Budget2021: How will the Finance Minister fund the UIF COVID-19 TERS benefit?

The Temporary Employee/Employer Relief Scheme (TERS) provides financial relief to South African workers when their employers could not pay them or were required to take compulsory leave during different phases of the COVID-19 lockdown in South Africa. We hope the Finance Minister will address the TERS financial implications in the upcoming Budget Speech.

When the Minister of Employment and Labour first announced the TERS scheme, the budget was R40-billion. However, employees and employers have claimed close to R60-billion in payments since March last year, excluding valid outstanding TERS claims and TERS’ extension from 16 October 2020 to 15 March 2021.

The Unemployment Insurance Fund (UIF) has also seen a sharp rise in claims for ‘reduced work time’ benefits because employers implement ‘reduced work time’ to accommodate COVID-19 safety measures in the workplace.

What’s more, many South Africans lost their jobs permanently during the pandemic, resulting in increased volumes of normal UIF claims.

These numbers will only increase due to the economic state caused by the pandemic and lockdown. This leaves us with the burning question of where the funds will come from. The question is whether the Minister of Finance will consider an increase in the UIF contribution limit by taking the following facts into account:

  • The UIF contribution limit is currently R14 872 per month, which calculates the maximum UIF contributions. Therefore, the maximum monthly contribution is R148.72 for both the employee and employer.
  • The UIF benefit limit is higher than that at R17 712 per month, which is used to calculate the UIF benefits payable to the employee.
  • It, therefore, makes sense to possibly increase the UIF contribution limit to R17 712 per month, resulting in a maximum monthly contribution of R177.12 for both the employee and employer.

Will the Minister of Finance increase the UIF contribution limit to align with the UIF benefit limit? Only time will tell.

Quick start guide to Payroll Tax Year-End

We understand your day-to-day challenges; which is why we want to try and make your business life easier. We’ve prepared this guide to help you work more efficiently, giving you more time to do what you do best – run, manage and grow your business.

Download your guide