National lockdown
On 23 March 2020 the President announced a nation-wide lockdown for 21 days, effective
from midnight on Thursday, 26 March 2020 until midnight on Thursday, 16 April 2020.
All South Africans, other than those whom are exempt will have to stay at home. Exempt
persons include:
- Health workers in the Public and Private Sectors;
- Emergency personnel;
- Security Services – such as police, traffic officers, military and medical personnel,
and other persons necessary for the response to the pandemic; those involved in the
production, distribution and supply of food and basic goods, essential banking
services, maintenance of power, water and telecommunications services, laboratory
services and the provision of medical and hygiene products.
A full list of essential personnel will be published shortly. Watch this space.
Individuals will not be allowed to leave their homes except under strictly controlled
circumstances, such as to seek medical care, purchase food, medicine and other supplies or
collect a social grant.
All shops and businesses will be closed, except for pharmacies, laboratories, banks,
essential financial and payment services, including the JSE, supermarkets, petrol stations
and health care providers.
Companies that are essential to the production and transportation of food, basic goods and
medical supplies are to remain open.
A full list of categories of businesses that should remain open will be published shortly.
Watch this space.
Companies that require continuous processes such as furnaces and other mining operations
will be required to make arrangements for care and maintenance to avoid damage to their
continuous operations.
Businesses are encouraged to continue their operations remotely if they are able to do so.
The National South African Defence Force will be deployed to support the South African
Police Services in ensuring compliance with the lockdown.
Economic response
In recognition of the impact of the national lockdown on an already ailing economy,
government will implement a number of initiatives.
1. The Solidarity Fund
The Solidarity Fund has been established and all are encouraged to contribute.
The solidarity fund will focus efforts on combating the spread of the virus, help to
track the spread of the virus, care for those who are ill and support those whose lives
are disrupted.
2. Regulations regarding price hikes
Regulations that prohibit unjustified price hikes, ensure that adequate stocks are
maintained and prevent panic buying, were published on 19 March 2020.
3. The informal sector
A safety net is being developed to support persons in the informal sector whose
businesses are anticipated to suffer as a result of the lockdown. No details of this
have yet been made available.
4. Temporary Employee Relief Scheme
There is consultation on a proposal for a special dispensation for companies that are
in distress and cannot pay employees wages during the lockdown. It is suggested
that, through this proposal, employees will receive a wage payment through the
Temporary Employee Relief Scheme which will enable companies to pay employees
directly during this period and avoid retrenchments.
A similar proposal was already announced on 17 March 2020 by the Minister of
Labour. That proposal required of a company, contemplating a short-term shut
down, to inform the Unemployment Insurance Fund. It also stated that a team from
the Department of Employment and Labour would visit these companies to provide
assistance with the processing of claims.
The following is apparent at this stage:
- A company “in distress” is not defined and there is accordingly no clarity as to
who precisely would qualify for relief;
- The proposal is in the development phase and there is again no clarity as to
what relief will be provided or how it will operate; and
- Given the lockdown and the number of companies who will probably seek this
relief, it is unlikely that teams from the Department of Employment and Labour
will be in a position to visit companies. There is likely to be an alternative
mechanism for accessing this relief.
5. Compensation for Occupational Injuries and Diseases Act (“COIDA”)
Employees who fall ill through exposure at their workplace will be paid through the
Compensation Fund in terms of COIDA.
6. A tax subsidy for certain private sector employees
A tax subsidy of up to R500.00 per month for the next four months will be provided to
private sector employees who earn less than R6,500.00 per month (under the
employment tax incentive). Details have yet to be provided, but it is anticipated that
this will be in a form of a wage subsidy paid via employers.
7. Utilisation of UIF reserves
Reserves within the UIF system will be utilized to extend support to workers in SME’s
and other vulnerable firms who are faced with loss of income and those companies
who are unable to provide support.
This is a proposal which is still in its development stages. There is again no clarity as
to whether this relief is only available to SME’s, what constitutes a “vulnerable firm” or
whether an assessment exercise will be conducted as to whether the relevant
business is able or unable to provide support.
8. Assisting businesses
Commercial Banks have been exempted from the provisions of the Competition Act
in order to develop common approaches to debt relief.
The South African Revenue Service will accelerate the payment of employment tax
incentive reimbursements from twice a year to monthly to assist in getting cash into
the hands of compliant employers.
Tax compliant businesses with a turnover of less than R50 million will be permitted to
delay 20% of their PAYE 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.
The reduction of employer and employee contributions to UIF and the Skills
Development Fund are being explored.
The Department of Small Business Development has made over R500 million
available to assist small and medium enterprises that are in distress through a
simplified application process.
The Industrial Development Corporation has put a package together with the
Department of Trade Industry and Competition of more than R3 billion for funding to
address the situation of vulnerable firms and to fast track financing for companies
critical to the efforts in fighting the virus and its economic impact.
The Department of Tourism has made an additional R200 million available to assist
SME’s in the Tourism and Hospitality Sector which are under particular stress.
What do I do with my employees during the national lockdown?
Obviously employees, other than those who are exempt, must stay at home and may not
render services.
Government requests that business look after its workers and where possible pay them
during this period. The reality is that many employers will not be able to do so. This appears
to be recognised by government through the various initiatives aimed at giving employees
relief in circumstances where they will not be paid and the initiatives aimed at business so
that it will be in a position to pay wages.
In our earlier communication we advised that, where an employer elects to close its business
in circumstances where the employees tendered their services, there was a legal obligation
on the employer, in terms of the employees’ contracts of employment, to pay the employees.
With the national lockdown, not only are most employers unable to accept a tender of
services, employees are equally unable to tender their services. In the circumstances, there
is no contractual obligation on employers to pay employees during the lockdown period. Of
course, there may be a moral duty on employers to do the best they can for their employees.
This however is quite obviously dependent on their resources.
Employers therefore have the following options:
- Leave without pay may be implemented. Assistance with accessing unemployment
insurance and the Temporary Employee Relief Scheme and whatever tax subsidies
are available should be provided;
- Employees may be placed on special leave where employers are at liberty to pay
remuneration either wholly or in part depending on their resources;
- Employees may be required to utilise their annual leave, in which case the
employees must be paid their usual remuneration; or
- Employees may work remotely where appropriate and be paid their full wage or a
portion thereof depending on how productive they are able to be.
