As we enter this period of uncertainty, you might be wondering how COVID-19 will affect your business. Typically, payroll and rental are the two biggest financial obligations, and as your trusted partner, PKF Octagon has compiled the below to give guidance relating to the payroll aspect.
We understand that the landscape is a difficult one. However, after business owners have explored all other options (e.g. discussions with banks, suppliers and landlords to defer or reduce payments), some may have to consider reducing their wage bill.
If this happens, and a work from home option is not viable, there are four scenarios for employers to consider:
- The first applies to companies who are in a financial position to place their employees on paid annual leave for days they have accrued. The employee will then in effect be on annual leave and thus forfeit their annual leave days. Should the shutdown period exceed the number accrued leave days, the balance of the shut-down period will be unpaid. The employees can, with the company’s assistance, claim UIF benefits.
- The second scenario is when ‘shut-down’ has not been considered or allowed for. In this instance a “temporary layoff” can be implemented by way of written notice. This option enables employers to reinstate employees post this period. Again, employees can apply for UIF benefits.
- The third scenario is if current employment contracts cover an instance of a ‘shut-down period’ and state that in such a case, a “No Work, No Pay” stance will be instituted. Employees can in this instance also claim UIF benefits.
- The fourth scenario is retrenchment. This is a laborious & time consuming process which is additionally costly and prohibitive in terms of future reemployment.
Should you need further clarity or assistance with implementing any of the above, do not hesitate to contact any of our Partners and HR specialist, Tamsin Jatho on email@example.com