Inconsistencies regarding past payments made to people who are deceased, imprisoned, or who are minors, and ‘red flags’ identified by the Auditor-General, have resulted in all payments being halted indefinitely.
Two weeks after the Unemployment Insurance Fund’s (UIF) upbeat declaration that R40 billion in Temporary Employer/Employee Relief Scheme (Ters) payments had been made, the system has abruptly been suspended.
The National Employers’ Association of South Africa’s (Neasa), Hamman Kriel on Tuesday told The Citizen that “pending internal verification and investigations at UIF, all Ters payments have been put on hold”.
The Ters benefit is intended to help mitigate economic damage caused by Covid-19 by ensuring that workers who had their salaries cut, or who have been unable to work due to lockdown regulations, receive some form of income put food on the table and meet their financial obligations.
A statement sent to stakeholders and organisations involved in employee matters was sent out by the Department of Labour, but this was made not made public.
A labour law, human resources and industrial relations consultancy also confirmed the payment suspension to The Citizen.
Attempts to contact the Department of Labour and the UIF were unsuccessful. Updates will follow as responses are received.
To Neasa’s knowledge, this pertains to “red flags raised by the Auditor-General,” and likely a response to government’s renewed anti-corruption campaigns.
This includes inconsistencies with regards to past payments made to people who are deceased, imprisoned, or who are minors.
UIF communication and marketing director Makhosonke Buthelezi told The Citizen earlier in August that the UIF’s systems have been increased to handle multiple transactions everyday. Since the beginning of July, payments were run twice a day, he added.
Neasa said a verification processes are currently underway, whereby the Ters database is being cross-referenced with data from the Department of Home Affairs. This is to ensure that double payments are not made to employees that already receive UIF payments.
Suspected fraud with regards to payment claims is one of the reasons investigations are taking place, Kriel explained.
“As far as we know, it has to do with the Department of Labour [having to conduct] more checks and balances to avoid any further fraud and payment claims,” he said.
Despite the fact that the UIF has taken decisive action against suspected fraud and corruption, Kriel lamented that this once again most adversely affects the poor.
He said those who applied for Ters payments by 15 August would not be able to benefit due to the suspension of payouts.
“A lot of employees are now suffering,” Kriel said, adding that the period for which Ters claims were made to assist them have now passed.
Cash-strapped employees struggled to apply for Ters benefits in July, amid a series of hiccups within the system.
Moneyweb previously reported that applications for May opened late, as well as June applications, which were closed shortly after due to security breaches. The system only came back online in the second weekend of July.
A survey conducted by Neasa, and published in August, indicated that more than half of employers who applied for Ters benefits for employees still had not received their June funds, and those that did receive Ters payouts in June were not all paid in full.
A small number of employers are still struggling to get payouts for May and April.
The latest batch of Ters applications for July and August narrowly made the cut, with the UIF declaring the application window open until 15 August. But on 12 August, the system was still not opened for the newest applications.
Those wanting to receive April and May benefits have until 15 September to apply.
To date, more than 9 million payments through 770 429 companies throughout the country have been made.
Labour minister Thulas Nxesi said in August that the UIF not only kept their promise in honouring billions in disbursements, but that taking into account the Ters extension, the UIF will end up having paid “much more than we promised” by the end of the disaster period.
According to information from Neasa, no processing or payments will be done, pending the conclusion of the ongoing investigations.
Kriel said it is not known how long it will take before desperate employees are paid out again.
Neasa and social partners are calling for an urgent meeting with the National Economic Development and Labour Council (Nedlac), to provide more details on the temporary Ters payment suspension.
According to Auditor-General media liaison manager Khutsafalo Mnisi, a virtual media briefing will take place on 2 September, where Auditor-General Kimi Makwetu will release a full report on the Covid-19 audit.
The Auditor-General was unable to comment due to not being able to speak to the portion of the report that has not yet been released, Mnisi said.