COVID-19 TERS

CORRUPTION
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WWW.CORRUPTIONWATCH.ORG.ZA
CONTENTS
 INTRODUCTION

The Temporary Employer / Employee Relief Scheme (TERS) was introduced

as one of a range of economic stimulus measures after a national lockdown
was instituted in response to the Covid-19 pandemic. The purpose of TERS was
to support employees whose services would not be used during lockdown
because of the disaster regulations that designated only certain industry sectors
and workers as essential. Following the lifting of hard lockdown, TERS benefits
continued to support those employees who were having to work less than they
would like to and whose income was diminished because of pandemic-related
adaptations such as staggering of work hours and shorter hours to implement
social distancing in the workplace.

TERS has supported many people since its introduction in March 2020.
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By 31 July 2020 R37.1-billion in Unemployment Insurance Fund (UIF) funds had
been disbursed through the TERS benefit – but its administration has not been
without complications. Very soon after the announcement of TERS, it became
apparent that the UIF system was faced with administrative issues that were
hampering it from being able to process the applications at a pace that kept up
with the realities of employees’ circumstances. Issues of corruption also
began to emerge.

The Covid-19 pandemic has exposed many pre-existing weaknesses in internal

control environments. Auditor-general Tsakani Maluleke acknowledged in her
briefing on her office’s second special Covid audit report that it was important to
recognise that the TERS had to be delivered rapidly. However, she also pointed
out that administering the TERS benefit was made more challenging because it
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was taking place in a compromised control environment.

1
Auditor General of South Africa. 2020. Second Covid special report. Available at: https://www.agsa.
co.za/Portals/0/Reports/Special%20Reports/Covid-19%20Special%20report/Second%20special%20
report%20on%20financial%20management%20of%20government's%20Covid19%20inititatives%20-%20
FINAL%20PDF%20(interactive).pdf
2
Auditor General of South Africa. 2020. Briefing on Second Special Covid Audit report. Available at:
https://www.pscp.tv/w/1DXxyRzlyRZKM 01
 TERS is not intended to be an ongoing benefit, but was rather designed as a
temporary form of social and economic relief to employees who could
not work and had been made vulnerable by the pandemic.
It will come to an end in January 2021.

In this report we highlight the trends contained in 126 whistle-blower reports

that relate to TERS, and make observations based on those reports. Our
recommendations are aimed at ensuring that these issues are dealt with as the
TERS benefit period draws to a close, and at strengthening the operations of the
UIF going forward.

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 THE MOST AFFECTED AREAS

TERS CORRUPTION REPORTS PER PROVINCE

MUNICIPAL AREAS WITH THE HIGHEST REPORT VOLUMES

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 INDUSTRY SECTORS WITH THE MOST REPORTS

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 THE CORRUPTION TRENDS

REPORTS PER MONTH

IMPLICATED PERSONS

The players most commonly implicated in corrupt acts related to TERS are:

Payroll officers, finance personnel and managers at employers

Inspectors who take bribes to ignore labour rights breaches

Third parties who offer support to access benefits

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 MOST FREQUENT TYPE OF ALLEGATIONS

By far the most reports (88%) that we received were from employees.
In most cases their income had dried up or been drastically reduced
and they were desperately trying to follow up about when their TERS
claims would be paid out. Many employees (77) suspected that
their employers had pocketed the TERS money instead of paying it
over to them. A number of employees checked the Department
of Labour’s website and, determining that the money had been
paid out, confronted their employers about it. In seven such cases,
the employer said that they had paid the money back to the
Department of Labour (DoL).

In nine instances, the employer paid employees less TERS than

received from the Department of Labour. Several employers claimed
TERS for employees who were actually working, and some claimed
for employees who had left their employ and who then could not
access UIF benefits.
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A number of reports detailed how, when employees could not work
during lockdown as they were not essential services, the employer
treated the continued payment of their salary/wages as a loan
while waiting for TERS payouts.

Various employees detailed how their employer does not provide payslips
or IRP5s, and/or pays wages in cash. A number alleged that this was
because their employer was engaging in tax evasion by not paying the
tax due to the South African Revenue Service (SARS). In four cases the
reporters outlined how their employer would not claim TERS for them
and once they made enquiries, it emerged that this was because the
employer had never deducted or paid UIF on their behalf. In a further
three cases, the employer was deducting UIF but not paying it over.

In some instances, the reporter was not making allegations of corruption,

but was growing desperate while waiting for the TERS payout.

CORRUPT ACTS INVESTIGATED

In many instances administrative justice was the crux of the matter.
There were delays in the time from application to receiving the TERS
benefit. This meant that when the employee was in crisis, the benefit was
not available to them. Many of the reporters explained their sense of
urgency that was arising from being unable to pay their expenses such as
rent, purchase food, buy airtime, or pay for transport.

The Promotion of Access to Administrative Justice Act (PAJA) promotes

efficient administration and good governance. It was enacted to “create
a culture of accountability, openness and transparency in the public
administration or in the exercise of a public power or the performance
of a public function, by giving effect to the right to just administrative
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action”. In too many of the reports that Corruption Watch receives, it
is evident that maladministration has become an entrenched culture.
We noted repeated TERS reports that documented the frustrations of
individuals who did not experience just administrative action in the
processing of their claims.

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3
Promotion of Access to Administrative Justice Act. Available at:
https://justice.gov.za/legislation/acts/2000-003.pdf
 In numerous instances there were significant delays on the part of the DoL.
How a department interfaces with citizens can result in a person’s dignity being
enhanced, or the person is left increasingly frustrated because officials neglect
to ensure they carry out their duties efficiently. The more common complaint
that related to officials was a frustration at failures to ensure matters were dealt
with in a timely manner. It was evident that processes and systems that were
put in place were insufficient, given the scale of the task.
In the TERS reports we received which contained allegations of corruption,
it is evident once more that both the public and private sector is involved in
corruption. In most cases, the allegation was that the employer (private sector)
had been the initiator of the corrupt act, for example, bribing an
official (public sector).

Corruption Watch investigated reports where there was sufficient evidence

of criminal wrongdoing to enable further action. In selected cases there
were allegations of employers bribing officials. In several reports there were
allegations of false TERS claims for employees who had long since left the
company, claims made for ID numbers of persons not even working for the
company, and for employees who were in fact working during lockdown.

The cases that Corruption Watch investigated further were clearly not mere
administrative errors, rather they were deliberate acts amounting to fraud and
misappropriation of resources. There were also several allegations of employers
failing to pay UIF deducted from employees to DoL, as well as their failure to
pay employees tax payable to SARS - this is illegal and amounts to tax evasion.

These reports are being referred to the Special Investigating Unit (SIU) for the
Fusion Centre to investigate. The Fusion Centre is a collaborative effort by
South Africa’s leading law enforcement agencies to share information and
work on investigations jointly. It has brought together numerous agencies,
including the Directorate for Priority Crime Investigations (Hawks), the Financial
Intelligence Centre, the National Prosecuting Authority and the SIU.

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09
 CONTRAVENTIONS OF LAW

Corruption Watch received a range of reports that

highlighted violations of South Africa’s labour and
employment law. While the Covid-19 pandemic and the
lockdown in response to it brought about tough economic
circumstances for many businesses, it is also clear that
some employers abused the circumstances to ignore
employees’ labour rights or had been habitually ignoring
labour law prior to lockdown too.

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 SAFETY NET FAILS

“Our head office they just tell us many stories, this is so painful
because other shops for this company they have been payed.
We are hungry, we have no money for taxis. I have to walk
from location at 6:30am and it is still dark. Please assist us to get
our money from UIF.”

“Our employers co
llected the incom
and June. Till toda e for April, May
y we waiting. We
hungry, we need need help. We
to pay rent and th
Labour is not help e Depart of
ing.”

idn’t apply
ob le m w ith ou r employer. They d
“We have a pr nn ounced because
of this
as go ve rn m en t a
for us our UIF TERS t assistance
le m . W e ha ve been trying to ge
COVID-19 prob d on ’t know why they
can’t
g be ca us e w e
online, but we failin t sa id and we also don’t
get
lf as go ve rn m en
apply on our beha 50 % on our salaries
for April
ey on ly ga ve us
pay from them. Th pa y for 3 days only they
say.
ill be on ly ge tti ng
and for May we w ga ve was taken by
our debit
se, th a t 50 % th ey
What is even wor m e. O ur families and kid
s are
nt. We st a y a t ho
in our bank accou er before COVID-1
9 kill us.”
in g to d ie of hu ng
hungry. We are go

“Our employer re
ceived the Covid
the employees. So -19 payments but
yesterday he had did not pay
workers to tell them to be at the mee
when to receive th ting with the
failed to do so. Th ei r UI F relief payment,
e workers got very but he
of the workers go a ng ry w hi ch at the end, one
t shot with the rubb
company open fir er bu lle t when private se
e on them.” curity

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 RECOMMENDATIONS

Based on the trends that we observed, our key recommendations are:

Law enforcement
Fusion Centre to look into practices of employers who are not paying over
employees’ UIF contributions and engaging in other forms of tax evasion.

Fusion Centre to investigate cases of bribery of inspectors and

Department of Employment and Labour officials by employers, as it
undermines labour rights.

Law enforcement to continue to recover TERS amounts paid erroneously

or due to misrepresentation.

Use of technology to improve responsiveness

Improve integration of IT systems at Department of Labour and across
different government departments.

Department of Labour to ensure that there are an adequate number of

officials employed in parts of the system where bottlenecks occur and
that officials are equipped with skills for a changing ICT paradigm.

Improved processes
Department of Labour to ensure that technological interfaces for UIF
administration and claims are user-friendly.

Department of Labour must improve responsiveness to ensure that

UIF claims are processed timeously. Performance targets related to
acceptable turnaround times must be included in officials’ performance
agreements.

If a claim is not successful, Department of Labour must ensure that there

are clear mechanisms for the claimant to appeal the outcome.

Improved controls
Department of Home Affairs must set a timeframe within which to
eradicate duplicate Identity documents.

Department of Labour to put safeguards and preventative controls

in place to ensure that going forward, UIF claims are assessed more
12 rigorously in order to prevent corruption before it happens.
 CONCLUSION

This report is intended to document the trends in UIF TERS-related

corruption allegations we received from whistle-blowers. We
hope that it can be used by relevant organs of state including
the Department of Labour, the Fusion Centre and the Auditor-
General of South Africa. And that ultimately some of the
employees who have been contributing to UIF, but were denied
benefits because of corruption may still receive the benefits
withheld from them.

VISIT
WWW.CORRUPTION WATCH.ORG.ZA

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 REPORT CORRUPTION!

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