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Nxesi warns of retrenchments

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Scores of companies likely to go under

EMPLOYMENT and Labour Minister Thulas Nxesi has warned about massive retrenchments and scores of companies likely to go under after the Covid-19 pandemic.

Addressing a joint meeting of two parliamentary committees, Nxesi said the number of companies was something to be braced for.

“It is a fact that a number of companies, after Covid-19, might not be able to recover. They might take up to six months to recover,” he said.

“Some might take a year. Some might not come back and be able to operate,” Nxesi said.

“The reality is that there are going to be massive retrenchments. We might add one million or two to the high unemployment which we have in the country,” he said.

The minister painted a serious situation that might result in lots of companies applying for the temporary employee relief scheme (TERS).

“The fund we have will be under strain. At some stage we will have to rationalise,” he said.

Nxesi noted with concern that some were not complying with regulations and did not want to submit claims on behalf of their workers, something that caused the government to amend regulations to compel them to do so.

“We expect more numbers to come after the lifting of the lockdown.”

Nxesi also anticipated a spike in thousands of disputes to be lodged with the CCMA arising from Covid-19. 

“Some employers have already informed workers about Section 189 in terms of retrenchments. There is a lot on a plate to deal with.”

He made comments as the Unemployment Insurance Fund (UIF) paid out R1.6 billion in TERS scheme benefits as at Tuesday.

Nxesi said the UIF continued to pay the claims as they were being submitted.

“We are finalising applications that will be paid out shortly,” he said about the entity that has 1.8 million employers and 8m workers. 

Nxesi noted that some bargaining councils have paid out of their funds R150m to affected workers. 

“We are in the process of reimbursing this amount from UIF. We encourage more employers who can pay the workers to do so and claim from the fund.”

He was concerned with employers that did not apply for the TERS scheme on behalf of their workers.

This also applied to those that made UIF deductions from workers but did not forward the monies to the UIF and those that understated their payroll yet they claimed for a large number of workers.

Nxesi said they were returning the claims to the employers for re-submission instead of repudiating them and instituting fraud investigations. 

“We gave an undertaking that the sins of employers will not be visited upon the employees.  The benefits will be paid out,” he said.

“I encourage non-compliant employers to use the opportunity to regularise their situation. It will save us a lot of trouble down the line,” he said.

Employment and Labour Department director Thobile Lamani said they were engaging companies that submitted applications with incorrect information. 

“The onus is on the employer to provide the correct information. We would like them to do so because if they do that they show solidarity to their workers,” Lamani said. 

He said only 45% of employers were not complying with occupation and safety during the Covid-19 as at April 15.

Lamani also said there were still areas which really have no regard  for safety and health of employees.

“We want to appeal to the employers to protect the worker. If you give money and they contract disease, you have not.done anything,” he said.