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The Impact Of The National Lockdown On Business

In response to the COVID-19 pandemic that is sweeping the world, the South African government has instituted an nationwide lockdown to prevent any further spread among the population. This has meant many employed people having to make arrangements to meet their work requirements from home or be forced to use their annual leave (paid and unpaid).

Meanwhile business owners are scrambling to find measures to cover the costs of running their companies, while still making what profit they can. There are many uncertainties for employers and employees alike during this COVID19 lockdown. In this article, we consider what companies can do to keep things running without employers losing profits or employees losing their jobs.

This situation is an unprecedented one, but as you will see, there are many options out there that can help your business stay afloat. However, having a lawyer on hand is always the best way to navigate this legal and logistical terra incognita and surviving the COVID19 crisis. And it’s amazing how affordable legal professionals become, when you have business legal insurance. Get a quote for legal insurance for your company today!

 

How Does National Lockdown Affect How Your Run Your Business?

This is what work looks like during a nationwide shutdown:

Working from home: If an employer can provide an employee with the hardware and connectivity, that employee would potentially be able continue business as usual. Even if the employer has to resort to short-time (reducing the number of regular work hours), they can rest assured that their employees can continue to deliver on their work requirements. If an employee can work during lockdown, they have a contractual obligation to do so.

Essential services: During the lockdown, there are a number of industries and services still in operation. These include health workers, emergency personnel, those in security services, financial service providers, and other persons needed to respond to the COVID-19 emergency.

Complete shutdown: A company would be forced to completely stop all operations in two instances. One is if employers cannot provide the resources or the funds to enable their employees to work from home. The other is if the company’s operations cannot be conducted without compromising the new safety measures (e.g. social distancing).

 

Annual Leave

The question of whether or not employees would be forced to use up their annual leave has been on many minds. And this is not a recent concern. Even when talk of a national lockdown was just a rumour, employees were terrified whether they’d have enough paid leave to last them through this necessary house-arrest. Would employees have to resort to unpaid leave? Could sick leave be converted into extra annual leave days? Or would a special self-quarantine leave apply?

Forced annual leave: Although employers are within their rights to force employees annual leave, the Departments of Labour strongly advises against this or to rather view this as a last resort. Under these conditions, employers may determine when employees may take leave. Sick leave may not be used to substitute annual leave. Once an employee runs out of paid annual leave, they would default to unpaid leave.

Unpaid leave: If an employee is unable to deliver on their work obligations and has no annual leave available, the employer may invoke the no-work-no-pay principle. These employees would have to claim from the Unemployment Insurance Fund (UIF) to cover their basic cost of living during the lockdown.

Public holidays still apply; employers cannot force their employees to work on these days.

 

Misconduct And Disciplinary Action During Lockdown

This national lockdown due to COVID-19 throws a proverbial spanner in many works. Companies must continue to operate wherever possible. This includes dealing out disciplinary action to employees, who have misrepresented the organisation (e.g. on social media) or abused their position prior to the lockdown taking effect.

Suspensions: If an employee was suspended prior to lockdown, their suspension may be lifted to allow them to work during the lockdown and maintain an income. However, employers must consider the reason for suspension in these cases. For instance, if an employee was facing disciplinary action for industrial espionage, lifting their suspension may prove unwise.

Giving notice: If an employee gave notice before the lockdown went into effect and can still work during the lockdown, their notice period still applies. However, if an employee, who gave notice previously, cannot fulfil their work obligations during the lockdown, their notice period could potentially be extended, unless the employee uses their annual leave.

Any employee, who is not involved in a business delivering an essential service and cannot conduct business from home, should not be forced to work during this lockdown. Any victimised worker is protected by the Labour Relations Act, and is entitled to contact the South African Police Service (SAPS) and report their employer.

 

Government Support And Relief Funds During Lockdown

As part of the COVID-19 lockdown measures, the Department of Employment and Labour updated legislation on 28 March 2020 with respect to employment and labour issues that arise in these unique circumstances. Part of this amendment to help South Africans get by during lockdown is the COVID-19 Temporary Employer/Employee Relief Scheme (C19 TERS).

The C19 TERS is a special benefit instituted under the Unemployment Insurance Fund (UIF). This measure was created to make provision for situations, in which it will not be economically possible to pay your employees as a result of this lockdown.

In order to make use of TERS funds, companies must meet the following criteria:

  • Registered with the UIF
  • Comply with the application procedure for this financial relief, which is as simple as sending an email
  • Company closure is directly linked to the COVID-19 pandemic

Apart from TERS, which only applies if your company is forced to shut down completely at this time, there are a handful of alternative resources available to stay in business:

  • SMME Debt Relief Programme: Small and medium-sized enterprises can cover their overheads (specifically payroll and rent) with this fund. To access this fund, you must register your business on https://smmesa.gov.za.
  • The South African Future Trust (OppenheimerFunds): This global asset manager has a number of philanthropic initiatives to its name. This fund, which is seeded by various governments and private corporations, has pledged R1 billion to support small, medium and micro enterprises. OppenheimeFunds potentially offers (a) small grant without payback, or (b) loans ranging from R250,000 to R1 million with a payment holiday of up to 12 months. To find out more about these funds, send an email to info@solidarityfund.co.za.

 

Communication: Golden Rule During National Lockdown

Whether you are faced with the possibility reduced work hours, forced annual leave, or disciplinary measures, social distancing should not get in the way of communicating these measures with your employees. Sadly, retrenchments seem to be an unavoidable symptom of COVID-19. However, most – if not all – legal bodies are telling employers that this should only be a last resort.

No matter what hard decisions you have to make for your business, all legal and HR professionals are giving the same advice: communicate! Any changes made to the structure, work hours, or payroll of your business must first be communicated with all employees. These include any employees, who are currently suspended or facing disciplinary action. And this communication must be a two-way street; employees must be given the opportunity to have their say before any decision is actioned by management.

Professional legal counsel can help you make the right choices for your business. With Business Legal Insurance, getting access to experienced professional has never been more affordable. Get legal cover quotes today!

 

LEGAL CONTENT DISCLAIMER

The information contained on this website is intended to offer members of the public a layman’s insight into laws in South Africa that impact how business can operate locally. This information does not necessarily apply to the legal needs of a specific person and BusinessLegalInsurance.co.za insists that one’s first course of action ought to be to consult a registered legal professional to address the individual’s unique circumstances. Please keep in mind that the law is constantly changing and while this website aims to keep all its information as timely and high-quality as possible, it cannot guarantee that all information will be updated and/or be without errors or omissions.