Lockdown day 11 6 April 2020 Lockdown 8 April 2020 - Global Business Solutions
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Lockdown day 11
6 April 2020 Lockdown
8 April 2020
Focus areas
Business
response
New General
Statistics planning & Q&A
developments information
legal
considerations
2
Key statistics
3
Globally (8 April 2020)
4
https://coronastats.net/
South Africa (8 April 2020)
https://coronastats.net/
Economic-labour impact
The lockdown period and the The business impact from a
Businesses will be well advised to
recovery period is likely to be workforce perspective must be
design a “to-be” business model in
longer than expected and must be determined through a process of
the “new-normal” context so that
planned for accordingly. The induction and estimation based on
there is certainty as to what the
following slides showing the global key quantitative and qualitative
desired position is in 2021
and local situation bear this out. factors
6 6
7
United States
8
9
10
PRELIMINARY AUDITED GROUP RESULTS FOR FYE 30 JUNE 2019
Turnover R78,2bn (+3,9%) +1,6% (2018) | +3% (2017)
Gross profit margin (39,2%:2018) | (39,7%:2017)
Ops. profit margin (7%:2018) | (8,4%:2017)
PBT R4,6bn (-3,7%) R5,5bn (-13,8%): 2018
Outside-in
ROE 17,5% (from 18% in 2018)
Employees - Africa 32 473
Training & dev. (SA) R110m
BBBEE Level 6
Employees – Aus|NZ 13 626
Rem & benefits R10,5bnWorkforce model analysis – Con Court unpacked
2002 2012 2012 - 2017 2017 2020 onward
All employees full Decision to employ only Set s189A in motion on 590 Ultimately 44 applicants How might we ….?
time (45hpw) flexible workers (40hpw) full-timers to convert to saw the matter through to
❑ 16400 flexi-timers flexi-timers Con Court (s189A is the
Outside-in
❑ 590 full-timers (50% right process but it was
greater rem) substantively flawed)
Labour law
Transformation
Financial
optimisation
Governance
and compliance
Productivity
4IR and relatedStep 1: Be an authentic leader – an agent of change
React Respond Transition Transform
The
The
The new
technical The cliff The come-back
normal
recession
Respond to immediate sustainability “To-be”
needs by optimizing “lock-down” status Transition towards - new policies, new terms of employment, new blended workforce business
Two Q’s
and starting/ continuing with operational models, new SLA’s, new skills sets, new technology
model
requirements restructuring
Design-thinkingReality sets in time to respond
14Step 2: Determine the envisaged impact on your business?
❑ Sector
❑ Cash management and revenue forecasting
❑ Supply chain
❑ Remote work propensity
❑ Funding options
❑ Investor sentiment
❑ Staff demographic
❑ Workforce model (flexibility)
❑ Current terms of employment and remuneration
❑ Skills sets
❑ Technology
15Step 3: Determine timeframes for scenario-planning and to
assist in managing expectations
buckets and merit-based responses
Timeframes envisaged – planning buckets Return to pre-covid-19 economic GDP | Unemployment impact Business revenue (& Fatalities
levels (12 months) cash flow impact)
High road 0% - 10% High road
27 March to 16 (20 to 59 yrs|60+)
11% - 20%
April 2020
-8% -5% 0,3% | 3,5%
21% - 30%
16 April to end of 31% - 40%
lockdown 2 or 30 Middle road Middle road
41% - 50% (20 to 59 yrs|60+)
May 2020 (earlier of)
-13% -9% 51% - 60% 1% | 8%
Yes, if lockdown is no more 61% - 70%
Above to than 5 weeks and there is
January 2021 progressive recovery Low road Low road
71% - 80%
(20 to 59 yrs|60+)
81% - 90%
Yes, if lockdown is for 3 months -20% -14%
January to and there is progressive
1,3% | 12,5%
90% - 100%
June 2021 recovery (June 2021) or slow
recovery (Dec 2021)
The new normal People % and
ROHCPhase 2: 17 April to 17 May 2020 Phase 3: 18 May to 18 June 2020 & beyond
Step 4: Start
establishing which
measures resonate
with you
Measures Melt (soften) Smelt (refine and reduce) Refine and prepare - “new normal”
Government • UIF: TERS COVID-19 • As alongside • As alongside
• UIF: illness/Occ-acquired COVID-19/quarantine • CCMA – TERS (when available after lock- • CCMA – TERS (when available after lock-down)
• SARS: various tax relief and retirement fund contr. down) • Tap into additional concessions
• Business Support Initiatives • Tap into additional concessions • Prepare for life without the concessions as well
• Essential services optimisation when modelling the business and workforce
• Work from home optimisation
• NWNP baseline (both essential and non-essential)
Employment policies • Moratorium on recruitment • Exhaust all annual leave where possible (cash- • Re-set cost-accretive policies and introduce
and employment • Focused training and education only personal depending) streamlined best practice
contracts mastery, advocacy and technology (remote) • Suspend all costs related to human resources • Use learnings from the lock-down to introduce a
• Invoke annual leave rights (exhaust) except for those still working new normal workforce model
• Workforce segmentation • Fully implement workforce segmentation • Drive an appropriate mix between full-time, part-
(1) Jobs generating full ROI and paid at 100% (1) Jobs generating full ROI and paid at 100% time, FTC, TES, outsourced and human cloud
(2) Jobs generating partial ROI and paid (2) Jobs generating partial ROI and paid blended model
proportionally proportionally
(3) Jobs generating NO ROI and NWNP (3) Jobs generating NO ROI and NWNP
• Start looking at implementing above 3 scenarios • Consider remuneration cut-backs even for
• No increases and bonuses those working
• Possible deferred schemes
Labour law • Beneficial work arrangements (no overtime, • Basically implement a “suspension of • Re-set labour law agreements and arrangements to
compressed work weeks, leave in lieu for overtime employment” where appropriate comply with law in the most optimal way possible
etc) • NWNP broadly applied • Drive an appropriate mix between full-time, part-
• Plan for a holistic s189A programme as appropriate • Start calculating impact of COVID-19 on age, time, FTC, TES, outsourced and human cloud
gender and identify s189A cost of blended model
retrenchments (cash requirements) • Full s189A
Other • Cut contractors and FTC’s • Re-set all appropriate policies and procedures Stakeholder engagement for sustainability and closeReview regularly Review regularly
Other
General pay cut for all (consistent)
Withhold retirement funding as per regulation requirements
No-work-no-pay/ unpaid leave
Pro-rate remuneration for less than full time worked
Tap into other UIF/COIDA claims (illness, occup-acquired COVID)
Apply for C19-TERS UIF claims
Annual leave optimization/advance additional annual leave
Fund full or part remuneration for limited period
Rationalise contractors and FTC employees
Employees required to work
Employees not required to work lesser hours
Employees required to work
Consider s189A notice to start process (unable to work remotely or just ❑ -20%
normal hours
before returning to post lock-down no business need (no ROI) ❑ -40%
❑ -60%
when concessions re NWNP expire ❑ -80%
and full remuneration costs kick in
again Workforce segmentation
COVID-19 impact starts 18Step 5: Start a deliberate
transition to the new normal
❑ Start on a clean slate How might we:
❑ Agnostic to current or past • Design the workforce model
❑ Client and human-centric • Introduce processes
❑ Not problem to solution • Contract more effectively
❑ Multiple stakeholders • Manage cash
❑ First connect and then task • Harness technologyThe two-tier labour relations economy
Business “as-is” Business “to-be” new
reality Lock-down Post lock-down normal
Today January – June 2021
Leverage the State of Disaster to survive in short-term as popular view is
there is NO need for consultation nor agreement to institute No Work No Pay
(NWNP) and potentially short-time or changes in employment terms (in the
latter case the view is that if the employee rejects the offer of short-time or
changes in terms of employment then NWNP may apply).
React and respond
Common initiatives include: NWNP, short-time, exhaust annual leave, pay-cuts,
no bonuses or increases and these are supplemented with C-19 UIF TERS and
other co-funding arrangements.
Problem:
1) It creates a false economy as the original employment terms revert after
lockdown and other government support may fall away which inflates
employee costs immediately
2) Post lock-down, the full procedural and substantive obligations of LRA etc
apply and starting s189A at that point will mean a further 60 days + 30
days notice at pre-COVID-19 remuneration levels
3) This approach on its own does not align to the “new normal” as it is not
well designed
Business
sustainabilityThe two-tier labour relations economy
Business “to-be” new
Business “as-is” reality Lock-down Post lock-down normal
Today January – June 2021
The preferred approach would be to design the new-normal based on scenario-planning on the pre and post lockdown periods and then use s189A for
Insightful transition to “new
umbrella and staged implementation of business re-engineering between now and 2021.
This will cater for:
❑ Still enjoying the levers of the lockdown in the lockdown period AND
normal”
❑ Starting a legally acceptable process toward the “new normal” and in the process including aspects such as changing staff numbers, types of staff,
skills sets, terms and conditions of employment, workforce models and other necessary aspects in the context of the overall s189A
Benefits:
1) It enjoys the protection of the lockdown economy during the lockdown period
Business 2) It starts the 60 – 90-day consultation countdown to mitigate the potential reversion to actual contractual terms of employment post lockdown
3) It creates a platform for engagement with staff that facilitates better communication and understanding as well as provides better legal protection
sustainability
4) It is a deliberate process that will result in s sustainable “new normal” businessWhat could features of the “new normal” include? ❑ Reverting to basic conditions of employment for types of leave entitlement (minimums) ❑ Optimising work arrangements to minimize overtime and other inflated payments relative to ROI ❑ Introducing flexible work arrangements and cutting back on overheads ❑ Revising remuneration philosophies, structures and conditions to include greater emphasis on performance, output and pay for work done ❑ Having mainly essential staff employed directly on payroll and then integrating contractors, TES, human cloud, Youth, learnerships and other work schemes to align costs and drive procurement rather than direct employment ❑ New technologies and digitization ❑ Project-based FTC’s ❑ Strategic partnerships and collaboration ❑ Other
Transition
Measures Melt (soften) Smelt (refine and reduce) Refine and prepare - “new normal”
Human cloud
Temporary Direct employment:
Employment permanent; part-time;
Service (TES) FTC; casual (payroll)
Outsourced:
Procurement – invoice independent
for output contracting
Payroll – pay for input Automation;
and carries a 30% cost robotics; related
plusWage arbitrage
New developments
2526
27
28
29
30
31
General
32C19 TERS Update
If you require assistance in managing/administering the Covid-19 Temporary Relief Scheme application process via UIF, GBS has a dedicated team ready to help you
navigate this process, including a detailed Application Toolkit available. For more information please contact: natalies@globalbusiness.co.zaC19 TERS Timeline
National Disaster Questions DEL process MOA concluded
Benefits Challenges regarding DEL issues Auto Social Partners agree
the practicalities of Response documents & changes to MOA including
President announces C19 TERS raised by MOA requirements for acceptance of partial
National Disaster Business, including C19 TERS applications. closure, no special bank
Benefits Fund (NDB) set restrictive nature of (This will change several account and dropping
up via UIF to assist directive times over next week) requirement for financial
employees during distress
lockdown
23 MAR 26 MAR 27 MAR 29 MAR 30 MAR 02 APR 03 APR 08 APR
C19 TERS NEDLAC Shifting Goals Waiting final docs
Minister of Social Partners DEL changes document Updated directive delayed in
Employment & begin negotiation requirements and publishing. New
Labour announces regarding application email address documentation requirements
C19 TERS to challenges changes, without specific likely from DEL. Need for
process UIF claims including special notification. companies to apply ASAP due
electronically bank account, UI Commissioner announces to large volume of
during lockdown partial closure & 3900 applications received applications already.
part-payment thus far.
If you require assistance in managing/administering the Covid-19 Temporary Relief Scheme application process via UIF, GBS has a dedicated team ready to help you
navigate this process, including a detailed Application Toolkit available. For more information please contact: natalies@globalbusiness.co.zaCOVID-19 LOCKDOWN: ACCESSING COVID-19 TEMPORARY RELIEF SCHEME
Application Process 1
Employers shall report their closure to Covid19ters@labour.gov.za and will receive an automatic reply outlining
the application process (as illustrated below)
3
Employer
with Less 4a UIF will pay
employees directly
Docs Required UIF will download completed
template to process claim:
than 10
employees
into nominated bank
accounts
Permission (from CEO) granted to individual • Calculation of benefits amounts
Letter of Authority to lodge claims on behalf of Company using Income Replacement Rate
sliding scale (38% - 60%) Employer with more than 10 employees
MOA with UIF sets out the terms relating to • Benefits calculated on maximum
MOA between participation in Covid-19 TERS. Employer will Capped Salary (R17 712)
Employer & UIF be required to confirm agreement with terms
& conditions electronically.
• No less than R3500 payable per
employee (irrespective of sector)
4b UIF will provide amount to be paid per
employee & request invoice from Employer
to transfer total amount.
Complete template with following info:
Prescribed template • Employer details
containing critical
Employer Employee
• Period of closure
• Employee details including Bank Details
5 Employer sends invoice to UIF.
information • Remuneration received by Employees
• Minimum Wage (R3500 across board)
2 Email Application & Documents
6 UIF deposits total amount into nominated
Covid19UIFclaims@labour.gov.za Employer bank account.
• Proof of remuneration to employees in
Supporting form of 3 months Payroll (detailed)
Information • Confirmation of Employer bank account in
form of latest certified bank statement
7 Employer pays employees into their bank
accounts and sends proof of payment to UIFC19 TERS Update
Frequently Asked Questions
Q: Which employees do we include on the prescribed template from DEL?
ONLY include those employees for whom you are claiming UI benefits, i.e.:
• Employees who will not receive payment during this period - “no work, no pay” or “unpaid leave”
• Employees who will only receive part of their salaries during this period, including those taking annual leave
NOTE: Employees who are already claiming UIF (i.e. Maternity / Illness) must not be included, they continue as is
Q: What is included in the “remuneration” for the purpose of UIF benefits calculation?
For the purposes of determining “Remuneration” for UIF benefits calculation use all taxable earnings except
commission. This would therefore include:
• Basic salary (cash components)
• Fixed allowances (e.g. travel, shift, etc.)
• Company contributions for “perks” including medical aid / provident or pension
• Overtime (calculate average over the last 6 months)
If you require assistance in managing/administering the Covid-19 Temporary Relief Scheme application process via UIF, GBS has a dedicated team ready to help you
navigate this process, including a detailed Application Toolkit available. For more information please contact: natalies@globalbusiness.co.zaC19 TERS Update
Frequently Asked Questions
Q: How much UI benefit will an Employee qualify for?
The value will be determined on a pro rata basis (currently the lockdown period equates to 3 weeks).
Minimum calculation value of salary will be R3 500 per month, regardless of actual earnings.
Maximum calculation value of salary will be R17 712 per month for purpose of calculation of benefits.
Low Earner:
Normal salary is R4 000 per month.
Usual UI benefits would be calculated at 60%, which equates to R2 400 per month.
Under C19 TERS the minimum benefit that will be calculated is R3 500 per month.
Median Earner: UI benefit
For those earning above R5850 and below R17 712, it’s difficult to know the exact benefit amount as the
UI calculator is not publicly available. amount is
High Earner:
TAX-FREE
Normal salary is R25 000 per month.
UI benefits will only be calculated on a maximum salary of R17 712 per month, and at 38%
Under C19 TERS this means the maximum benefit that will be calculated is R6 730 per month.
If you require assistance in managing/administering the Covid-19 Temporary Relief Scheme application process via UIF, GBS has a dedicated team ready to help you
navigate this process, including a detailed Application Toolkit available. For more information please contact: natalies@globalbusiness.co.zaC19 TERS Update
Frequently Asked Questions
Q: How will Employers know how much individual employees are eligible to receive?
DEL/UIF will assess the application spreadsheet and enter information into their system. Hence why its essential
that the spreadsheet is completed (and saved) exactly. They will then complete the calculation and return a
schedule to Employer detailing the benefit amount applicable per employee, before making the tranche
payment.
Q: Why does the UIF require individual bank account info if they will pay Employer directly?
Firstly, it appears that DEL/UIF has shifted to a single spreadsheet, regardless of size of employer or whether
payments will be made to Employee, Employer or via Bargaining Council. According to UIF contact, the individual
banking details will be used as a means of auditing payment to employees, if not for paying employees directly in
case of small employer/Bargaining Council.
Q: What type of “proof of payroll” is required to be submitted as supporting documentation?
DEL/UIF requires a detailed payroll (for past 3 months) that enables the UIF to check that employees for whom
you are claiming, were on your payroll previously. Essentially, they require a “per employee” payroll schedule.
If you require assistance in managing/administering the Covid-19 Temporary Relief Scheme application process via UIF, GBS has a dedicated team ready to help you
navigate this process, including a detailed Application Toolkit available. For more information please contact: natalies@globalbusiness.co.zaC19 TERS Update
Frequently Asked Questions
Q: Can I apply for a longer period than lockdown if I can show it was due to Covid-19?
It seems clear that any applications made for periods outside the current national lockdown, i.e. 27 March 2020 –
16 April 2020, are being returned by DEL/UIF. ONLY apply for the national lockdown period to avoid delays.
Q: Which version of the spreadsheet applies?
A new version of the spreadsheet is under construction by DEL/UIF. This is an attempt to “fix” columns and
formatting as they’ve had major challenges already with submissions made by Employers thus far. We
understand that this will be available shortly and we will share ASAP.
Q: Will I need to re-submit with new spreadsheet version?
This is unclear although anticipated that this will be the case. UIF contact has indicated that they are assessing all
applications and reverting to Employers where challenges with data verification, format or other issues is present.
Q: What happens if Employer applies directly before Bargaining Council agreement concluded?
According to UIF contact, Employer continues with their direct application. If a secondary application is required,
Employer will have the choice whether to continue with direct application or to go via the Bargaining Council.
If you require assistance in managing/administering the Covid-19 Temporary Relief Scheme application process via UIF, GBS has a dedicated team ready to help you
navigate this process, including a detailed Application Toolkit available. For more information please contact: natalies@globalbusiness.co.za40
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