201 reflects a total payable of R5 000,00, the employer is allowed to pay only R4 000,00.

The deferred amount of R1 000,00 must be paid in equal monthly instalments commencing on 7 September 2020 and ending on 5 February 2021.

  1. Where the result of the total PAYE liability less the ETI utilised (claim) is less than the deferred portion of the PAYE liability,

the deferred amount must be limited to the PAYE Payable.

Payment Calculation

PAYE liability (1 above)                    5000.00 X 20% deferral calculation = 1000.00

Less: ETI utilised (2 above)            -4500.00

PAYE payable                                      500.00

Less: 20% deferral                            -500.00

PAYE due after deferral                          0.00

Plus: SDL liability                                  600.00

Plus: UIF liability                                  1400.00

Payment due to SARS                       2000.00

Although the EMP201 reflects a total payable of R2500.00, the employer is allowed to pay only the R2 000,00.

The deferred amount of R500,00 must be paid in equal monthly instalments commencing on 7 September 2020 and ending 5 February 2021.

SARS Statement of account

When the EMP201 is submitted for a month which qualifies for the payment deferral relief, SARS will programmatically calculate the deferral amount and issue a statement of account within a few minutes of the submission.

The statement of account will reflect the payment referral relief and the final amount which is payable by the employer.

Important: Best practice is to check the statement of account to ensure that SARS has allow the payment deferral relief. If this is not allowed on the statement of account, then it is an indication that there is a tax compliance issue.

Payment of the deferred amounts

The total of the deferred amounts for the months of April to July 2020 will be added together by SARS and divided by 6. These instalments will then be added programmatically to the employer’s account for August 2020 to January 2021.

When the employer submits the EMP201 for the periods August 2020 to January 2021, a statement of account must be requested to ascertain the total amount payable for the relevant month.

The payment reference number for the payment of the deferral instalments will be the same as the payment reference number for the month (August to January) that the employer is paying.

Do not split the payment into two separate payments as the deferral instalment payments are programmatically allocated to the relevant months, therefore the employer is only allowed to make one payment (which must include the deferral instalment).

Important: Should the employer not use the payment deferral, he must pay the full amount indicated in the “Total Payable” field on the EMP201. SARS will reverse the programmatic payment deferral calculation on their systems when the full payment amount is received in these cases.

This becomes more complicated if the employer is part of ETI and can reduce PAYE by the ETI amount calculated by the payroll for the month.

The deferral amount must then be limited to the PAYE payable.

The postponed PAYE liability must be paid to SARS in equal instalments over a six-month period commencing 1 August 2020, i.e. the first payment must be made on 7 September 2020, therefor stressing this is a deferral of payment and not exemption. The last payment must therefore be made on the 5th of February.

 

Want to download these document? view the download links below:

 

Payroll Managers Checklist A

Employer

      
 

Tax Clearance Certificate

Company Covid-19 Start Date

Company Covid-19 End Date

Registered Employer representative

Payroll data in electronic format

 

Payroll Managers Check List A

 

TERS

Yes

Yes

Yes

Yes

Yes

  

Reduced Worktime

Yes

Yes

Yes

Yes

Yes

  

Illness benefit

Yes

  

Yes

Yes

  

Death Benefits

Yes

  

Yes

Yes

  

ETI

Yes

Yes

Yes

Yes

Yes

  

Deferral of employees Tax

Yes

Yes

Yes

Yes

Yes

  
            

Employee

 

Certified employee ID document

Employee Covid-19 Start Date

Employee Covid-19 End Date

Employee Banking Details

Employee Dependent Details

Employee beneficiary details and further particulars to % splits

Employee Residential and Postal details

Employee e-mail address if present

Occupation

Education details / highest level

Remuneration current and historical

TERS

Yes

Yes

Yes

Yes

   

Yes

  

Yes

Reduced Worktime

Yes

Yes

Yes

Yes

  

Yes

Yes

Yes

Yes

Yes

Illness benefit

Yes

  

Yes

  

Yes

Yes

Yes

Yes

Yes

Death Benefits

Yes

  

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

ETI

Yes

Yes

Yes

   

Yes

Yes

  

Yes

Deferral of employees Tax

Yes

Yes

Yes

   

Yes

Yes

  

Yes

Payroll Managers Checklist B

Payroll Manager Check List B

 

Tax Clearance / EMP201

UI19

UI2.7

UI2.1B

UI2.2

UI2.8

UI2.5

UI2.6

UI53

 

TERS

Yes

         

Reduced Worktime

Yes

Yes

Yes

Yes

 

Yes

    

Illness benefit

Yes

Yes

Yes

 

Yes

Yes

    

Death Benefits

Yes

Yes

   

Yes

Yes

Yes

Yes

 

ETI

Yes

         

Deferral of employees Tax

Yes

         
 
 

Employer Confirmation

Employee Confirmation

Employee ID

Payroll History in electronic format

Employers Account Details

Employee Master details

Employee Remuneration History

Death Certificate

  

TERS

Yes

Yes

Yes

Yes

Yes

Yes

Yes

  

Reduced Worktime

Yes

Yes

Yes

Yes

  

Yes

  

Illness benefit

Yes

Yes

Yes

Yes

  

Yes

  

Death Benefits

  

Yes

Yes

  

Yes

Yes

 

ETI

   

Yes

Yes

 

Yes

  

Deferral of employees Tax

  

Yes

Yes

Yes

Yes

Yes

  

Payroll pre-COVID and Payroll Post-COVID

Process

Pre-COVID

Post-COVID

Employee Master file

Minimal information – information as required or compulsory for SARS submission

Holistically employee data

Recording of employee Beneficiaries

Only required by 3rd parties and usually maintained and stored on their side.

Recording of employee’s beneficiaries to be available and on hand should a claim be required from UIF.

Access to data and maintenance

Generally, the individual would be on site in a secure environment accessing the payroll application on a locally hosted server and application

Access to data to any party at anytime from anywhere.

Data storage employee.

The conventional employee file with relevant data / paper-based source.

Paper “Less” and not Paperless access to data where source documents are uploaded in the cloud.

Availability (the on and off switch)

Very site dependent, power, server, network availability, Speed, Priorities on network

The IoT DR, fail overs, 99.95% up time concurrent processing, multi-tenant, best of breed and evolving platform.

Platform

Local installed application, only available within VPN or remote desktop.

Cloud, preferred supplier

Delivery and service.

Key man dependency

Blueprint framework – introduce, familiarize and start to use framework to eliminate dependencies

Collaboration

A very centralized workforce.

Decentralized HCM model where multiple users are exposed to what they are accountable for and only that.

Workflow

Manual best practice and usualy the central departments preference

Blueprint driven workflows with spread accountability and a wide casting of net to gather holistic employee data.

Employee / Manager

Process driven making use of forms and signatures.

Workflow / platform driven and validated via electronic workflow and an approval

Communication

Billboard, Communique and meeting driven

Electronic e-mail, USSD, SMS etc.

Risk

Accountable and Responsible

Accountable but the responsibility of organigram.

Vendor Support

Site dependant

Anywhere, anytime.

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