Some employers over-claiming coronavirus UIF, says labour minister

Labour and Employment Minister Thulas Nxesi told MPs on Wednesday that the Unemployment Insurance Fund had found instances where employers attempted to over-claim from its Covid-19 special cover, but that employees should not be made to suffer as a result during tough economic times.

Nxesi was addressing a joint meeting of the Portfolio Committee on Employment and Labour in the National Assembly and Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour in the National Council of Provinces.

The UIF buffers the impact of unemployment through contributions members make while they are gainfully employed. It introduced a special coronavirus fund which allows employers to pay out salaries during the April lockdown without loss.

Vulnerable businesses

The non-compliance underscores the tight balance the government must strike between enforcing compliance and ensuring penalties to not shut vulnerable businesses down and leave their employees without work.

The lockdown, which seeks to control the spread of the highly infectious coronavirus, has caused businesses which do not fall under essential services, to either work remotely or close their doors until the restriction is lifted.

On Tuesday evening, President Cyril Ramaphosa said he would introduce measures including tax relief, the release of disaster relief funds, emergency procurement, wage support through the UIF and funding to small businesses to respond to the economic impact of Covid-19.

Ramaphosa added the UIF’s special Covid-19 benefit had paid out R1.6 billion by close of business on Tuesday, which would assist more than 37 000 companies and 600 000 workers.

Nxesi told MPs during a web seminar that the system was effective in picking up non-compliance and misleading claims, but the department did not seek to punish employers during the delicate lockdown period because “the sins of the employer will not be visited on employees”.

“The Covid-19 benefit claims have registered non-compliance by some employers. Some claim against a larger number of employees that is actually employed. We are picking up on that. We retain them, phone the people and we tell them that it can’t happen here.”

Nxesi said the UIF was also paying keen attention to its work with bargaining councils in sectors where employees did not contribute to it to ensure their salaries could be paid out during the lockdown at no loss to employers.

Finalising payments

“We are finalising payments for the bargaining councils in the textile, catering and metal sectors. In this respect, councils are getting involved. The road and freight bargaining council has paid R150 million to workers and we will pay that amount to the employers through the UIF.”

The labour and employment department’s director-general, Thobile Lemati, reassured MPs the UIF was not open to being defrauded by criminals as the set of requirements for a claim required up-to-date verifiable information.

“You can only process claims that are competent. In dealing with banks and medical aid schemes, we abide by their rules and guidelines. That’s why we had to send back all the claims that do not meet the requirements.”

Lemati said clothing and textile bargaining council employers, whose workers do not contribute to the UIF, received R28 million for 67 employers, allowing them to pay salaries during lockdown.

Cosatu’s parliamentary liaison officer, Matthew Parks, said employers who abused the system should face the full might of the law as some employers had already been caught out for under-contributing to the UIF before the coronavirus outbreak.

“If there’s anyone who over-claimed, the government must enforce the rule of law. What we have been told at Nedlac [National Economic Development and Labour Council] is that many employers have been caught out as having failed to contribute to the UIF and have under-contributed before the outbreak.”

Parks said he was concerned about “a lack of urgency” on a number of fronts when it came to the UIF, including a lack of awareness of Covid-19 among employers and relatively low rates of disbursements.

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