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Havoc at the workplace as small businesses face closure




First, every business has to do a thorough exercise of what work has to be done, what work will come in over the next few weeks and months, and which staff are indispensable, if any.

Second, every business must look at its finances to ascertain how long it can survive with current expenses, and what has to be cut to in order to be able to keep the business solvent until the end of this epidemic.

The real issue is that no one knows how long this will last, but many experts are telling us that the curve will spring back within four months.

Our government – and the department of employment and labour in particular – has put together a package of assistance for small businesses.

Although this package doesn’t go far enough, at least it gives us something to work on. The labour department has indicated that the Unemployment Insurance Fund (UIF) is well resourced, and able to cope with the claims that are starting to stream in.

First, there is the ability to claim from the UIF for 14 days for self-quarantine. The condition is that there must be a good reason to go on self-quarantine, and the employee can then apply for UIF benefits.

Most employers are assisting in ensuring that this is done correctly. In cases of quarantine for longer than 14 days, there is a requirement to show that the employee had been in contact with an infected person or had been travelling and had reasonable suspicion that he or she had been in contact with an infected person.

Although the UIF system hasn’t been tested yet, the fund’s commissioner has assured me that it has the regulations in place and the ability to meet claims.

Furthermore, distressed companies can apply for a reprieve from contributing to UIF. Over and above this, the UIF is in the process of accessing leave schemes to ensure that workers aren’t laid off.

All this will help if a company decides to close for a short period of time. However, if a company is expecting to close for more than two or three months and is also not expecting business to come on line until after this disaster, then it would have to explore longer solutions.

One of these is to approach staff, and undergo a proper retrenchment programme in which they would be able to claim UIF for a period of up to 12 months in terms of an agreed formula.

Many staff earning below the threshold (R17 100 per month) will be paid up to 45% of their salary for that 12-month period. Many loyal staff members have agreed to either waive their severance payment or take a portion of it in exchange for a guarantee that they will receive the same job back on the same terms and conditions after a stated period of time.

I have successfully negotiated this arrangement with numerous employers and employees on the basis that everyone will receive the same position when the situation corrects itself.

Some employees have said – wisely – that if they aren’t back at work within three or four months (whatever the case may be), they would then have the right to claim their full severance package.

I understand that the department of employment and labour is discussing further relief for small companies who can show that they are under immense financial pressure.

Remember that the UIF has more than R60 billion in surplus, and there has been a call for specific support for small companies.

The secret to reaching agreement between employer and employee is open and honest discussion with full disclosure about the financial situation of the employer.

  • Michael Bagraim is an attorney specialising in labour law, and advises nationwide on the restructuring and management of labour forces. He is also a Democratic Alliance member of parliament.

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1 Comment

1 Comment

  1. Tanya Silverman

    Mar 26, 2020 at 11:13 am

    ‘Thanks for article

    What about rents not being paid as people have no work.

    How does a landlord survive this

    Would appreciate your advice

    Thanks stay safe’

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