Mining Weekly

Employment and Labour Minister Thulas Nxesi has confirmed that discussions are under way with the South African Revenue Service (Sars) about the prospect of using the country’s tax infrastructure to support the Unemployment Insurance Fund (UIF) in implementing the Temporary Employee/Employer Relief Scheme (TERS).

He has indicated, however, that Sars’ role could be limited to facilitating the payment of benefits, rather than supporting the UIF in administering the scheme.

Speaking on Radio 702 on the morning of April 20, Nxesi said the department’s current assessment was that the UIF had the capacity to administer the scheme, notwithstanding the large volume of claims and despite rising anxiety about the UIF’s capacity to deliver.

The focus, he said, was currently shifting from the scheme’s architecture – which was finalised only on April 16 after talks with the social partners at the National Economic Development and Labour Council (Nedlac) – to the validation and payment of claims.

“We have processed applications of close to R1-billion and, as we speak now, we are of the view that the UIF is managing, but Sars is waiting on the side-lines in case our system crashes,” Nxesi explained.

The number of UIF officials appointed to process the TERS benefit had been increased from 25 to 200 and discussions were under way about the prospect of introducing a three-shift system to ensure 24-hour-a-day processing.

Administration by the UIF was critical, Nxesi argued, to ensure the validation of claims, as well as the proper governance of public money. He noted that some 23 000 claims had already been rejected as invalid.

“You have to sift all that information properly, because you are dealing with public money and there must be accountability – we don’t just simply pay.”

The TERS benefits are available to all employees who are, along with their employers, contributors to the UIF and where the employer has closed its operations, or part of its operations, as a direct result of the Covid-19 pandemic.

The benefit is determined with reference to a sliding scale, with the minimum salary amount set at R3 500 a month and the maximum at R17 712 a month. Employees will receive a percentage of their salary of between 38% and 60%, with the precise percentage to be determined in accordance with the UIF calculator.

The department has confirmed that about R30-billion has been set aside for TERS.

There is lingering anxiety, however, about the capacity of the UIF to administer TERS, with the Covid-19 Economists Group having recently made a call for a non-discretionary payment to be made automatically to all Sars-registered firms, covering a portion of workers’ wages using the tax system.

In a paper published on the network’s website and written by Miriam Altman, the Covid-19 Economists Group argues that the scale of the benefit could still be calculated along the lines of the TERS benefit and that the funds could come from the reserves accumulated by the UIF.

It is estimated that such a programme would cost R27.3-billion a month and that funds paid to firms not affected by the lockdown could be recouped through tax returns.

Nxesi said that government was indeed considering a ‘blanket’ scheme, but stressed that the progress made on the TERS benefit had followed elaborate negotiations within Nedlac and that the current priority was, thus, implementing the scheme as agreed.

Cabinet would meet on April 20 to consider various socio-economic proposals, he added.