When Business Is in Distress: How UIF TERS Is Failing Employers in Their Time of Need

Natalie Singer, a member of Business Unity South Africa and a consultant at Global Business Solutions, discussed the serious administrative and operational difficulties employers face when applying for assistance under the Temporary Employer/Employee Relief Scheme, commonly known as TERS.

In this episode, the question is whether the Unemployment Insurance Fund (UIF) is meeting its mandate in practice. For employers in distress, TERS is meant to help preserve jobs by supporting salaries while a business implements a turnaround strategy.  The Department of Employment and Labour (DEL) describes TERS as assistance for companies in distress for up to 12 months, with applications beginning at the CCMA and eligibility assessed by a single adjudication committee. While the Scheme has demonstrated value, the episode then moves to the current tension: if TERS can save jobs, why are employers still reporting delays, unresolved applications, compliance obstacles and poor responsiveness?

Singer outlined that administrative backlogs, lengthy adjudication processes, inappropriate compliance requirements and payment delays are preventing the Scheme from assisting when it is most urgently needed. In some cases, businesses are reportedly exhausting their remaining cash reserves or taking on additional debt while waiting for the conclusion of the adjudication process and payment. By the time relief arrives or a final decision is issued, the business may already have retrenched employees or closed its doors.

This creates a fundamental policy contradiction: a scheme established to prevent job losses may be contributing to the very retrenchments and business closures it was designed to avoid.

TERS as a Job-Preservation Mechanism

TERS is not intended to provide indefinite support to an unviable enterprise. It is a temporary intervention for businesses experiencing financial, operational or employee-related distress, but which have a reasonable prospect of recovery.

Under the Scheme, employees who face short-time work, temporary layoffs or possible retrenchment may receive income support funded by the UIF. The relief can operate for a maximum period of 12 months while the employer implements a turnaround strategy. Training and reskilling opportunities may also form part of the intervention, although training is not compulsory. Wages are often one of the largest costs carried by a distressed business. Where an employer temporarily cannot sustain its full wage bill, TERS should create breathing space by:

• reducing the employer’s immediate wage costs;
• maintaining an income stream for affected employees;
• allowing the business time to restructure or recover;
• preventing premature retrenchments;
• preserving productive capacity and institutional knowledge; and
• supporting reskilling where the business needs to reposition itself.

The difficulty is therefore not necessarily the design or purpose of TERS. The difficulty lies in the speed, sequencing and administration of the process.

The Problem: Emergency Relief That Does Not Arrive Urgently

Singer explains that businesses usually turn to TERS only after exploring other options. These may include restructuring operations, seeking additional funding, negotiating with creditors, reducing non-wage expenditure or changing the company’s operating model.TERS is often the employer’s last meaningful alternative to retrenchment.

Despite this urgency, the application process may involve several separate periods of delay.

A cumbersome initial application

Employers must provide substantial documentation showing that the business is genuinely distressed and that it has a reasonable turnaround strategy.

This requirement is understandable. Public funds must not be used to support fraudulent claims or businesses that have no realistic prospect of recovery.

However, the documentation requirements can become an obstacle when applications are repeatedly returned, when requirements are not clearly communicated or when there is insufficient assistance to help employers submit complete applications.

Delays in adjudication

The next hurdle is the adjudication of the application.

Singer highlights that employers may wait several months for a recommendation ruling, even after the application has been considered. This ruling effectively becomes the employer’s entry point into the UIF funding and compliance process.

She acknowledges that adjudication must be robust. TERS should not become a source of easy funding for businesses with no credible recovery prospects.

However, the adjudication body must have the appropriate mix of expertise. A distressed business cannot always be assessed solely through a labour-law lens. Its financial position, inventory, market conditions, order book, production cycles and cash-flow projections may require specialist commercial and financial analysis.

The interview points to cases in which potentially complex assets, such as inventory, were treated as though they could be sold to generate cash. That approach may overlook whether the inventory is customised, perishable, subject to contractual restrictions or incapable of being sold outside a particular market.

A fair assessment therefore requires labour-relations expertise together with financial, restructuring and sector-specific business knowledge.

Repetitive and historically remote compliance requirements

Even after a favourable CCMA recommendation, the employer must proceed through UIF compliance verification.

Singer describes cases in which employers were required to resolve or explain declaration records dating back many years, sometimes as far back as 20 or 25 years, even where those records had little bearing on the calculation of the current benefit or the viability of the present application.

Employers should unquestionably comply with their UIF contribution and declaration obligations. However, compliance controls should be proportionate, risk-based and relevant to the application being considered.

An unresolved historical record concerning a former employee should not automatically delay wage support for hundreds of current employees where the employer is otherwise compliant, and the discrepancy does not affect the benefit calculation.

Treating every discrepancy as an automatic barrier can turn compliance verification into an indefinite administrative hold.

Delays in obtaining signatures and making payment

Singer also highlights delays after an application has effectively been approved. Documents may wait for a final signature for several weeks, followed by further delays before funding is released.

For a financially healthy organisation, a delay of six or eight weeks may be inconvenient. For a distressed employer that is already borrowing money to pay salaries, the same delay may be fatal.

A scheme intended to respond to business distress must therefore be measured not only by whether an application is eventually approved, but also by whether support reaches employees before retrenchment or closure becomes unavoidable.

Drawing from the experience of Beyers Chocolates as an illustration of the consequences of delayed intervention. Singer states that the company had been approved for assistance but waited approximately three and a half months for the necessary ruling. By that stage, the intervention was reportedly too late to prevent the closure and associated job losses.

The loss of a business therefore has multiplier effects that extend to employees’ households, suppliers, contractors and surrounding communities.

Call for Action

These challenges demand immediate and coordinated action. The following interventions are essential:

• Establish an organised business tracking mechanism to monitor the number, progress and status of CCMA TERS applications, identify recurring bottlenecks and support employers in meeting compliance requirements.
• Urgently review and streamline the adjudication process to eliminate unnecessary delays and ensure that applications are finalised within timeframes that reflect the financial realities facing distressed businesses.
• Adopt a proportionate approach to UIF compliance with primary emphasis on complete and accurate records for the preceding five years, rather than allowing historic administrative discrepancies to delay urgent relief.
• Strengthen the role of social partners on adjudication panels to ensure that decisions are informed by practical labour-market, business, financial and sector expertise.
• Require greater urgency and accountability from the UIF, including direct oversight by senior officials, so that TERS applications are treated as critical job-preservation interventions rather than routine administrative matters.
• Introduce regular and transparent progress reporting so that employers, employees and representatives are kept informed throughout the application, adjudication and payment process.
• Launch a clear and sustained stakeholder communication campaign explaining the purpose of the Scheme, qualifying criteria, application requirements, compliance obligations and the consequences of approval or rejection.

TERS can only fulfil its purpose if support reaches distressed employers before retrenchments and business closures become unavoidable. Delayed relief is not effective relief.