SARS PAYE Deferral – reminder to start paying back

The 35% PAYE deferral for employers under the disaster management relief legislation was extended by another month to cover the August month instead of ending as the end of July. Don’t forget the deferrals now need to be paid back in 6 equal instalments starting on the 7 October until the 7 March 2021, with the timetable as follows:

  • September 2020 – payment due by 7 October 2020;
  • October 2020 – payment is due by 6 November 2020 (last business day before the 7th);
  • November 2020 – payment is due by 7 December 2020;
  • December 2020 – payment is due by 7 January 2021;
  • January 2021 – payment is due by 5 February 2021;
  • February 2021 – payment is due by 5 March 2021.

Further information is available on the SARS website.

The ETI challenge – EMP501 reporting

In May we reported on the fact that most payroll systems had mis-calculated the Employment Tax Incentive (ETI) because the disaster management legislation retrospectively changed rules making it exceptionally difficult.

We have been surprised to see relatively little communication about this from payroll software providers. We suspect then that most employers would have miscalculated their ETI for the six months ended 31 August 2020.

So, why is this important:

  • We have no idea what validation checks SARS will use for this recon period (in the past few days the validation checks have not allowed the disaster management ETI changes, but we assume this will be rectified). Without understanding your ETI calculations you will struggle to submit your EMP501 for this recon period;
  • Assuming SARS applies the validations correctly, if you haven’t manually adjusted your calculations for April and May in particular, then they will be wrong and your entire ETI claim will be rejected – leading to penalties and interest;
  • If you assumed your system would calculate ETI correctly during the disaster management period, you may have left lots of money on the table as unclaimed;
  • SARS is short of cash. There is a high likelihood of subsequent audits in this space given the complexity. Don’t be caught out having to pay penalties and interest post an audit because you assumed your system would do things correctly

We encourage all employers to do a manual calculation of their ETI to get comfortable with their claims and to support their EMP501 filing. Don’t be caught out.

Empowering the retrenched

In the current economic climate, organisational change is almost certain for many companies. This has led to fluctuations in the labour market as companies have been forced in many instances to downsize and go through retrenchment processes.

Employers and businesses are encouraged to adopt best-practice retrenchment programmes that look to empower those being retrenched – both emotionally and practically. This best practice should help limit the damage to the remaining employees helping productivity recover faster, thereby mitigating the negative impact of the retrenchment process.

It is not only the retrenched employee(s) that experience a high degree of stress and anxiety during the process, but the remaining employees and stakeholders as well – be they the line manager, the human resources department, or the business owner.  All involved parties go through a substantial amount of psychological stress before, during, and long after the process has ended.

Irrespective of the reason for the retrenchment, a portion of the psychological stress can simply be lessened through programmes that aim to empower the retrenched employee/s. These programmes include inter alia:

  • Training to help the employees find alternative employment
  • Counselling
  • Financial advice

If the impact of retrenchment can be minimised, then all parties can move on with their lives quicker, leading to a healthier working environment, more constant efficiency levels, upkeep of employer brand, and lower rates of post-retrenchment resignations.

By investing in a programme that assists each individual being retrenched to move on and find new opportunities, some of the pessimism of retrenchment can be eradicated.

Life after TERS

Author: Douw van der Walt & Meagan Cesare


Editor’s note: there are some useful options for employers to consider in this article. However, they all assume the proper functioning of the Department of Labour UIF Department and the CCMA. The UIF Department particularly is under immense strain. It is not certain therefore if these solutions are all workable practically i.e. will the processes at UIF allow them and will there be enough money to make payment and by when? This has an impact on employee / employer relationships as the employee naturally assumes that where they are not being paid it is the employer’s fault. Please be careful, communicate well and do your homework first.

South African business owners are emerging at the end of the lockdown period with a lot more wisdom, having suffered through some of the most testing times in recent history.

HRTorQue has experienced a high volume of enquiries from clients on how best to proceed in order to safeguard their business and to preserve jobs.  The importance of having well-structured financial plans and high levels of accounting acumen became starkly apparent, as for many small business owners these issues have not always been a priority and became lost in the everyday need to keep their company working and afloat.  This is an opportune moment to instill good financial habits or partner with a financial advisor and check in frequently with accountants for up to date results, which could allow analysis of problem areas before they go past a point of no return.

The introduction of the TERS UIF benefit by Government in March 2020 provided some relief to companies. However, TERS as a benefit has only been gazetted for a three-month period (April, May and June) and unless that stipulation is revised and a new Government directive passed; employers must now look for alternative relief to help them through another few months of potentially slow business conditions.  There has been recent talk of extending the benefit for those businesses that are ostensibly still in lockdown, such as the tourism industry, but nothing has been clarified.

Our advice to business owners who are still not yet fully operational is to consider the following alternatives:


Remote Working: 

This is a key consideration before more drastic measures are considered and could be beneficial for both the employee and employer. Many companies cannot bring all their staff back due to COVID-19 regulations which prescribe social distancing measures between employees, as a result of limited space at their business premises.  We suggest a careful analysis of your business structure and to identify those employees who are responsible, with good work ethics, and the right infrastructure to enable them to work from home.


Temporary Lay-Offs:

Lay-offs are envisaged as a temporary solution to a problem that will hopefully resolve itself once business confidence strengthens.  The principle of lay-off is that an employee remains employed with the company, but with no work and no remuneration for a certain period.  This may be covered in the employee contract or in bargaining council agreements.  If not, the employer and employer should enter into a consensus seeking process to enable the arrangement as provided for in s189 of the LRA.  This gives the employer temporary relief for the stipulated period where salaries won’t be required to be paid, but the employee is entitled to receive benefits from the Unemployment Insurance Fund.


Short Time or Reduced Working Time:

This is another option in terms of s189 of the LRA, and for many employers this may be the only way forward for another month or two. Short time is a fairly new concept in the definitions under which the UIF provides assistance, having only been introduced in 2018. The concept is defined as: “A contributor employed in any sector who loses his or her income due to reduced working time, despite being employed, is entitled to benefits if the contributor’s total income falls below the benefit level that the contributor would have received if he or she had become wholly unemployed, subject to that contributor having enough credits.”

An employee can apply either online or in person at a labour office and the documents are the same as those for temporary layoffs. However please note our concerns that there is still no certainty on the calculation and practical payment of the short time benefit by UIF yet.


Illness Benefit UIF for fourteen-day quarantine period:

Where an employee is ill, but has exhausted their sick leave days they can apply for the illness benefit from UIF.


Training Lay-Off Scheme:

(Editor’s note: we have not seen this operating in practice yet, so caution is warranted)

This benefit is overseen by the CCMA.  It is another temporary relief scheme designed to assist employers in distress and was envisaged as a means of reducing retrenchments.

Employees are laid off work for a period whilst they undergo training; they are provided with a training allowance grant from the Department of Labour and calculated on similar principles to UIF unemployment benefits.  Workers remain employed during the training lay-off but are not paid their normal salaries.  The lay-off may be combined with the short-time work arrangement.  The time period is flexible but is usually based on three to six months of training.

Employers may apply to the Department of Employment and Labour for the benefit and these are granted based on the submission of financial statements and budgets as well as a proposed turn-around plan. The CCMA also has dedicated resources that can be contacted for advice on how to start the process.



Should employers be forced to restructure their Company and retrench staff they must be careful to follow the required labour legislation and established protocols.

Consultations must be initiated with all employment parties such as workplace forums, registered trade unions whose members are likely to be affected, as well as with individual employees as the situation dictates.

An attempt to reach consensus must be made on the following:

  • Avoiding possible dismissals; this can be done by introducing reduced working time, temporary layoffs, offering early retirement to some employees or stopping overtime pay or the discontinuation of temporary employee contracts.
  • Negotiating ways to minimise the retrenchment of employees as well as discuss the timing of the exits.
  • The method of selecting employees to be retrenched must be stated as well as the severance pay envisaged.

The employer should provide all information related to these issues in writing; particularly the reasons for the retrenchment process as well as how many employees are going to be affected.   Reduce to writing any alternatives that were proposed and why they have been rejected. The number of employees affected must be disclosed, the timing of the retrenchment process as well as the severance pay that has been proposed.  There should be a reassurance of re-employment should the company find itself to have increased capacity at a later stage.

Retrenchments cannot be used for the sole purpose of getting rid of unwanted employees.

The employees or other consulting party must be given an opportunity to present alternatives and these must be considered, and a response provided.

At the conclusion of the consultation process, should no agreement be reached on the criteria for selection, then often the LIFO (last in, first out) principal may be applied, but this is not the only means of selection, i.e. for instance a combination of methods such as early retirements or departmental restructuring, or retention of key skill personnel may be used. The CCMA has published guidelines on how restructurings should be conducted, and these are updated from time to time and serves as a useful reference for parties involved in restructuring.

Severance pay as well as notice pay (per labour law) must be paid out.  Employees are entitled to their outstanding leave pay as well as any other criteria stipulated in their employment agreement.


There have been multiple press releases and changes announced over the past three months in relation to UIF benefits or DOL policies. These may change from day to day.  Details reflected in this article are correct at the time of going to press.  Kindly ensure that you check for updates from us on a regular basis.

Where to now with TERS and UIF Benefits?

Author: Douw van der Walt & Meagan Cesare


The Temporary Employer / Employee Relief Scheme (TERS) claiming process certainly did not start smoothly. The process changed regularly, and the systems often crashed due to the sheer volume of applications.

With the three-month legislated TERS period closing; employers have become increasingly concerned about the financial implications and long-term viability of retaining staffing at historical pre-Covid levels. The month of July looks to be a watershed month and without the TERS cushion, many employers may have to start looking at retrenchments or deeper short-time implementations. There is no simple answer as again mixed messages are being received from Government as to the likelihood of further Government support using UIF funding. The most recent message clearly states that TERS benefits will cease at the end of June as there has to be enough funds in the UIF coffers to pay out benefits based on the other UIF benefit pillars. That said, there have also been rumours that TERS will be extended for one more month as there is at least a system in place to get benefits to those employees in need. We hope that this uncertainly is cleared up by Government well before the next pay cycle comes around, but don’t hold your breath…

Assuming TERS benefits ends, there is still a potential alternative. An additional benefit pillar was introduced in 2018 to cater for ‘reduced working time’ (short time). The big differences between this benefit and TERS are:

  • The ‘reduced working time’ benefit is paid out based on the number of credits that the employee has.
  • This benefit is paid out directly to the employee based on a claim made by the employee.

In an ideal world this process is not that complicated. We are not in an ideal world though and having hundreds of thousands of employees trying to make applications at the Department of Employment and Labour under COVID-19 conditions would be a disaster. In addition, there is still no clarity on how the benefit would be practically calculated. Any application at the current moment would need to be made with reduced expectations of the timing and amount of payment. This makes the process difficult particularly as the claim needs to be made by the employee.

So, we are at a crossroads.

If TERS is extended for a month, HRTorQue will be able to assist you in submitting the claim for that month.

If TERS is not extended employers can still theoretically use the ‘reduced working time’ UIF benefit, with the hope that the UIF systems will allow for claims to be made with minimal human interaction. Bulk uploads by employers for such claims cannot currently be done on uFiling. HRTorQue, will however be able to assist your employees with the collection of the paperwork necessary to make a claim. We are in daily contact with the Payroll Authors Group of South Africa in this regard, and we are aware that they are having high level discussions with the Head Office of the Department of Employment and Labour. We will disseminate information as soon as it becomes available.

You are welcome to give our Team a call to discuss these options. We understand the pressures that business owners are facing and will do our best to provide practical and cost-effective advice in these challenging times. Due to the constantly changing landscape presently surrounding UIF benefits, both for TERS and possibly short-time scenarios, our information and advice is correct as of today, but may well change at a future time.  Ensure that you check in with us regularly for updated information.

Home Office Expenses – Tax deductions for Working from Home

Whilst the concept of a ‘home office’ is certainly not new the unprecedented challenges of the COVID-19 pandemic has brought the concept and its terms and conditions firmly into focus. With many companies not able to return to full or partial employment until at least Level 2, employers have quickly had to formulate plans to get employees set up in their homes so that they are in a position to get to a productive capacity as soon as possible.  The punitive cost of office space, traffic congestion and a changing work dynamic are all additional reasons why productivity conscious employers are looking at the ‘home office’ concept as a solution to such problems.

The onset of COVID-19 has pushed the need for employees to maintain a home office into a necessity. Overnight employees have been thrust into this new working culture. Employees have hurriedly had to set up a workspace to enable them to be productive and client-facing as soon as possible. In many of these cases the practicalities of such changes would have only been agreed after the fact, with the most important of these being the costs associated with the ‘home office’. Depending on the agreement reached with the employer in terms of who is required to pay such costs, the employee may need to familiarise themselves with the tax legislation in this regard.  SARS allows such employees to deduct their home office expenses within the “Other Deductions” section of their annual Income Tax return. It is important to note that this is only allowed under certain specific conditions. Before explaining the legislation though it is important to understand that the situation is different for sole proprietors or independent contractors who also work from home. They can automatically deduct their home office expenses and do not need to work through the same stringent set of conditions applied to employees to see whether they qualify for a deduction. The relevant portion of home office expenses can simply be reflected within the “Local Business, Trade and Professional Income” section of their annual Income Tax return.


So, what are the requirements to deduct home office expenditure for a salaried employee?

  • The employer must allow the employee to work from home. SARS requires that this fact be put in writing in the form of a letter or an addendum to the employment contract.
  • The employee must spend more than half of their total working hours working from their home office.
  • The employee must have an area of their home which is used exclusively for this purpose. For example, employees who meet clients in their dining room at home would not qualify. A separate office, which is used specifically for the employee’s work, must be maintained to qualify for the deduction. This is often a sticking point with SARS and could potentially be problematic, particularly with the flexible arrangements made to deal with the COVID-19 pandemic.
  • The office must be specifically equipped for the employee’s trade, i.e., it must be specially fitted with the furniture, tools and equipment required for the employee to perform their work. A room utilised for multiple activities would not qualify.


What expenses can be deducted?

Firstly, one must look at the employee’s remuneration structure to confirm whether they:

  • Earn more than 50% of total remuneration either from commission or some other variable income based on work performance; or
  • Is a normal salaried employee with variable payments or commission making up less than 50% of their total remuneration?

The first group (i.e., commission / variable income earners) can claim pro-rated deductions based on rent, interest on bond, repairs to the premises, rates, cleaning, wear and tear, and all other expenses relating to their home. In addition, they can also take other commission-related business expenses, such as telephone, cell phone, gifts, stationery and repairs to the printer into account.

The second group (i.e., salaried employees with variable payments or commission making up less than 50% of their total remuneration) can only claim pro-rated deductions based on rent, interest on bond, repairs to the premises, rates, cleaning, wear and tear, and all other expenses relating to their home.


How to calculate the home office deduction.

First calculate the total square meterage of the home office in relation to the total square meterage of the home and then convert this to a percentage. Then, apply this percentage to the home office expenditure to calculate the portion that is deductible.

This calculation is best explained with an example.

James is a design engineer who works for Smart Engineering. His remuneration only consists of a salary. His company is happy for him to work from home due to limited office space and flexibility in terms of working hours. He has a separate office at home which is fitted with a desk, cupboard, computer and printer which he uses exclusively for his job. The computer and printer were purchased one year ago for R21 000. His office is 10m2 and the floor space of his entire home, including the office, is 100m2.

During the 2020 tax year he incurs the following expenditure:

  • R100 000 interest on mortgage bond
  • R42 000 rates and electricity
  • R36 000 cleaning costs (including maids wages)
  • R8 000 security and monitoring costs
  • R23 000 cell phone expenses (business portion)

Based on the above information, James qualifies for a home office deduction. The square meterage of his home office (10m2) is 10% in relation to his entire home (100m2).

James’s home office deduction for the tax year can be calculated as follows:

10% x (R100 000 + R42 000 + R36 000 + R8 000) = R18 600

James would also be entitled to a R 7 000 wear and tear deduction on his laptop / printer (assuming a three-year SARS write-off).

As a ‘salaried employee’ James would reflect his home office expense / other claimable expenses claim within the ‘Other Deductions’ section of the annual Income Tax return (ITR12).

It is important to note that any deduction reflected in the ‘other deductions’ field will elicit a query from SARS. They will request details of the claim. The first thing to do is to clearly show the calculation of how the percentage of home office expenses were arrived at. It is advisable to have a detailed schedule reflecting the totals per expense item and then have the schedules of the expenses specific to the claim. It is not always practical to send every invoice to SARS so a schedule will allow them to choose specific expenses if necessary. With any home office submission to SARS you must include a copy of the letter / employment contract from your employer confirming the requirement to maintain a home office.

There is another tax issue that needs to be understood before going down the road of the home office. While people are eager to claim the home office tax deduction in order to reduce their taxable income (and ultimate tax liability), few people understand the negative tax impact a home office will have on the calculation of Capital Gains Tax when they sell their homes one day.

When taxpayers sell their primary residence, there is a primary residence exclusion of R2 million. This means the first R2 million of the capital gain (or loss) is excluded for the purposes of working out Capital Gains Tax. All individual taxpayers receive an additional R40 000 capital gains exclusion per year.

However, if the taxpayer worked from home and used part of the house as an office, the Income Tax Act requires the capital gain to be apportioned between primary residence use and business use. This apportionment must take into account the length of time that the home office was used as a portion of the entire period of ownership, as well as the size of the home office compared to the size of the entire property.

Before happily agreeing to the use of a home office there is some homework that the employee should do. The employee should compare the potential Capital Gains Tax implications with the annual tax saving from the home office deduction to decide which is more advantageous from a tax perspective. Whilst the Capital Gains Tax implications are unlikely to be material if only a small part of the home is used as a home office, it is still important to factor this consideration into the decision.

With the tax position now clear focus now needs to be put on the implementation process. Whilst we can all agree that we are working and living in unprecedented times, what we as humans often have problems with is communication.  Disagreements abound because people battle with communication. There is no better place to see communication challenges than in the workplace. Factor in a money issue and there is sure to be unhappiness. When discussing a change in working conditions with an employee ensure that there is adequate consultation on the matter and that the applicable terms and conditions are put in writing. The employee must understand what the expectations of them will be and what equipment and facilities will be required in this home office. After explaining the tax position and successfully negotiating the specifics of the new working conditions employer and employee should be in a good position to take advantage of this remote working relationship.

Government COVID-19 tax concessions

The impact of the COVID-19 pandemic has had far reaching implications on the South African economy and businesses, big or small. The true spirit of South Africans has come to the fore though and we have seen general society and Government quickly respond to deal with the hardships that have quickly become evident. Government has implemented various concessions to assist with the alleviation of the cash flow burden that tax compliant small to medium sized businesses may suffer arising as a result of the COVID-19 outbreak. The following concessions will be for a limited period of four months, beginning 1 April 2020 and ending on 31 July 2020:

  • Deferral of 35% of the payment of PAYE liability, without SARS imposing administrative penalties and interest thereon.
  • The deferred PAYE liability must be paid to SARS in equal instalments over a period of 6 months commencing on 01 August 2020, i.e. the first payment must be made on 07 September 2020.

Treasury has proposed the following changes to the qualifying criteria for the Employment Tax Incentive scheme during this concession period:

  • The Maximum ETI claimable per qualifying employee is increased to R1 750 in the first year of employment and to R1250 in the second year of employment.
  • Employers to be allowed to claim an ETI amount of R750 for employees who are between the ages of 18 and 29 years and are no longer eligible for ETI as the employer has claimed ETI in respect of those employees for 24 months (First new category).
  • Employers to be allowed an ETI amount of R750 for employees who are between the ages of 30 and 65 years who earn less than R6 500 (Second new category) and
  • The payment of ETI reimbursements to be made monthly instead of twice a year.

Provisional Tax has been addressed by the provision of the following concessions:

  • Deferral of the portion of the first and second provisional tax payments to SARS, without SARS imposing administrative penalties and interest for late payment of the deferred amount.
  • The first provisional tax payment (due from 01 April 2020 to 30 September 2020) to be based on 15% of the total estimated liability and the second provisional tax payment (due from 01 April 2020 to 31 March 2021) to be based on 65% of the total estimated liability.
  • The deferred amount must be paid when making third provisional tax payment (top-up) to avoid interest being charged.

The requirements to be met for the above proposed tax relief are as follows:

  • Annual turnover not exceeding R100m
  • The company must be fully tax compliant (No outstanding returns, no outstanding tax debt other than a debt of less than R100 suspended debt or debt subject to the instalment payment agreement.

A Skills Development Levy (SDL) holiday was introduced in the second wave of concessions. From 1 May 2020, there will be a four-month holiday for SDL contributions (1% of total salaries) to assist all businesses with cash flow. All employers who are registered for SDL will automatically qualify for the SDL payment holiday. The zero amount SDL liability will be defaulted on the relevant EMP 201 returns.

The tax deductible limit for donations (currently 10% of taxable income) will be increased by an additional 10% for donations to the Solidarity Fund during the 2020/21 tax year. Therefore, there will be a limit of 10% for any qualifying donations (including donations to the Solidarity Fund in excess of its specific limit) and an additional 10% for donations to the Solidarity Fund.

The 20% tax-deductible limit for donations will apply only to donations made during the 2020/2021 tax year. Any donations over the limit made during the 2020/2021 tax year will be carried forward and deemed to be a donation made in the succeeding year of assessment (2021/2022) and be subject to the 10% limitation in that year.

The donations thresholds have also been increased at payroll level. Employers can traditionally factor in donations of up to 5% of an employee’s monthly salary when calculating the monthly employees’ tax to be withheld. An additional percentage that can be factored in up to 33.3%, depending on the employee’s circumstances – will be provided for a limited period for donations to the Solidarity Fund.

This will ensure that the employee gets the deduction that is in excess of 5% much earlier than under normal circumstances and will therefore not have to wait until final assessment to claim a potential refund, provided the donation is made to the Solidarity Fund.

However, it is important to note that a final determination must still be made upon assessment as the employee may have other income, deductions, or losses that impact the final taxable income before the deduction of donations.

If these concessions are utilised effectively the cashflow injection into companies will go a long way to assisting such entities get through these trying times. The concessions must be managed correctly though as any slip ups could cost the company in terms of penalties and interest.

Second Revised Draft Disaster Management Bill

The Second Revised Draft Disaster Management Bill was issued by Treasury on 19 May 2020. Due to the time sensitive nature of the amendments for payroll it was imperative that National Treasury and SARS assist the Payroll Authors Group of SA by issuing the amended requirements that would impact on payroll.

In the latest Bill three of the Employment Tax Incentive (ETI) requirements are deemed to be retrospectively effective from 1 April 2020. The result is that the ETI values that have already been calculated for April in terms of the 1 April Bill must be recalculated by applying the 19 May formulas to the April employee data. The value of the ETI calculated in April for April in terms of the 1 April Bill, will differ from the ETI value calculated in May for April in terms of the 19 May Bill for the following reasons:

The 1 April Bill proposed:

  • An extra ETI amount of R 500
  • That the ETI value for the three extended age groups must not be grossed down if there are less than 160 employed and remunerated hours in April.

The 19 May Bill proposed:

  • An extra ETI amount of R 750
  • That the ETI value for the three extended age groups must be grossed down if there are less than 160 employed and remunerated hours in April.
  • That the ‘1 October 2013 employment start date’ qualifying test is deleted from 1 April until 31 July.

The ETI total for April that is recalculated in May according to the 19 May Bill can be either more or less than the ETI total originally calculated for April according to the 1 April Bill.

The challenge to the administrator dealing with the submission for the monthly EMP 201 returns is the fact that there has been a change in benefits and that an adjustment would need to be made in the May payroll. The difference between the two ETI totals must be applied to the EMP 201 as follows:

  • If the ETI total calculated in May for April is more than the ETI calculated in April for April, then the additional amount can be added to the normal ETI total for May in the May EMP 201
  • If the ETI total calculated in May for April is less than the ETI total calculated in April for April, then the April EMP 201 must be adjusted to reflect the lesser ETI total.

PAGSA is discussing with SARS the issue of the late payment penalty and interest that would be levied if the adjustment explained in scenario 2 was made (to the April EMP 201).

Any adjustment to the ETI totals would also have an impact on the tax certificates. The recalculated ETI values for April must be allocated correctly to the monthly ETI tax certificate fields. If this is not correctly done, the tax certificate amounts will not reconcile with the EMP 201 and EMP 501 totals when tax certificates are submitted to SARS for the 2020 mid-year tax certificate submissions and reconciliations.

Finally, one additional ETI matter that has an impact on the minimum wage qualifying criteria. Section 4(1)(b) of the ETI Act requires that the employee’s wage must not be less than R 2 000 per month, or the grossed-up value of the employee’s wage if employed and remunerated hours are less than 160 hours must not be less than R 2000 per month.

This section has been deleted by the changes in the May 19 Bill and this change will be in effect from 1 May 2020 to 31 July 2020. After this deletion though it was not clear whether or not the employees of that employer qualified in terms of section 4 if there is no wage regulating measure and the National Minimum Wage Act does not apply. SARS after consultation with PAGSA has confirmed that an employer that is not subject to a wage regulating measure and that is exempt from the National Minimum Wage Act is not eligible to benefit from the Employment Tax Incentive.

We are working in times of unprecedented change. Traditionally legislation takes at least a year to pass through the various consultative processes before it is ready for promulgation. In this case we are looking at a compressed consultative process and legislation amendment process. The pressure on payroll companies to make programming changes has been relentless. The timing of legislative changes could not have been worse though. At this point we expect that in a lot of cases changes in ETI claims for April and May, may only happen in June. Whilst we welcome any Government concessions, one has to question why these COVID-19 concessions have had to be so technical and difficult to implement.

Potential challenge – new directive by Department of Health – vulnerable employees

The Department of Health issued a new directive in late May to protect vulnerable employees from Covid-19 infection. While well intentioned the directive has the potential to offer some employees a way to get out of doing any work while still being paid. We have reproduced the directive and then look at this risk and how to mitigate it.

What is our concern?

In summary the directive creates quite onerous obligations for employers and requires employers to look after vulnerable employees (including the elderly, late pregnancies and severely obese employees) and provide them with an opportunity to see a doctor about their comorbidity vulnerabilities. This may end up in the doctor recommending the employee remain at home and/or take sick leave while requiring the employer to continue paying a salary while on sick leave and continue paying any medical aid benefit. Given the nature of some employees this seems to us to be an ideal opportunity for shirkers to be paid for doing nothing where the circumstances don’t warrant it. We would therefore recommend employers either work through a company appointed doctor so they can control the process or alternatively provide the employee with a detailed description of the safety precautions being taken at the workplace for presentation to the doctor (also requiring the doctor to confirm by signing that they have read the precautions). Feel free to contact us to discuss.

Note: non-compliance with the directive could be seen as non-compliance with the OHSA Act which carries some potentially quite stiff penalties for managers in their personal capacity.

In relation to the actual requirements of the directive:

What does the directive say? (source: Ministry of Health)

Who is a vulnerable employee in the context of COVID-19?

Section 5, subsection 5 (d) and (e) of the Regulations issued in terms of section 27(2) of the Disaster Management Act, 2002, specifically requires employers to adopt “special measures for employees with known or disclosed health issues or comorbidities, with any condition which or may place such employees at a higher risk of complications or death if they are infected with COVID -19; and “special measures for employees above the age of 60 who are at a higher risk of complications or death if they are infected with COVID-19.”

COVID-19 is a new disease and there is limited information regarding individual risk factors for an infected person with complications and needing higher levels of medical intervention. In order to minimise the adverse consequences of COVID-19 on selected persons, employers should implement a process in identifying employees who:

  • are at high-risk of developing severe illness from COVID-19; or
  • reside with or care for persons that are at high-risk for severe illness from COVID-19 (including family members, aged parents etc.)

The major categories of vulnerable employees include:

  1. 60 years and older
  2. One or more of the underlying commonly encountered chronic medical conditions (of any age) particularly if not well controlled:
    • chronic lung disease: moderate to severe asthma, chronic obstructive pulmonary disease (COPD), bronchiectasis, idiopathic pulmonary fibrosis, active TB and post-tuberculous lung disease (PTLD)
    • diabetes (poorly controlled) or with late complications
    • moderate/severe hypertension (poorly controlled) or with target organ damage
    • serious heart conditions: heart failure, coronary artery disease, cardiomyopathies, pulmonary hypertension; congenital heart disease
    • chronic kidney disease being treated with dialysis
    • chronic liver disease including cirrhosis
  1. Severe obesity (body mass index [BMI] of 40 or higher)
  2. Immunocompromised as a result of cancer treatment, bone marrow or organ transplantation, immune deficiencies, poorly controlled HIV or AIDS, prolonged use of corticosteroids and other immune weakening medications
  3. >28 weeks pregnant (and especially with any of co-morbidities listed above)


Assessing a vulnerable employee

  1. The employee should be assessed by his/her treating doctor, or, in the event that a worker cannot afford such costs, the employee should be assessed by a doctor, at the expense of the employer (noting the doctor-employee confidentiality) and preferably one who has insight into the workplace and its processes.
  2. The doctor should provide a confidential note to the employer, indicating the presence of any of the above conditions, without specifying the diagnosis. Should the employee have a condition not listed above, which in the opinion of the doctor renders this employee vulnerable a motivation would be necessary. The treating doctor should refrain from commenting on the employee’s fitness to work.
  3. The doctor should ensure that the employee’s health condition is fully optimized, which may include:
    • recommending flu vaccinations (and pneumococcal vaccine where appropriate)
    • INH prophylaxis for workers as stipulated in the Department of Health’s guidelines
    • continuous advice on maintaining compliance with treatment plan
    • the employee has adequate supply of chronic medication for up to 6 months
    • advise the employee not to delay getting emergency care for their underlying condition
    • advise employee to maintain ongoing health consultations if they have any concerns
    • ensure that the employee has access to psychosocial support for new onset or exacerbation of pre-existing mental illness


Protecting and managing vulnerable employees in the workplace:

  1. Employers should have a clear and transparent policy and appropriate procedures to address the specific needs of vulnerable employees beyond the workplace risk control measures for all employees. These policies and procedures should be based on legislative provisions specific to their sector.
  2. These measures need to take into account the individual circumstances of the employee in relation to their work environment and activities and would include:

2.1 Ensuring that potential exposure to the SARS-CoV-2 virus by this employee in their current job is eliminated or reduced such that the risk for infection is substantially minimised

2.2 If potential exposure cannot be eliminated or reduced, then the employer, in consultation with the relevant employee, should explore other ways of temporary workplace accommodation to prevent the risk of infection. These accommodations should be granted based on optimal utilisation of the employee’s skills/competencies, without a reduction in benefits and accompanied with adequate training where appropriate:

        • alternative temporary placement / redeployment to a different role and responsibility which has a negligible risk for transmission
        • restriction of certain duties (not allowed to perform high risk procedures)
        • protective isolation (e.g. providing a dedicated, clean office, etc.)
        • provision of specific PPE appropriate to the risk of the task/activity identified in the workplace risk assessment and adherence to PPE usage protocols
        • stricter physical distancing protocols (including staggering of shifts), barriers or additional hygiene measures
        • limit duration of close interaction with clients, colleagues and/or the public reducing external risks (use of public transport) by providing alternative transport arrangements where feasible

2.3 If the above steps are not possible, then consideration should be given to allowing the employee to work from home if able to do so, and the necessary equipment, internet access, etc. is available

     3. Leave procedures:

    • temporary incapacity, for the period of the COVID-19 epidemic, may be motivated by the treating doctor /occupational medical practitioner on the grounds that workplace accommodation is not possible
    • should this not be possible the employee should be able to utilise his/her sick leave if appropriate, as advised by the treating doctor/occupational medical practitioner
    • should sick leave be exhausted, the employee should be able to utilise his/her annual leave if an employee’s working time is reduced or temporarily stopped due to operational reasons (workplace functioning at 50% of capacity), an application can be made to the Department of Employment and Labour for the TERS benefit (COVID-19 temporary relief scheme)
    • where applicable the eligibility of the employee to receive additional company benefits and/or UIF (may be topped up by TERS benefit) should be considered
    • unpaid leave is not recommended and if contemplated, should be the last resort

4. Ensure employee’s existing health benefits are ensured:

  • maintain all employer-related medical aid benefits for employees already eligible for benefits until the employee is deemed eligible to return to work

Return to work (RTW) and incapacity management of the vulnerable employee post COVID-19 illness

  • ensure adequate worker’s compensation claim (WCA/COID) processing and rehabilitation if exposure was work-related
  • ensure that any sick leave related to a workplace-acquired COVID-19 related illness is managed under COIDA procedures
  • employees with mild illness (not requiring hospitalisation) should complete the mandatory 14 days isolation and return to work
  • employees that have been hospitalised due to COVID-19 prolonged illness and complications should be assisted by the employer to ensure RTW integration
  • a fitness to work medical evaluation should be performed in those with moderate to severe illness by an occupational medical practitioner/specialist and occupational therapist, where appropriate, to assess the presence and degree of clinical deficits (e.g. lung function impairment) and health problems related to ICU (muscle weakness, memory and concentration problems, mental ill health) since these employees may require prolonged work adjustment
  • rehabilitation may be recommended by the occupational therapist and other allied health professionals as appropriate

Registration for UIF with the Department of Labour

It has been eye opening to see how many employers had correctly registered with SARS for PAYE, UIF and SDL, but had not been registered for UIF with the Department of Labour for UIF, or had been registered, but had not been sending monthly UIF declarations.

Initially this caused huge angst because these employers’ TERS applications were being rejected. Fortunately, UIF has allowed employers to show they had made payment, so they didn’t lose out. However, the next step post TERS will likely be short time working UIF applications where the UIF credits built up by employees will be relevant and these UIF declarations (and history) will be critical for employees to claim.

A linked registration we also see consistently being missed by smaller employers in particular is the WCA/COID registration (required by all employers) and the filing of the annual return of earnings to the Compensation Fund. There will be some pain here particularly if an employee is infected and is then unable to claim from the Compensation Fund because the employer is not registered and/or not in good standing.