TERS overpayments: Employers to correct payroll, engage workers

Employers that incorrectly calculated employees’ benefits under the Temporary Employee / Employer Relief Scheme (TERS), need to correct their payroll and engage their staff, especially where staff were under the impression that the Unemployment Insurance Fund (UIF) TERS benefit would top up their salaries, and employers paid them on this basis before receiving the TERS benefit from the UIF.

The UIF is currently in the process of evaluating all transactions paid in April 2020 in order to validate correctness and accuracy of payment, and employers have to refund any amount above the normal salary to the UIF, as per a letter sent to employers in this regard.

In an article by Juanita Steenkamp, Project Director of the South African Institute of Chartered Accountants (SAICA), she said that following the President’s announcement on 23 April 2020, employers and employees assumed that the UIF would top up salaries to the normal salary that the employee would ordinarily receive.

The directive published by the Minister of Employment and Labour, the COVID-19 TERS as amended, stated that the total benefit together with any additional payment by the employer in any period, may not exceed the remuneration that the employee would have ordinarily received.

This led to the conclusion by employers and employees that the UIF would top up the usual remuneration of employees, according to Steenkamp. “For example, where an employee receives a salary of R6 000 and the employer can now only pay the employee R2 800, the expectation was that the UIF TERS benefit would cover the R3 200 – that is, the difference between the salary of R6 000 that the employee would have received and what the employer can now pay”.

This is unfortunately not the way that the UIF calculates these benefits, Steenkamp said. Based on feedback from the public where UIF TERS benefits were already paid out, as well as calculations performed using the UIF formula for benefits, SAICA can confirm that the following is the actual calculation:

For a salary of R6 000 where the employer pays the employee a partial salary of R2 800, the UIF TERS benefit calculated for 35 days is as follows:

The UIF TERS benefit will be R3 500 (which is the National Minimum Wage). This is divided by 30,414 days (which is the average number of days per month used by the UIF) which equals 115,07 (National Minimum Wage per day), multiplied by 35 days (from 27 March to 30 April – all days counted), which equals R4 027,45. From this amount, is deducted the amount paid by the employer: R2 800 / 30,414 x 35 = R3 222,20 The UIF TERS benefit to be paid is thus R805,25 .

SAICA is also of the view that employers that claim the UIF TERS benefit without informing the UIF that they are paying a portion of the salary and then later top up an employee’s salary, are not acting within the prescripts of the law, as the UIF specifically requires employers to inform them if they can afford to pay a portion of the salary.

Employers and employees need to take note of the difference when calculating the UIF TERS benefit and ensure that they account for the UIF TERS benefit correctly, Steenkamp advised

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