Debt-Relief Fund – Assistance to Small Businesses – Labour (UIF) – COVID-19

Credit: As taken from The FD Centre

 

As we endeavour to provide the best service to our clients, we are sharing the following information as a guideline. For further assistance in your specific case, contact MMS today.

1. AS REGARDS WORKER EXPOSURE IF YOU ARE AN ESSENTIAL SERVICE BUSINESS AND WILL CONTINUE OPERATING

a. Ascertain the category that your workers are in and act accordingly

2. AS REGARDS PAY AND RELATED ISSUES

a. From a pure COVID-19 impact perspective – as things stand normal conditions per the Labour Relations Act still apply

b. Normal sick leave regulations are in force

c. Normal short-time and related regulations are in force

d. There are some NEW UIF regulations regarding reduced working time

  1. An employee (i.e. contributor) who loses income due to the implementation of a duly arranged company policy which results in reduced working time, is entitled to claim and receive UIF benefits, if that employees’ total income falls below the benefit level that the employee would have ordinarily received if the employee had become unemployed (irrespective of that employee still being employed). It is however subject to that employee having sufficient credits available (i.e. as a result of their UIF contributions whilst being employed).
  2. The income received by the employee from reduced working time plus the value of UIF benefits calculated, may not exceed the benefits that would have been paid if the employee had become unemployed. Reduced working time benefits must be calculated based on the remuneration of the employee at the time that the reduced working time policy was implemented.
  3. The new UI-2.1, UI-2.7, UI-6A and UI-19 forms cater for the recording of reduced work time.
  4. There are also 2 new forms in the case of a worker not being able to attend work if exposed to the virus
  5. We have the batch of documents that need to be completed for your ease of reference should you require

e. A tax subsidy of up to R500 per month for the next four months for those private sector employees earning below R6,500 under the Employment Tax Incentive is to be implemented. Details are yet to be released.

f. The South African Revenue Service will also work towards accelerating the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible.

g. Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months.

h. The Department of Small Business Development has made over R500 million available immediately to assist small and medium enterprises that are in distress through a simplified application process. All small, micro and medium enterprises (SMMEs) may apply for relief on existing debts and payments. In order to be eligible, all applicants will be required to show an impact, or potential impact, of the virus on their business. This facility will also assist entities to acquire raw material, pay labour and operational costs. All these interventions will be structured to match the patterns of the SMME’s cash flows, as well as the extent of the impact suffered.

i. This application requires basic information such as your company’s registration and income tax numbers, details of shareholding and employee numbers. It is clear that certain sectors, those aligned to essential services in light of the virus crisis, will be prioritised. See below the current table that specifies what constitutes a medium, small or micro business by sector.

It would appear that the following criteria are applicable for this funding:

  • Company must be 100% owned by South African citizens
  • Employees must be 70% South African
  • Priority will be given to companies owned by Women, Youth and Persons with disabilities
  • Be registered and compliant with SARS
  • Be UIF compliant

3. OTHER CONSIDERATIONS

a. We also recommend you look at your insurance cover and see if there is cover for loss of profits; and if so what triggers this – if you need help in this area please speak with your MMS consultant.

*PLEASE SEE TABLE

TABLE REFLECTING MEDIUM; SMALL AND MICRO BUSINESSES BY SECTOR – ITS IS EXPECTED THAT THESE WILL QUALIFY IF THEY MEET THE CRITERIA FOR COVID RELIEF FUNDING

SECTOR SIZE MAXIMUM TRUNOVER
 Agriculture  Medium  R35 million
   Small  R17 million
   Micro R7 million 
     
 Mining and quarrying  Medium  R210 million
   Small  R50 million
   Micro  R15 million
     
 Manufacturing  Medium  R170 million
   Small  R50 million
   Micro R10 million 
     
 Electricity, gas, water  Medium  R180 million
   Small  R60 million
  Micro  R10 million 
     
 Construction Medium   R170 million
  Small  R75 million 
   Micro R10 million 
     
 Retail, motor trade, repair Medium  R80 million 
   Small R25 million 
   Micro R7.5 million 
     
 Wholesale Medium  R220 million 
   Small R80 million 
   Micro R20 million 
     
 Catering, accommodation, other Medium  R40 million 
   Small R15 million 
   Micro R5 million 
     
 Transport, storage, communication Medium  R140 million 
   Small R45 million 
   Micro R7.5 million 
     
 Finance and business services Medium  R85 million 
   Small R35 million 
   Micro R7.5 million 
     
 Community, social, personal services Medium  R70 million 
   Small R22 million 
   Micro R5 million 


If you found this information helpful, contact us now for help with your specific needs