I only earn variable pay/commission, how will my employer calculate my income in terms of the Long-Term Insurance Act, No 52 of 1998 (LTIA) during this lockdown?

It varies from company to company but seems that the most popular method is to use the calculation of averaging the commission earned based on the last three months prior to the lockdown.  It is important to consider the definition of Remuneration and considerations that are regulated by the Regulations Under the LTIA (in this regard see Reg 3.2 (4A) of the Act).

I work for an insurance company. I subsidise my own leave; but during this lockdown my annual leave days ran out what can I do?

You can by agreement with your employer, either request unpaid leave or apply for negative leave days.  Some employers have already indicated that they will not accept negative leave days. There is the UIF alternative for unpaid leave.

Do the OHSA and COIDA apply in the current lockdown of COVID -19? 

S8(1) of the OHSA refers to the general duties of employers with special reference to “reasonably practicable”.

“Every employer shall provide and maintain, as far as is reasonably practicable, a working environment that is safe and without risk to the health of his employees.”

Besides the OHSA, Covid-19 was declared a “compensable occupational disease” in terms of COIDA Notice 193 of 2020.

COIDA provides for specific reporting time frames for the reporting occupational diseases and so also further for certain presumptions.

Depending on the wording contained in a policy, a claimant must prove causality in that the employee contracted Covid-19 within the workplace further that the contraction of Covid-19 was as a result of the employer’s negligence or intent.

My employer wants us to take a holiday contribution in respect of all our retirements funds, is that permitted?

FSCA in a Press Release on 27 March 2020 issued guidance to retirement funds industry to respond to COVID-19 risk. 

This note addresses how COVID-19 may impact employers’ and employees’ ability to comply with the full, partial or even any payment of contributions in terms of section 13A of the PFA. Most funds have existing relevant rules for distressed employers and members and the FSCA encourages them to apply these rules to alleviate the financial difficulties they may be facing. Some of the rules include:

  • A provision for temporary absence from work (with or without pay);
  • A break in service (in instances where employees are not working);
  • A postponement of contribution payments; and/or
  • A reduction of pensionable service (in respect of employees who are working reduced hours).

For funds that do not have these or analogous rules, they are requested to submit such relevant rule amendments to the FSCA urgently. This includes both Pension Funds and Provident Funds as defined in the Income Tax Act, no. 58 of 1962. Funds are advised to indicate the effective date for these amendments agreed to by funds and employers. Given the current circumstances, funds will only receive a letter and an unstamped version of the rule amendment from the FSCA. Funds will receive the stamped version of the rule amendment once business resumes as usual.

Wil the Union encourage the employer to take a holiday contribution?

The Union may not give advice as it is not a registered Financial Services Provider as described in the FAIS Act.

Are we permitted to take a holiday contribution on our full-risk benefits like Group Life Assurance?

FSCA Communication 11 Of 2020 (Rf) Covid-19: Section 13a of the Pension Funds Act, 1956 And Financially Distressed Employers and Employees – Submission of Urgent Rule Amendments dated 26 March 2020 at Clause 3.4 of the notice, the FSCA advised that funds must attempt to ensure that full risk benefit premiums (to the extent applicable) continue to be paid in full by participating employers to ensure that risk benefits will be provided. Therefore, funds must attempt to ensure that participating employees continue to pay their full risk-benefit premiums where applicable to ensure that risk benefits such as death and ill-health benefits will be provided.

My company suggested that a reduced contribution be made to the retirement funds?  Will that include both the employer and employee’s contribution?

To align with the wording of S13A of the PFA, it may include both the contributions of the employers and the employee.

Section 13A (1) of the PFA provides that:

“Notwithstanding any provision in the rules of a registered fund to the contrary, the employer of any member of such a fund shall pay the following to the fund in full, namely-

(a) any contribution which, in terms of the rules of the fund, is to be deducted from the member’s remuneration; and

(b) any contribution for which the employer is liable in terms of those rules.”

My employer asked the administrators to suspend our retirement fund contributions, can I claim the loss from the fund and/or my employer should my employment be terminated for whatsoever reason?

The Rules of a registered fund are registered with the FSCA. It may be difficult to lodge a legal claim against any registered pension fund or provident fund, in the event where the overarching governing body, i.e., the FSCA is has the required jurisdiction to publish notices for the amendments to the Rules of any registered pension fund due to a force majeure.

What are the tax implications of any such reduction or suspension?

Clause 5 of the FSCA Communication 11 of 2020 (Rf) Covid-19: Section 13A of the Pension Funds Act, 1956 And Financially Distressed Employers and Employees – Submission of Urgent Rule Amendments dated 26 March 2020 states that the FSCA has consulted with the SARS in respect of the tax implications for retirement funds in the event of the reduction or cessation of employer and member contributions by an employer or participating employer. SARS has advised that it will not jeopardise the income tax approval status of the retirement fund concerned.

My employer reduced my hours of work during the lockdown can the employer also reduce my salary and all contributions made to other social benefit funds accordingly?

This will depend on the rules of your fund whether or not contributions must be maintained at your full pensionable salary, or must it be paid at the rate of your lower salary – with potential implications for your risk benefits – and whether or not your employee contribution is payable.

If these rules did change to adjust to a lower contribution due to a lower income, the employer must advise staff at least 30 days in advance. It is important to note that funds will be required to inform affected members of their employer’s request to reduce or suspend fund contributions, as well as the proposed rule amendment to that effect (if necessary), within 30 days of receipt of the employer’s request.

Has there been any Corona Virus claims to date?

Yes, two in United States of America, the first one is the securities class action suit filed against Inovio Pharmaceuticals where the company’s Chief Executive Officer announced that the company developed a vaccine for COVID-19. Citron Research called Inovio’s claims into question and the stock price fell on this news. The second coronavirus-related securities class action suit filed was filed against Norwegian Cruise Lines for make false and misleading comments regarding the Virus. Their stocks also fell.

List of abbreviations:

COIDA shall mean the Compensation for Occupational Injuries and Diseases Act, 130 of 1993

FAIS Act shall mean the Financial Advisory and Intermediary Services Act, No 37 of 2002

FSCA shall mean the Financial Sector Conduct Authority

LTIA shall mean the Long-Term Insurance Act, No 52 of 1998

OHSA shall mean the Occupational Health and Safety Act, No 85 of 1993

PFA shall mean the Pension Funds Act, No 24 of 1956 

SARS shall mean South African Revenue Service

UIF shall mean the Unemployment Insurance Fund