The SA Revenue Service (Sars) will help with the payments of Unemployment Insurance Fund (UIF) claims should the labour department’s systems crash because of the high volumes of claims received, labour and employment minister Thulas Nxesi said on Monday.
This follows an urgent appeal by the DA last week for exactly that.
“We realised from the beginning when we started with the Covid-19 benefits that the systems we had were not designed for these high volumes. Sars is waiting on the sidelines in case our systems crashes,” Nxesi said during an interview on the breakfast show on 702 radio with host Bongani Bingwa.
Despite this, Nxesi said, the department had processed almost R1bn in the UIF’s Temporary Employee/Employer Relief Scheme (Ters).
The scheme was set up after the labour department said it would fund financially distressed businesses during the Covid-19 pandemic. The department set aside R40bn in reserve for South African employers and employers who find themselves in difficulty caused by the global health crisis.
The minister told eNCA the UIF was working under extreme pressure.
“The system was never meant to face such a huge demand. The system is very small, helping with 10,000 to 20,000 claims. Now millions of workers are claiming. In terms of the system, we are not going to be able to deliver as we are supposed to deliver.”
He said different institutions had been approached to help. “We have gone to Sars, to some companies.”
[pullquote]Bagraim said Nxesi had admitted that the labour department would not be able to pay all the Ters-UIF claims and the system is not able to cope with the number of claims received.[/pullquote]
Nxesi told Bingwa that Sars would likely come on board later this week.
Michael Bagraim of Bagraim Attorneys and deputy DA spokesperson for employment and labour made a video on the matter which has gone viral. Bagraim said Nxesi had admitted that the labour department would not be able to pay all the Ters-UIF claims and the system is not able to cope with the number of claims received.
Bagraim said he had warned the commissioner of the UIF about this very scenario more than two months ago, after seeing China instituting lockdown.
Bagraim said he was told he was “overreacting”.
As of April 16, the Unemployment Insurance Fund (UIF) had processed only 136 applications for the Covid-19 Ters benefit, out of the 36,000 received.
“This is a disaster in the making,” the DA’s shadow minister for employment and labour, Dr Michael Cardo warned. “SARS must be brought in to assist or take over the administration of the scheme immediately.”
By last week, the UIF had received 36,000 applications for the Covid-19 Ters benefit, 15,755 of which were apparently duplicate applications, and only 16,534 of which were in the correct CSV file format. About 23 000 companies were sent e-mails to resubmit their applications in the correct file format.
“While it is obviously important for all applications to be valid, many small business owners do not have the IT expertise to comply with UIF’s onerous filing requirements for the Covid-19 Ters benefit,” Cardo said. “Moreover, they are finding it difficult to get rapid feedback or assistance from the UIF because the institution’s systems are overwhelmed.”
In the ordinary course of events, SARS collects UIF money paid over by employers and transfers it to the UIF. SARS has the IRP5 and IT3(a) records of all employees on their systems. They also have bank account details for all these employees, and the employer. The IRP5 and IT3(a) both carry the details of UIF payments on the face of the document.
“SARS needs to be brought in immediately to ensure that employers and employees will have cash in the bank come month-end,” Cardo said.
TimesLive and own reporting.