Business, Coronavirus Reliefs

(Source: PAGSA)

As you have all no doubt read in the media releases of 5 September, the Auditor General has recently conducted audits on the UIF TERS benefits that were approved and paid during April and May, a time when the Fund was under severe pressure to develop systems to control the rollout of the benefit.

Some of the senior personnel at the Fund, including the Commissioner, have been suspended to allow further investigations to take place unhindered. This has had a big impact on TERS benefit payments which have stopped while proper checks are put in place.

For many who have been involved in this process the news release was not a surprise as it has been an immensely frustrating journey. We have set out below the media feedback on what has happened and then raised a few points for employers to consider.

Interim Audit Results as Reported by the Media:

  • The UI Fund has had to process an unprecedented number of claims under the TERS benefit, aimed at assisting employees who were temporarily unemployed or partially unemployed during the Covid-19 lockdown.
  • Auditor-General Kimi Makwetu audited TERS claims made in April and May amounting to R28-billion. His findings point to a lack of verification and controls. The interim audit report highlights the following TERS benefit payments.
    • R140 556 822 was paid to 35 043 applicants who had already received benefits from other state institutions:
    • NSFAS students who received stipends, were paid TERS benefit claims of R10 335 344;
    • Beneficiaries of the SANDF received benefit claims of R327 638;
    • Employees paid through PERSAL were paid benefit claims of R41 009 737;
    • Disability grant recipients were paid TERS benefit claims of R69 419; and
    • Old age grant recipients were paid benefit claims of R88 814 684.
    • R10 215 765 in overpayments was calculated incorrectly by the early versions of the TERS system
    • R169 900 was paid to individuals who were indicated as being in prison
    • R685-millionwas paid to foreigners whose employers hadn’t paid contributions within the last 12 months
    • R441 144 was paid to deceased individuals
    • R30 071 248 was paid to 4161 employees with invalid identity numbers
    • R200 000 was paid to employees below the legal working age of 15.

“There is also evidence of overpayments (and underpayments) as well as inflated claims. I take these breaches very seriously,” (Minister Nxesi)

“The Unemployment Insurance Fund (UIF) is implementing actions to address what we have reported. We further selected payments to employers and bargaining councils to verify that the eligible beneficiaries were paid. The observations in this regard will be included in the next report,” (Auditor General Makwetu).

What might this mean to employers?

The first step is for the UIF TERS process to resume and payments to be started again and the subsequent TERS payment periods to be opened and processed.

Thereafter, as we have warned on a number of occasions it is highly likely there will be a ramp up of audits in the UIF space to recover funds where the UIF department considers incorrect claims for TERS may have been made. Please be warned. Audits will arise around the information submitted to the UIF department so make sure your house is in order.