TERS update: 22 April
In an amendment to the directive establishing the Covid-19 TERS scheme, and to the direction issued on 8 April 2020, the TERS scheme now allows that –
“An employer who has required an employee to take annual leave during the period of the lockdown in terms of section 22(1)(b) of the Basic Conditions of Employment Act, 75 of 1997, may set off any amount received from the UIF in respect of that employee’s Covid-19 benefit against the amount paid to the employee in respect of annual leave provided that the employee is credited with the proportionate entitlement to annual leave in the future.”
The benefit received from the Department of Labour by an employer under the TERS scheme is a UIF benefit and in the ordinary course would be paid directly to the employee. It is therefore clearly not remuneration and not taxable.
Where an employer has decided to pre-fund the TERS benefit (in anticipation of receiving this from the DoL later) we would recommend the payment is treated as a TERS advance (and not remuneration). In the following period when the UIF benefit has been received this can be treated as a repayment of the advance. In the event the UIF benefit received is greater than the advance then the excess should be paid to the employee with no further consequences. If the benefit is less, then any excess not recovered from the employee will need to be re-classified as taxable remuneration