In Circular 1/2020 we wrote about the financial assistance government is providing, as well as the private funding that would be provided to employers and employees due to Covid-19.

The question is how does these interventions work in practice and what is the practical effect on employers and employees?

In this circular we will address one of the financial funding mechanisms government as implemented, known as TERS.

The first point to highlight about the government interventions as a whole is that the TERS and UIF benefits will likely not reach people employed in the informal sector as one of the requirements, such as being a contributor to the UIF, will not make it possible to claim the benefit.

The second point to highlight is the daunting administrative task for the UIF to process hundreds of thousands of applications as expeditiously as possible so that benefits can be paid out urgently.



TERS recognises that employees will have to be laid off temporarily and that they may lose income.

Whilst TERS encourages employers to pay employees (likely paid annual leave), the reality is that most businesses, especially SMMEs, will not have sufficient cashflow to carry the cost of salaries if they are not generating revenue, or enough revenue, to meet their expenses.  In these circumstances, temporary lay-offs or short time are inevitable to protect jobs and the business in the long term.

TERS is a benefit which has fallen under the UIF to pay benefits to contributors of the UIF who have lost income. Currently the benefits are for a period of only 3 months or until withdrawn by the Minister (presumably whichever comes first).

However, to access this relief there are numerous requirements to be met by the employer.


TERS: Requirements for relief

The scheme provides that the employer must:

  • be directly affected as a result of Covid-19
  • have closed its operations, temporarily or partially, or has reduced working hours for employees, for a 3 month or lesser period (the benefit only pays for the cost of salary during the partial or temporary closure period)
  • have suffered financial distress as a result of the closure
  • be registered with the UIF
  • comply with the application procedure

Whilst some of these requirements are fairly simple to prove, such as proof of registration with the fund or complying with the application procedures, TERS does not state how an employer is to prove that it meets some of the other requirements. For example, how does an employer establish that its business is directly affected by COVID 19 or that it has suffered financial distress as a result of the closure.

Most likely an employer will have to submit proof to demonstrate financial distress and a direct link to COVID 19.

The reasonable assumption is that the administrator, UIF, will determine if an employer meets these requirements based on value judgement and on the documents below, which will have to be submitted to the UIF.

Ultimately and given the pressure under which the administrators are under to deal with these applications, poor decision making, and inconsistent application of the requirements may become inevitable.

The administrative process itself may take too long resulting in the closure of business and ultimately no immediate and urgent relief for employees. This will result in many businesses unfortunately having to retrench their employees to save the businesses.

Any relief that eventually can be paid under the Scheme may also be limited and may not be able to adequately assist employees with their daily living and the upkeep of businesses.


TERS: calculating the benefit

The benefit under TERS stands separately from the normal UIF benefits and is not a loan.

The salary taken into account is capped at a maximum of R17 712.00 per month per employee, even if the employee is earning above the threshold. An employee will not be paid less than the minimum wage which is R3 500.00.

The benefit will be paid according to the Income Replacement Rate (“IRR”). The maximum IRR is fixed at 60% and the minimum IRR is currently set at 38%. In short, the amount the fund with pay out can vary between a maximum rate of 60% of remuneration for lower income contributors and a lower rate of remuneration for higher income earners.

The Covid-19 benefits will only be paid to the employee if the benefit together with any additional payments from the employer during this period does not exceed their normal remuneration that the employee would ordinarily have received for work during that period. However, if this calculation is less than R3 500.00, the employee will receive the minimum wage of R3 500.00.


TERS: Procedure to apply for the benefit

The employer must apply for the benefit on behalf of the employee. The employer must report the closure of their business to the email address: However, if an employer is a member of a bargaining council then the employer must contact their bargaining council to determine if any arrangements have been made with the UIF for the payment of TERS benefits to employees. These employers may not be able to apply to UIF for benefits if they are members of a bargaining council that has made arrangements with the UIF for the payment of benefits to employees.

A response will be sent back to the employer outlining the application process and the documents to be submitted. The required documents must be submitted to a separate email address being:

As at today, businesses that are sending out emails to TERS to register for the funding are receiving an automated response that “their (TERS funding) email addresses are no longer valid”. As there is no answer on the dedicated TERS landlines as a result of the mass incoming calls, the reasonable conclusion is that there may be a major backlog in the TERS application system or a technical error in the system.

In order to proceed forward with accessing the TERS funding, once the detours and glitches have been clarified, the employer must have the following documents ready for submission:

  • Letter of authority on the company’s letterhead authorising the appointed person to lodge a claim on behalf of the company
  • 3 months proof of payroll for all employees for whom the benefit is being applied
  • Confirmation of bank account details in the form of certified latest bank statement
  • A letter of confirmation from both the employer and employee showing that the employee was in an agreed precautionary self-quarantine for 14 days
  • A medical certificate from a medicate practitioner together with a continuation form (UI3) if the employee was in self quarantine for longer than 14 days
  • A memorandum of agreement will be sent to the employer. The MOA must be signed by both the employer/employee/bargaining council and returned to the Fund

Lastly, as a measure of protection for employees, the DOL has also regulated that the monies paid by or on behalf of the UIF can only be used to pay employees their benefits. It specifically records that the monies do not form part of the general assets of the business and banks cannot refuse to release or administer the transfer of these monies to employees – this is even if the employer is in overdraft. The reason for this seems to be that these monies do not belong to the employer but to the employees and the employer is merely acting as the agent for the UIF.

The dedicated number that has been created by the Fund for any queries regarding TERS is (012 337 1997). As stated above, as a result of high call volumes, an automated operator requests that the caller direct an email to (currently not operative).

What does this TERS benefit mean at present for all those businesses that still require assistance for their employees. The answer may well be that alternate income replacement mechanisms such as the UIF and SMME funding will have to be tapped into, and very quickly.


In the upcoming circulars we will discuss in detail the processes and practical effect of accessing the UIF benefits and SMME funding.