Massive budget increase for TERS

In a bid to cushion companies in distress and prevent job losses, the Department of Employment and Labour has significantly increased its Temporary Employer-Employee Relief Scheme (TERS) budget from R400 million to R2.4 billion for the current financial year.

In a statement issued on Sunday, the department said this significant boost aims to assist companies in distress and prevent employee layoffs amid unstable economic conditions, as revealed by Employment and Labour Minister Nomakhosazana Meth.

TERS is an intervention by the department that provides financial assistance to companies in distress for up to 12 months. The scheme enables employers to retain employees by covering their salaries while the company focuses on implementing a turnaround strategy to remain operational. 

During this period, employers are only required to cover employee social costs such as provident fund and medical aid contributions. 

Productivity SA, an entity under the department, offers turnaround strategy solutions to companies in distress. 

Minister Meth urged companies experiencing financial challenges to participate in the scheme as soon as they notice signs of distress.

“The nature and degree of distress will be objectively measured through indicators including but not limited to a decline in revenue. The application process for TERS begins at the Commission for Conciliation, Mediation and Arbitration (CCMA) and is entirely free of charge. There are no application, initiation, or administration fees required,” said Meth. 

A single adjudication committee administered by the CCMA evaluates all TERS applications for eligibility using a combination of indicators.

Rationale for the budget increase

The expanded budget comes in response to the country’s ongoing economic challenges, which have resulted in significant job losses across various sectors. 

Recent reports from the CCMA reveal that while 14 887 jobs were saved through interventions during the 2023/2024 financial year, over 22 500 employees were still retrenched. 

The number of job losses, particularly in key industries, necessitated an adjustment in the budget to enhance TERS.

“The increase in the TERS budget is a proactive response to volatile economic trends that threaten the livelihoods of impoverished workers and the sustainability of businesses. Our goal is to preserve jobs and support companies facing financial difficulties.

“Furthermore, the increase in the scheme’s capacity, aims to reduce the risk of further retrenchments and support economic stability,” Meth said. 

The highest number of job losses were recorded in the following sectors:
• Mining: 5 153 job losses.
• Manufacturing: 2 125 job losses.
• Telecommunications: 1 680 job losses.

Since its inception, TERS has been instrumental in supporting a wide range of industries severely impacted by economic challenges. 

The following sectors have notably benefited from the scheme: 
• Hospitality and tourism: hotels, restaurants, and travel agencies affected by decreased tourism.
• Manufacturing: factories experiencing reduced demand and supply chain disruptions.
• Retail: non-essential retail businesses facing reduced consumer spending.
• Transportation: bus services, and logistics companies dealing with decreased operations.

TERS has facilitated the retention of hundreds of thousands of jobs by providing salary support to employees who might otherwise have been laid off. It continues to play a significant role in stabilising the economy during turbulent times, ensuring a quicker path to recovery by alleviating the financial burden on companies.

Application requirements

Employers seeking to participate in the TERS scheme will be required to provide documentary evidence for evaluation:
• Audited Annual Financial Statements for the past two financial years.
• Independently Reviewed Annual Financial Statements for companies not legally required to be audited, covering the past two financial years. 
• Independently Reviewed Management Accounts with comparative figures if the latest financial statements are older than three months.
• Termination of Contract and Bank Statement for individual applicants.
• Business Case outlining the triggers for distress and proposed remedial actions.

With the expanded budget, the department said it hopes that more businesses will participate in the scheme, preventing further job losses and helping to build resilience within South Africa’s economic landscape. – SAnews.gov.za

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