How To Calculate The Benefits Of 'TERS'

COVID-19 Temporary Employee/Employers Relief Scheme | 3 min read

Since the initial proposal of the COVID-19 ‘TERS’ benefits there has been various misunderstandings about how to apply for the benefits, who will qualify and how the benefits will be calculated.

After a few teething issues the application procedure was changes from an email submission to an online portal followed by another Directive published by the Minister of Employment and Labour to explain the calculation of the benefits.

From the most recent publication by the Department of Labour, issued on 30 April 2020, further clarification has been provided in relation the manner in which benefits will be calculated as well as how much employees might expect to receive.

As per Schedule 2 of the Unemployment Insurance Act, No. 32 of 2003 the benefit due is calculated as follows:

  • Employees Daily Income (weekly earners) = Weekly rate x 52 / 365
  • Employees Daily Income (monthly earners) = Monthly rate x 12 / 365
  • Benefit = Daily Income x Income Replacement Rate (“IRR”).

 

The IRR is based on a percentage which is determined according to the contributor’s previous income. The IRR is a variable between 38% and 60%.

 

Generally, a contributor who previously earned a low wage is entitled to receive benefits based on a larger proportion of their previous income. Whereas a contributor who earned a higher wage will receive a benefit based on a lower percentage.

 

  • IRR = 29.2 + (7 173 / 232.92 + (Employees Daily Income))
  • Daily Benefit Amount = IRR x Employees Daily Income ­­­­
  • Benefit Amount = Daily Benefit Amount x 30 days

Examples:

Important note: TERS benefits paid by employers to employees will not be subject to SDL, PAYE or UIF