National Employers Association of SA comments on national shutdown

NEASA CEO Gerhard Papenfus says the lockdown is a necessary evil. 

This may be the better of the two evils. It was always a toss between two very difficult decisions: either a ‘partial lockdown’ or a ‘complete lockdown’. It turned out to be a three-week lockdown.

It cannot be expected of government to make perfect decisions. What is expected is for government to act decisively, and that is what government did. After extensive deliberations, based on what they know, they took the best decision under the circumstances. We must make the best of it.

A three-week lockdown can be regarded as a balancing act between containment of the virus, protection of South Africans and measures aimed at fortifying the economy against the inevitable disruption to manufacturing, productivity, growth and employment - as per the President’s Monday message.

Some may argue that this measure amounts to an overreaction. However, taking cognisance of the situation in Italy, the current global epicentre of the pandemic, this seems not to be the case. The Italians blame inaction regarding restriction of movement and a lack of appreciation of the seriousness of the pandemic, as the reasons for the life and death predicament they find themselves in.

Businesses will have to work with what they have been presented with. Firstly, many SMMEs cannot shoulder this financial burden alone; it is to be shared between government, business and workers.

The President has given an undertaking that certain measures will be implemented to soften the blow for employers and employees alike. The details of these interventions have not been disclosed but are expected within days. However, due to the government’s fiscal constraints, there is not much government can do to alleviate the plight of those affected.

Of concern is: what if, three weeks from now, we haven’t achieved the desired result? What happens if the infection curve shows a downward trend during the lockdown period, but increases again thereafter? What then?

It is, however, not for us to answer this question now. What we do have are three weeks in which we all have to make the best of this dire situation.

No work, no pay

In the meantime, we will be adhering to the principle of 'no work, no pay' throughout the lockdown. Although some employers may be in a financial position to deviate from this principle, they must do so taking into consideration the long-term sustainability of their businesses. Although there is currently no indication that this will be the case, companies making a decision in respect payment of employees must calculate an extended lockdown period into the equation.

Employers who are able to continue paying their employees during the lockdown period, without compromising the viability of the business, are encouraged by the government to do so. Of course, employees who can continue to work from home may be allowed to do so if it is feasible and practical, while we do recommend that, as an alternative, employers also place their employees on annual leave and exchange this with the annual December break, if possible and feasible. In this instance, payment of leave entitlement should occur at the same intervals as normal remuneration payments. In other words, weekly or monthly.

Employers may consider staggering payments of monies due in order to manage cash flow effectively, a lay-off for their employees if it comes to that. 

The President also indicated that employers may opt to participate in the Temporary Employer/Employee Relief Scheme (TERS) in terms of which employees are placed on training during the lay-off period and the employer is exempted from certain statutory obligations and only needs to pay a portion of the employee’s salary. For more information on TERS please click here. However, due to the inherent requirements of this training (face-to-face and on-site), this does not seem to be a viable option.

Employers should note that these options may change considerably due to the regulations that the government is expected to issue. The Minister of Employment and Labour has indicated that interventions and assistance by his Department are still under discussion at NEDLAC and may only be published tomorrow, or even later.

Business must reserve its capabilities in order to remain sustainable for a protracted period - the fight against the spread of Covid-19 and the long-term survival of business may turn out to be a war of attrition, Therefore, in the absence of the appropriate government gazettes detailing UIF and other potential forms of aid to business, and by implication their employees, businesses should not make any salary commitments to their employees.