The Covid-19 developments have taken our breath away. My personal Covid-19 period memory bank takes me back to a flight back to South Africa from Frankfurt in mid-January 2020, when most of us were pretty oblivious to the impending drama that was about to unfold. I had missed my flight and had to spend 24 hours at Frankfurt airport before catching a flight home the following evening. Up to this day, I ponder the level of risk I was unknowingly exposed to at the airport, for a relatively prolonged period of time.
On March 15, 2020, the President declared Covid-19 a national disaster in terms of the National Disaster Act (57 of 2002). Later that day, a Sunday, a client of ours sent me a WhatsApp message asking us for advice on how to deal with a national “mandatory shutdown” of the retail industry. This is a national retailer, operating across the globe. To be honest, this surprised me – “mandatory shutdown”? This was reflected in my reply to him – “No indication of retail closures, if so, will be a combination of annual leave and negotiated unpaid closures.” At the time, the prospect of a national lockdown was, apparently, highly improbable.
Within a mere eight days of receiving that client’s WhatsApp message, the president announced a 21-day national lockdown, commencing at midnight on Thursday, March 26, 2020 – a bold and decisive measure to limit the spread of Covid-19. On March 26, 2020, the Minister of Employment gazetted the directive relating to the establishment of the Covid-19 Temporary Employee/Employer Relief Scheme (TERS). Today TERS has become a colloquialism which was largely unheard of a mere two weeks ago. Yet it is set to be the difference between food on the table and starvation, for thousands of South Africans over the coming weeks.
Quite simply, TERS is a scheme to fund income shortfalls during the national lockdown, to be paid from the National Disaster Fund. Time will tell how efficient this well-intended scheme will work. Predictably, our firm has been inundated with enquiries and requests for assistance in the TERS application process from employers across the country. Since then, to date, South Africa’s Covid-19 infection and death rates, while alarming in their own right, have not mirrored the awful infection and death rates experienced elsewhere. We have also experienced the real economy in apparent free-fall, and this has bludgeoned jobs. In the USA, for example, approximately 10 million applications for unemployment benefits were received in the last two weeks of March 2020 alone.
South Africa, and the rest of the world, has followed suit, with some predicting that our already outrageously high unemployment rate will climb at least another 10 percent, or higher, within weeks. As a labour relations consultancy firm, at any one time, we are typically partnering clients in the implementation of retrenchments. This should come as no surprise if one stops to think about the parlous state of our economy in recent years. The impact of Covid-19 has however, pretty much overnight, impacted job security on a massive scale not experience in our lifetime, or perhaps at any time in history. Many employers are clamouring to retrench staff any which way possible. Some industries have clearly been more affected than others.
The hospitality industry has fallen off a cliff. Hotels, bars and restaurants have closed. Many won’t reopen. Most of our hotel clients have closed down for three months, irrespective of whether or not the lockdown period lasts that long. They realise that hotel bookings are not going to be normalised for many months to come, regardless of how long the lockdown continues, or how long it takes for Covid-19 infections and deaths to be brought under control. Most anticipate a long, and slow, resumption in hotel and guest confidence levels, which are crucial to enable the hospitality industry to get out of the red. Employers are in a conundrum in deciding how to navigate the unchartered waters of needing to reduce all costs, especially payroll, when in lockdown mode.
It will take a very brave employer indeed, to attempt to commence a retrenchment procedure, as provided for in the Labour Relations Act – the national lockdown prevents an employer from complying with the letter and spirit of consultation required in the Act. That is why many employers have decided to offer staff voluntary retrenchment during the lockdown. In most other circumstances, most employees would not consider the prospect of voluntary retrenchment enticing, and yet in the current circumstances many employees are even applying for voluntary retrenchment to access funds to see them through the next few months. Employees applying for voluntary retrenchment understand that they would otherwise qualify for UIF TERS benefits, but only up to a maximum of 60% of their salary, if they are lower paid workers. The world of work is going to be a wild ride for quite some time to come.
Tony Healy is a labour law expert at labour law consultancy Tony Healy & Associates. For back-copies of articles, visit Tony Healy & Associates.