Minister & Department on experiences, challenges and future plans with regards to COVID-19
22 April 2020
A joint sitting of the Portfolio Committee on Employment and Labour & the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour was briefed by the Department of on its Covid-19 response plans, in respect of the Unemployment Insurance Fund, Compensation Fund & Inspection and Enforcement Services.
The Minister of Employment and Labour highlighted the UIF’s response to Covid-19 through the Temporary Employer/Employee Relief Scheme, had disbursed over R1.6bn, benefitting 606 000 employees. He noted the sectoral approach to disbursement through bargaining councils was progressing rapidly.
The Minister warned MPs that a number of companies would not be able to recover, either immediately or not at all. The reality was there would likely be massive retrenchments. Some economists had projected between 1 and 2 million additional unemployed - this was a very serious matter. This made it highly likely that many companies would apply for the TERS, and the Fund would be under serious strain.
The Department provided more detail on the UIF’s disbursement procedure and statistics, stressing the 48-hour turnaround time and involvement of SARS and bargaining councils in the disbursement strategy. The Compensation Fund’s operating procedure and acceptance of 15 cases of Covid-19 related liability was also covered. Finally, the continuation of OHS inspections by IES inspectors, subject to adequate PPE availability, was covered.
Members’ discussion focussed on the procedure and turnaround of TERS disbursements, especially the application process and the need for accounting schedules for employers receiving money. Members also requested clarification as to the current and future capacity of the Compensation Fund to deal with a likely uptick in claims. IES inspections were welcomed, and Members stressed the need to ensure health and safety standards were respected more than ever.
Chairperson Dunjwa welcomed the joint sitting of the Portfolio and Select Committees, noting the challenges and issues currently faced by the country as a whole. She congratulated the Government and President on the work they had done to mitigate the effects of Covid-19. In the same vein she congratulated the Minister of Employment and Labour, Mr Thulas Nxesi, as well as his department.
She noted her concern over a video of Mr M Bagraim (DA) that was circulating.
The role of the Committees was to assess what had been done for workers in the current situation. She welcomed the stimulus package announced the previous day by the President.
It was important that the Minister talk to the capacity and capability of the entities concerned in the day’s briefing. The joint sitting would not be harsh – but it would be thorough.
The Committee Secretary noted attendance at the meeting.
Minister Nxesi commenced his briefing, affirming his commitment to the oversight duty of the legislature on the executive. Nevertheless, he noted Covid-19 was an intense period for the executive and country as a whole. Information was key and the Department was expanding its communication capacity. Government was seeking to slow the spread of the virus whilst mitigating the devastating economic impact for businesses and workers.
Minister Nxesi proposed that the UIF was delivering: it had paid out R1.6bn under the Temporary Employer/Employee Relief Scheme as of 21 April, for 606 000 workers. It was continuing to process claims. The UIF was finalising applications from bargaining councils which would be paid out soon – these represented roughly 1.8 million workers. He applauded the road and freight bargaining council, which had paid out R150 million to its 13 000 members from its own pockets and was awaiting compensation from the UIF.
The Fund continued to pay normal UIF beneficiaries, separate from Covid-19 beneficiaries. These beneficiaries did not need to submit monthly continuation forms. The Fund had distributed R522 million to these beneficiaries since the lockdown began.
The UIF incorporated 1.8 million employers representing 8 million employees. It was clear the fund would be inundated with claims when the lockdown began. There was a concern that the normal application procedures would endanger the public and employees. The UIF thus opted to move to mass disbursement through employers, sectoral representatives and bargaining councils. This required agreements at NEDLAC and bargaining councils. Only when consensus was reached there did the Fund request submissions. The Fund had been working with banking and insurance sectors to process the volume of transactions, and SARS had been assisting to disburse to payment hubs.
To assist employers and claimants, the capacity of the UIF Call Centre had been expanded from 25 to 200 people through partnership with the Harambee Youth Employment Accelerator. The UIF toll free number is 0800 030 007. Telkom SA assisted to migrate the call centre to the Harambee YEA. For those without phone or internet access, the Fund had placed drop boxes at labour centres. Vodacom assisted with online applications for the youth. The UIF had a problem with employers not applying on behalf of employees. Workers would remember who was on their side during Covid-19.
TERS had flagged noncompliance, especially non-payment of UIF benefits or retention of UIF benefits by employers. The Fund could not pay out in these cases. However, the sins of employers should not be visited on the employees. The Minister encouraged noncompliant employers to regularise their accounts.
Social partners had to be kept informed. The Minister would not hide when there were issues. He noted the importance of honesty. As the new disbursement models were bedded down, the Department would communicate regularly. He handed over to the Director General.
Briefing by Department of Employment and Labour (DEL)
Mr Thobile Lamati, Director General, DEL, thanked the Minister for the substantial overview.
He highlihted the three major issues the Department was addressing:
- Protection of workers
- Supporting enterprises, jobs and income
- Supporting economic growth
The first policy response was looking at reducing worker exposure, the second providing income support to those quarantined, and finally preserving jobs and supporting workers losing employment.
In terms of the UIF, under the temporary shutdown, employees were compensated as per section 12 (1) (b) of the Unemployment Insurance Act. Because the UIF wanted to make things easier, it was imperative to relax directives. It had amended calculations especially as per employer top-ups over TERS. A dedicated email for inquiries was created, with autoreplies so that when claims were lodged, the system responded directly.
The DG noted the report claiming that the UIF only paid out 34 claims. This was dishonest reporting. Applications were erroneous and had to be sent back in terms of processing. The Fund was now processing these claims.
The sectoral approach worked much better. The UIF had discussed with bargaining councils, it continued to engage those not involved yet. Bargaining councils were doing an excellent job acting as disbursement agencies. Within a day or two, money was in the hands of employees.
The UIF had not neglected the payment of ordinary benefits. It had paid R670m to date for various benefits it offered. Operations of the UIF at provincial level never stopped. Sectors were applying for normal benefits.
The UIF received over 55 000 TERS applications before the system was deployed on 15 April. It paid out 6986 of these 55 000 applications. The UIF processed fewer applications initially as it was stress-testing the system, so decided to be cautious. The Fund picked up duplicates, errors in applications, mainly employers who did not put correct banking details for employees. The UIF was left with roughly 34 000 applications. It put all these applications through processing system. The Fund ended up paying 37000 employers yesterday, 790 000 employees benefitted. The rand value was just over 1.6 billion. The UIF urged employers to submit correct information. The Fund had committed itself to a turnaround time of 48 hours.
The DG noted given the extent of envisaged job losses, the system would be inundated with huge volumes. As part of the UIF business continuity plan, it was working with SARS to check system compatibility, so that in the event of system collapse, processing of applications could continue, and disbursements could be made. Regarding payments per province: Gauteng had the lion’s share, followed by the Western Cape, KwaZulu-Natal and the Eastern Cape. As of 22 April, the UIF had 21 000 applications. At 13:00 it should have a sense as to how many applications went through for payment. This concluded the presentation on the UIF.
Chairperson Dunjwa asked Members whether they wanted to give input before the Compensation Fund briefing.
Mr M Cardo (DA) indicated his desire to address the UIF issue.
Dr N Nkabane (ANC) suggested the opposite, noting the time constraints. Issues in the discussion would likely cut across funds.
Mr M Nontsele (ANC) agreed with Dr Nkabane.
Ms H Denner (FF+) agreed with Mr Cardo’s proposal.
Chairperson Dunjwa allowed the Director General to continue.
The Director General noted compensation was for those injured at work. The Compensation Fund (CF) issued a government gazette notice confirming Covid-19 contracted in the workplace as an occupational disease. A team of medical professionals had been established to address this. Especially eligible were those at high risk of Covid-19 contraction. Employees who contracted covid-19 were required to quarantine or isolate
As of 21 April, the Fund had received 15 applications – it had accepted liability and claims were being processed for payment. Post-lockdown, normal fund services would continue albeit electronically. Deadlines would be extended to 30 June. Walk-in centres would remain closed – consultations would take place electronically and by appointment. The Compensation Fund would ease back in to operation once the lockdown ended.
In terms of the Inspection and Enforcement Services, the Department declared OHS inspectors as essential workers. It expected the amount of work for them to be substantial. The IES issued guidelines to companies, splitting the workplace response to Covid-19 into engineering controls, administrative controls, safe work practices and PPE. The fundamental concept of safe work practices was to comply with social distancing. The provision of PPE to employees was essential, but only part of the response. Often people rushed to distribute PPE without taking the other measures to limit spread.
A summary of inspections was available in the presentation. IES had inspected government offices as well. Most inspections were conducted at retail stores.
No inspections had been concluded in the Northern Cape – in instances where there was a short supply of PPE, inspectors could not go inspect. PPE took some time to reach the Northern Cape – as of 21 April, inspections were conducted.
IES received multiple complaints from employees about employers not respecting best practices, or fraudulent certificates, or provision of non-essential services. The global shortage of PPE exacerbated issues locally so made inspections difficult.
Regarding challenges, at the current stage people were concerned about the UIF putting money in the hands of workers. As much as this was important, protecting the health and safety of workers was essential. It had become clear some employers had no regard for this. The duty of care needed to be shown by employers.
Covid-19 inspections would continue. Other inspections would continue administratively. IES was working closely with the Department of Health. Training of inspectors and PPE would be assured.
The DG closed the three presentations and thanked the joint sitting.
Chairperson Dunjwa handed over to Chairperson Rayi, requesting members to be straight and to the point.
Chairperson Rayi thanked Chairperson Dunjwa, noting the virtual platform did not have a raise-one’s-hand feature. He noted the need for all political parties to have a say. He reminded members that there was a chat feature on the platform.
Mr G Hendricks (Al Jama-ah) was alarmed that health and safety was not being respected in workplaces. Company executives should commit themselves to maintain the prerequisites. He was worried about the spread of the virus as the country returned to work.
Ms Denner recalled the Minister mentioned the expansion of the UIF call centre – had the processing team’s capacity been increased as well? Regarding usual UIF claims, both the Minister and Director General mentioned usual payments had continued, but Members had been inundated with complaints from usual UIF claimants about non-payment and non-communication. Did the call centre answer queries with regards to usual claims? If a TERS application was accurately and validly processed, did the 48-hour threshold for processing include payment? In terms of the President’s stimulus package’s use of UIF surplus, would UIF funds be ringfenced for employment issues or used for general spending? On the Compensation Fund, what was the timeline from receipt of a properly completed claim until the "accepted status" and payment? Taking into account IES inspectors that could not be in the field due to pregnancy or illness, how many inspectors were currently in the field performing their mandate?
Mr Cardo welcomed the initiative of approaching SARS – how would SARS be involved in the processing and payment of the Covid-19 TERS benefit? Would its involvement require employers to resubmit applications on a new channel or in a new format? A number of employers complained that when they did receive TERS payments, there was no payment advice, so they were unsure of how to disburse the money between employees, especially where the disbursements were under the total amount requested. Some employers risked paying employees under minimum wage. They were also worried that when they were going to be audited, there would be accounting problems because of the lack of payment advice. When and how would this be remedied? Would the Labour Centres be re-opened on 4 May so that people could go in and sign for the regular UIF benefits?
Mr Cardo added that he was getting lots of reports from people who had not received an SMS as per the new lockdown protocol.
Ms S Boshoff (DA, Mpumalanga) asked whether inspectors were being screened for Covid-19, and if so, whether any had contracted it. The ILO estimates pointed to a significant rise in unemployment and underemployment globally. In view of this, what were the numbers South Africa was facing? A number of employers were complaining that they had had no response from the UIF after submitting their claims. They were of the opinion that they would not be able to pay salaries at the end of the month which will place a social burden on the employees as they will have no form of income. Will this be remedied and when?
Chairperson Dunjwa stressed that companies had to apply to UIF, not individuals. How were workers to know whether companies had applied and received money? There should not be a situation where workers had not been paid while a company had been supplied with money under TERS. She congratulated the clothing and textiles bargaining council for leading by example and being sensitive to their workers.
Mr Nontsele highlighted that IES inspections had not been done in hospitals as suitable PPE was unavailable. How soon could these inspections be done, especially those designated as Covid-19 centres? This spoke to the question around labour instability in certain institutions because of bad conditions. What was being done about the issue of false permits for employers categorised as essential when they were not?
Mr Nontsele expressed his concern over the statement circulated by Mr Bagraim, as there was the issue of undermining the work that had been done. He recommended doing something in this regard, and possibly asking Mr Bagraim to withdraw his statement.
Mr M Mmoeimang (ANC, Northern Cape) emphasised that there were clearly employers creating a situation where workers were vulnerable, when their UIF contributions had not been regularised. What could be done to put in place a solution for these workers? On the issue of informal traders – research indicated that more than 3 million informal traders were not covered by UIF. Was there anything the UIF could do to register these people in future? He requested the Department to ensure inspections were done in the Northern Cape.
Dr Nkabane noted the Unemployment Insurance Act indicated that the Minister could direct the UIF Board to develop a strategy to mitigate job losses caused by Covid-19. How far along was he in engaging the UIF board to consider and advise them in this matter? On inspection and enforcement, she was happy that the Director General indicated a solution to the PPE issue in the Northern Cape. Since he had indicated inspections commenced the previous day – were the inspectors meeting demands despite the delay? Regarding the Compensation Fund operating at 50% capacity, she worried that vulnerable workers needed access to this service – was there an outcry for this service?
Mr Bagraim rejected the call to withdraw his statement. He thanked the Minister for his presence. He stated his attempt to call the toll-free UIF helpline had been unsuccessful, as had many others’. He highlighted the issue of accounting for employers. He said it was almost impossible to use the UIF claims system – given that it had been changed, would employers have to re-submit claims? He argued that the Compensation Fund had been dysfunctional for 20 years – did the Minister think it would be able to handle the high volume of applications which were likely as the country went back to work?
Mr Cardo inquired as to how much the UIF would be contributing to the R500 billion stimulus announced by the President, and how much money the UIF had available over the next 6 months.
The Director General noted that occupational health and safety in workplaces was a concern shared by the Department, which led it to deem IES inspectors essential. There was a concern that when the lockdown was lifted, more and more workers would have increased exposure to infections. This was why the President spoke of a phased-out lockdown approach. There was also a need to talk about new practices for workplaces. The DEL would be working with companies to make sure they complied. Health and safety committees were currently not operational. When companies reopened, this would be an issue.
UIF processing teams had not been expanded, but the process had been automated.
There was a provision in the UIF Act for the Commissioner to force payment to people unable to submit continuation forms, which the UIF had done.
The Harambee call centre did answer calls on other benefits. This call centre worked closely with the UIF call centre.
The 48-hour TERS turnaround time included payment.
The involvement of SARS in the TERS strategy would not involve new requirements on employers– we will just transfer files to SARS. The UIF was checking whether SARS would be able to process files.
The UIF was working on a system where employees would know when money was transferred to employers. As part of its discussions with Vodacom, it had acquired an SMS functionality in order to be able to inform workers when money had gone to employers.
The DG noted the importance of providing PPE to inspectors.
Regarding employers who had not paid UIF benefits: this was not the fault of employees. The issue had to be taken up with employers - employees would be paid regardless.
Informal traders were dealt with by the Department of Small Business Development – the President announced that part of the stimulus measures implemented would deal with informal traders.
The timeline for Compensation Fund applications, if all documents were submitted with the claim, was a same-day acceptance of liability. All required documents had been published. Walk-in centre closures had had little impact due to a number of other methods available.
The Director General noted that Mr Bagraim had telephoned the wrong toll-free number.
The UIF had committed to sending accounting and disbursement schedules to companies as per what they had submitted. Companies that had not received full amounts either did not submit bank statements or were claiming for far more employees than they were registered for.
The DG proposed that the TERS claims system was working well – some companies had had issues, but the majority did not. To date, 37000 employers had successfully applied, and 21 000 applications were received on the 21st.
The Compensation Fund would be able to cope with expanded claims as it engaged in the continuous assessment of claims. Claims had to be properly completed in order to be adjudicated. UIF and CF rules had to be complied with.
Mr Teboho Maruping, Commissioner, UIF, clarified that, given market developments, its portfolio was R145 billion. Of this, money is invested in bonds, SOEs, money markets, and R33 billion of social responsibility investments to create and save jobs. R40 billion had been set aside for the President’s plan. However, after lockdown there would be job losses. The UIF had set aside R60bn for people to come and claim in the ensuing economic downturn.
Chairperson Rayi noted the written question from Ms B Mathevula (EFF, Limpopo) on punishment for non-compliant employers.
The DG replied that punishment would be closure notices with a lifespan unless the company had been forced to close. Non-compliance would be met with legal action.
For employers complaining about the lack of response from the UIF, all the applications the Fund had received, aside from those received the previous day, had been processed and paid or returned to the company for corrections.
Minister Nxesi advanced some big socioeconomic issues Members should brace themselves for: a number of companies would not be able to recover, either immediately or not at all. The reality was there would likely be massive retrenchments. Some economists had projected between 1 and 2 million additional unemployed - this was a very serious matter. This made it highly likely that many companies would apply for the TERS, and the Fund would be under serious strain. This explained why the President had talked about various schemes to be unveiled to deal with a number of socioeconomic issues. Given what had happened, a number of companies complied – but others did not. The DEL had had to compel some companies to claim from the UIF. He expected more companies to come forward, until well after the lifting of the lockdown. The Department was discussing the likelihood of thousands of employment disputes with the CCMA. Some employers had already issued Section 189 retrenchment notices to employees.
Regarding PPE, the health and safety of workers was a non-negotiable. This was why the Department was tough on companies, but also on government. The DEL had had meetings with the Department of Health on this issue. There was a mounting disruption of the global supply of PPE, caused by high demand, panic buying, hoarding and misuse. Some companies were selling these materials at much higher prices than normal. Market manipulation by companies had taken place, selling to the highest bidder. The DTI had pulled out all the stops to ensure manufacturing and distribution of PPE was a priority. The country would need these materials en masse, even after the lockdown. The government was trying to make sure that everyone could access masks and PPE, even in townships.
Mr Nontsele proposed that the Committee could not allow Mr Bagraim’s video statement to continue to circulate; and argued the Committee should ask him to withdraw it in order to support the good work done by the Department.
Dr Nkabane concurred with Mr Nontsele, requesting Mr Bagraim to withdraw his statement that was circulating as it was not true. If the Committee was given an opportunity to play an oversight role in entities, Members should be available – when it went to the Compensation Fund, Mr Bagraim was not there.
Ms Henner requested rapid responses to the members’ written questions.
Mr Cardo rejected outright the idea that the statement Mr Bagraim made should be withdrawn. All members were being bombarded with calls and issues from employers expressing extreme frustration with the UIF. He rejected with contempt that the Member should be asked to withdraw the recording.
Chairperson Dunjwa said she did not want to muddy the meeting or create a hostile environment, but the statement being circulated was creating an impression that the Department of Labour was not telling the truth. She appreciated the opposition had a role to play in oversight, but the statement was unacceptable. It had created an issue for her. She had always ensured that as an activist and MP, she listened to what the Department said. She did not think what Mr Bagraim was saying was correct. She humbly requested him to desist. If Members were not comfortable with what the Department was doing, the Committee was the platform to ask questions of the executive. It was unfortunate that a Member would use their authority to do this in public. She did not want members to push the Committee to a point where it had to defocus itself. She proposed, as Chairperson, she had the right to take the matter forward (of asking Bagraim to withdraw). There should not be a hostile environment when the country needed everyone to be united. Members should correct where things had to be corrected, but not create confusion.
Chairperson Dunjwa added she would be corrected by the Office of the Speaker and the Chair of House Committees if her actions were incorrect.
The meeting was adjourned.