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Coronavirus: Employee relief scheme will help cushion the blow for businesses

Graphic: Alexey Hulsov/Pixabay

Graphic: Alexey Hulsov/Pixabay

Published Mar 23, 2020


Johannesburg - President Cyril Ramaphosa has moved to calm fears about the economic impact of the pending national lockdown saying those whose livelihoods will be impacted by the lockdown will be assisted through a series of measures including the use of a temporary Employee Relief Scheme. 

The lockdown will commence at midnight on Thursday and will remain in effect until April 16. 

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Ramaphosa said the lockdown was needed to ensure that the spread of the Covid-19 pandemic is contained. The country has 402 confirmed cases of the coronavirus. 

Only essential services such SAPS, the SANDF, banks and grocery stores will remain open while other businesses will have to shut down.  

Ramaphosa said companies that experience distress during the pandemic will have their employees receive payment through a creation of a Temporary Employee Relief Scheme.

Employees who fall ill through exposure at work will be paid through the Compensation Fund. 

The government will also put in the following measures to assist businesses that may experience distress;

* Using the tax system, the state will provide a tax subsidy of up to R500 per month for the next four months for those private sector employees earning below R6 500 under the Employment Tax Incentive. This will help over 4 million workers. 

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* The South African Revenue Service will also work towards accelerating the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible. 

* Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months. This intervention is expected to assist over 75 000 small and medium-term enterprises. 

* Government is exploring the temporary reduction of employer and employee contributions to the Unemployment Insurance Fund and employer contributions to the Skill Development Fund. 

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* The Department of Small Business Development has made over R500 million available immediately to assist small and medium enterprises that are in distress through a simplified application process. 

* The Industrial Development Corporation has put a package together with the Department of Trade, Industry and Competition of more than R3 billion for industrial funding to address the situation of vulnerable firms and to fast-track. 

Political Bureau

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