As a result of COVID 19 the Minister has set up a COVID 19 TERS relief fund, as highlighted below, which is a separate fund linked to UIF and which every employer is obligated to register for. I set out the salient points below:

The Covid-19 TERS Gazette

Thembelani Waltermade Nxesi, the Minister of Employment and Labour has issued the Covid-19 TERS Gazette which purposes are as follows:

To make provision for:

• Payment of benefits to the Contributors who have lost income due to Covid-19 pandemic;
• Minimize economic impact of loss of employment because of the Covid-19 pandemic;
• Avoid contact and contain the spread of Covid-19 during the process of application for benefit;
• Establish the Temporary Employee / Employer Relief Scheme and set out the application process for benefits of the Covid-19 pandemic and to alleviate economic impact of Covid-19.

The Covid-19 TERS Gazette states that should an Employer as a direct result of the Covid-19 pandemic close its operations for a 3 (three) month or lesser period and suffer financial distress, the Employer shall qualify for a Covid-19 Temporary Relief Benefit and the benefit shall be de- linked from the Unemployment Insurance Fund’s normal benefits. The benefits will only pay for the cost of salary for the Employees during the temporary closure of the business operations and the salary benefits will be capped to a maximum amount of R17 712, 00 per month, per Employee and an Employee will be paid in terms of the income replacement rate sliding scale (38 % -60 %) as provided for in the Unemployment Insurance Fund Act 63 of 2001. Should an Employee’s income determined in terms of the income replacement sliding scale fall below the minimum wage of the sector concerned, the Employee will be paid a replacement income equal to minimum wage of the sector concerned.

Further to the above, to qualify for the TERS benefit the Employer must be registered with the Unemployment Insurance Fund and must comply with the online application procedure as set out in the Department’s media statement.

We encourage Employers to remain compliant with labour laws and to take heed of the plea from the Department of Employment and Labour to compassionately engage with Employees in attempt to find reasonable solutions to avoid retrenchment and short time work implementation. If you are an Employer in financial distress due to COVID-19 we can assist you with your TERS application, alternatively if your application is declined we can assist you with cost effective methods to assist your business during this time.

Their website is updated daily, and publishes calls for action or assistance on important topics, such as:

• Standard Operating Procedure (SOP) under Rebate Item 412.11 for Business importing Critical Supplies during the National State of Disaster.
• Standard Operating Procedure (SOP) for Business to request an update of critical supplies under COVID-19 project as managed on HS Supplies List under ITAC and SARS.
• Companies requested to divert stocks of Personal Protective Equipment (PPE).
• Urgent call for businesses to divert PPE inventories to national healthcare sector.
• Business for South Africa, Covid-19: LRN Escalation Procedure.
• Payment of employees during the COVID-19 lockdown.
• Solidarity fund update.
• Statement on lock down regulations.
• Update: COVID-19 testing.
• South African business collaborates with government to reduce COVID-19 risks and economic impacts.

We have also included the following documents to keep you updated.

• Corona Virus Easy Aid UIF.
• Notice of Compensation for Occupationally Acquired Corona Virus under COIDA Amended Act.
• Guidelines for the Workplace.
• Compensation For Occupational Injuries And Diseases – Period of Returns for 2020.
• Compensation For Occupational Injuries And Diseases Increases.

Contact Nicole Ross Attorneys for advice regarding any Labour Law related issues.

“Never let a good crisis go to waste” (Winston Churchill)

The COVID-19 coronavirus crisis will, like all crises, eventually give way to economic and societal recovery.

Even before that inevitable upturn actually sets in, entrepreneurs should remember that times of great risk and challenge are also times of great opportunity. So get your team together now and brainstorm what new needs and new niches you can fill. Witness for example the “remote destination” businesses like game lodges now offering safe and luxurious havens for those wanting to self-isolate and to practice social distancing far from the city hotspots. That’s a win-win for everyone – businesses, their employees, their clients, and their suppliers.

And when a sustained recovery does make its welcome appearance, make sure that you are way ahead of the pack by using this current time of fear and negativity to maximise your planning. What will the recovery look like? How will you take advantage of it? What staff and resources will you need?

Get off to a good start with “Growth opportunities for small business in SONA and the Budget” on the Catalyst Magazine website which highlights some of the many opportunities still open to businesses big and small –

• The Infrastructure Fund
• The Tourism Equity Fund
• The African Continental Free Trade Area
• Incentive Programmes For Small Businesses.

“In our law cohabitation does not have special legal consequences. Generally the proprietary consequences and rights flowing from a marriage are not available to unmarried couples, regardless of the length of their cohabitation” (extract from judgment below)

If you live as a couple, avoid the trap of believing the myth of the “common law marriage”. It’s a very persistent myth, possibly because some other countries do indeed give formal recognition to certain forms of life partnership.

But not in South Africa – there is no such thing in our law as a “common law marriage”. No matter how long you have lived together, if you break up or when one of you dies, neither of you automatically has any of the rights and protections afforded to a couple in a marriage or civil union.

Apart from the personal consequences the financial downsides can be huge, and our courts are all too often faced with sad and bitter disputes which end with one of the partners destitute and homeless after decades of cohabitation.

A recent High Court case highlights the financial dangers…

22 years on, a couple splits

• For most of 22 years, with only a short early separation, a man and woman “in a romantic relationship” lived as a couple, in a household complete with the woman’s daughter from a previous relationship.
• They had been jointly involved to one degree or another in a series of business ventures including vegetable farming (on a farm purchased in the man’s name), commercial blasting, a bakery and a packaging business, and what was at stake in the High Court was whether the woman could prove her claim to a 50% share of the resultant assets.
• The facts were bitterly disputed, with the man adamant that the relationship had been nothing more than co-habitation as lovers. But eventually the Court concluded, on the basis of the facts that it found proved, that “the parties intended to pool their resources for the benefit of a joint estate” and that the woman had accordingly proved the existence of a “universal partnership”.
• Not however to the 50/50 extent she claimed, and the end result is that at age of 47 and after 22 years she leaves the relationship with only 30% of the net assets. Hard though that may seem, she could easily have been left with nothing, as we shall see below when we look at what our law says about such relationships.

The difficulty of proving a “universal partnership”

The problem in such a case is that you have to prove a lot more than just cohabitation.

You also need to prove the existence of a “universal partnership” and that, as many cases in the past have illustrated, is not easily achieved, not least because the onus is on you to prove your case. You will need to prove all of the following –

1. Each of the parties brought something into the partnership, or bound themselves to bring something into it, whether it be money or labour skills;
2. The business had been carried on for the joint benefit of both parties;
3. The object was to make a profit; and
4. The partnership contract was legitimate.

If, as is common in this sort of situation, you rely on a “tacit” agreement (an unexpressed agreement inferred from your actions as a couple), you have to go further and prove that –

5. The other person was fully aware of the circumstances connected to the transaction;
6. The act relied upon was unequivocal; and
7. The tacit contract does not extend beyond what the parties contemplated.

Again, not easily proved, as “A tacit contract will be interpreted strictly and not extensively, since a contract must be interpreted in favour of the person on whom it is sought to place an obligation.”

The good news – there’s a simple solution…

We have talked above only about the financial consequences of life partnerships which are unregulated by agreement. But formal marriage also provides a range of other legal benefits and protections (such as rights of inheritance and support and other personal aspects of your relationship) which are not automatically available to you.

Fortunately you can avoid all the risk and uncertainty of an unregulated relationship with a quick and simple solution – a formal cohabitation/life partnership agreement.

Just be sure to get it in place early on. Take professional advice (jointly – this is to protect you both!) as soon as you commit to a long-term relationship.

…the default position is that an executive director or a senior employee may not carry on business activities which fall within the scope of his company’s business during the time when he serves as director or works as employee. The default position however changes on resignation.” (Extract from judgment below)

What happens if relations between you and your fellow company directors sour to the extent that a director leaves? Can he or she immediately open up a new business in direct competition to you?

A recent High Court decision both addresses that knotty question, and highlights a quick and easy solution.

Fishing for business: “Big Catch” claims R24m

• Big Catch Fishing Tackle (Pty) Ltd markets and hosts fishing and fly fishing tours in both local and international waters.
• The company’s two directors and shareholders fell out, culminating in one director accusing the other of serious breaches of his duties as director.
• Although hotly disputing any wrongdoing he resigned his directorship (under, he says, duress and coercion). He remains a shareholder.
• Big Catch is now suing the ex-director for some R24m in “past” and “future” damages, relying on disputed claims of improper or unlawful conduct which include the channeling away of business from Big Catch, misappropriating stock, diverting payment of commissions and acting recklessly and without authority. Whether or not these allegations will be proved eventually will only be determined when the main case finally goes to trial.
• What is of interest to us at this stage is Big Catch’s interim application to the High Court to interdict the ex-director and his new business (Upstream Fly Fishing) from competing with Big Catch.

Ex-director off the hook

• Directors have a range of fiduciary duties towards their companies. They must at all times act in good faith and in the best interests of the company. They must avoid conflicts of interest. They cannot compete with the company nor make secret profits. “The default position”, as the Court in this case put it, “is that an executive director or a senior employee may not carry on business activities which fall within the scope of his company’s business during the time when he serves as director or works as employee.”
• ig Catch had to convince the Court that those duties survive resignation unchanged. But, held the Court, that “default position” changes on resignation and “the director or employee does not commit a breach of his fiduciary duty merely because he takes steps to ensure that, on ceasing to be a director or employee, he can continue to make a living even by setting up a business in competition with his former company or by joining a competitor and then pursuing opportunities similar in nature to those targeted by his former company.”
• Although a director’s fiduciary duty does indeed survive departure, “the content of that duty does not remain the same … The duty will only be breached after resignation if it involves the use of confidential information or violates an interest of the company that is worthy of protection in some other way” (emphasis supplied).
• In other words, a company cannot simply say “our ex-director is breaching an ongoing fiduciary duty towards us”, it must go further and actively prove a right to protection. Big Catch in this case being unable to make out its case, the Court dismissed the application with costs and the ex-director is off the hook, at least for now.

Big Catch’s big mistake – no restraints of trade

Round 1 therefore to the ex-director; a victory made easier by Big Catch’s failure to put restraints of trade in place for all its directors and senior employees.

As the Court put it “…in the absence of a restraint of trade, the onus shifts to the director’s former company to justify the interdict both in law and in fact” and “…a company that wishes to prevent a director or employee from competing with it after resignation should either do so by way of imposing a reasonable restraint of trade or it will have to persuade a Court that it has an interest worthy of protection, such as confidential information, client lists or connections, that justifies an interdict.”

Bottom line – make protecting your company easy with restraints of trade!

“The primary remedy therefore is an order for removal of the structure” (extract from the judgment below)

What can you do if your neighbour has started (or finished) building without the necessary municipal approvals?

In a nutshell, our courts will very probably assist you with a demolition order, as a recent High Court decision around a long-running property encroachment illustrates.

The 16 year saga of an encroaching garage

• A couple, owners of a property next to a church Mission, expanded their house in 2004 by building a brick garage.
• They thought they were building on their own land, having in 1998 built a wall along what they genuinely – but mistakenly – thought was the correct boundary between the two properties.
• As we shall see below, their fatal mistake was building their garage without municipal plans or approval.
• In fact the garage was inadvertently built on Mission land, but the Mission was having none of that –
  • First in 2012 it asked the couple – and another neighbour in the same position – to demolish.
  • When the couple refused (the other neighbour complied) the Mission in 2014 laid criminal charges against them for failing to comply with the relevant Act (the National Building Regulations and Building Standards Act). These charges, for purely technical reasons, failed to stick.
  • On pressed the Mission, this time turning to the local municipality for help in 2016. The municipality duly issued a formal Notice requiring demolition of the garage as it had been erected illegally without plans or permission. The couple simply refused to either receive the Notice or to remove the encroaching garage.
• Which brings us to the High Court in 2017, with the Mission applying for a demolition order and the couple asking the Court to rather order the Mission to transfer the relevant piece of its land to them against payment of reasonable compensation.

What about alternatives to demolition?

A court deciding a demolition application has “discretion to reach an equitable and reasonable solution in terms of the common law by ordering payment or compensation rather than removal in cases where the cost of removal would be disproportionate to the benefit derived from the removal”.

In this respect said the Court (emphasis supplied) “the encroaching owner’s own conduct plays an important role” and “while one is acutely aware of the financial implications, inconvenience and disruption which the partial demolition will cause the [couple], the upholding of the doctrine of legality, a fundamental component of the rule of law, must inevitably trump such personal considerations.”

Commenting on the couple’s “obstructive behaviour” in this case, and finding that they “are indeed in legal and administrative breach of the law … to allow them to keep the structures where they are, would be to perpetuate the illegality”, the Court ordered the couple to demolish their illegal garage within 90 days.

So if you are the neighbour planning to build…

Whilst the case in question deals with encroachment on another’s land, our courts have applied exactly the same principles to a wide variety of “neighbour dispute” cases – sea view obstructions, failure to observe building lines and the like.

So don’t even think of starting to build without having all necessary municipal plan approvals and permissions in place!

And if you are the objecting neighbour…

The couple in this case put up an argument that the Mission couldn’t demand demolition as it had “acquiesced in their occupation of the relevant land because it did not object when they built the wall on the church ground in 1998, and did not complain when they built the ‘offending’ garage in 2004 or 2005.”

Factually the Mission’s long history of actively objecting to the unlawful construction put an end to that argument, but the longer you delay in objecting and taking action the greater your risk of facing a similar argument. Take immediate action against any neighbour building unlawfully.

“The secret of crisis management is not good vs. bad, it’s preventing the bad from getting worse” (Andy Gilman)

We can only guess at how the COVID-19 coronavirus outbreak will end, but let’s all take whatever concrete steps we can right now to lessen its impact on our personal lives, on our businesses, and on our country.

One of those steps is for businesses to find ways of continuing to operate as normally as possible, given of course the exceptional times we are living through. And as employers, many businesses will find themselves facing some novel challenges, particularly during the National Lockdown…

Small businesses – the new relief programs

A whole raft of support and relief programs has been announced. Some still need to be finalised and the situation is changing daily, so keep an eye on the media and incorporate into your business survival plan all relief channels you think may be open to you. At date of writing, these are the main ones –

• The DSBD (Department of Small Business Development) will provide relief to businesses in several categories. Call the DSBD on its 0860 663 7867 hotline or email info@dsbd.gov.za to see if you quality. Apply at https://smmesa.gov.za/.
• The DTI (Department of Trade and Industry) is set to provide relief for large businesses as well as small. Keep an eye on the DTI’s website for developments.
• The Solidarity Fund has been set up with R150 million from the government to, amongst other things, assist and support those affected (contact details here).
• Employer and employee relief: Access the “Easy Guide for employers on COVID19” here and read up on the “Temporary Employer/Employee Relief Scheme” and UIF benefits from a special R30bn National Disaster Benefit Fund. Confirmation that employees who fall victim to the virus will be paid through the Compensation Fund – details here.
• Other funds and relief measures: The Rupert and Oppenheimer families have pledged R1 billion each to help struggling small businesses and employees – the details are not available at date of writing. Read the President’s speech here for more on planned or implemented measures involving tax relief, changes to the Competition Act, a fund to support the tourism sector, and more.

Employers – comply with the law!

From a legal perspective, employers in particular need to have a solid action plan in place to ensure that they comply with all our many employment laws, which will continue to apply as is, unless and until government announces any new measures to the contrary.

Detailed planning will not be easy. With the situation changing daily, keep informed of developments and keep all your plans flexible.

In any event there is unfortunately no “one size fits all” answer to questions like “Can I dismiss an employee who tests positive for COVID-19?”, “Can my employees insist on working from home?”, “Can I start retrenching?”, “Can I prohibit employees from travelling abroad for personal reasons?”, “What steps must I take to ensure a safe working environment and what rules can I put in place to underpin them?”.

The list is endless and the answers to these questions will depend upon your Lockdown exemption status, your particular employment contracts, business circumstances, operational needs, and so on.

Your employee action plan

We need to get used to constant change and uncertainty, but there are steps you can take now to plan for as many eventualities as possible –

1. As a start, incorporate into your “COVID-19 Business Plan” all the possible scenarios you can think of, both during the National Lockdown and after it ends.
2. Then brainstorm – with your employees where you can – a list of all the employment-related problems you and they might face. Use that in turn to make a list of questions you will need the answers to under each scenario.
3. Then, make sure you are fully prepared to deal with whatever may come your way by taking specific legal advice on each and every one of those questions.

“Will the 20s roar like they did in the last century or will the outcome be different?” (Clem Sunter)

What exactly is in store for us South Africans in the Twenty-Twenties? It’s a vital question not only for business and for investors, but for us all on the most personal level.

Of course it’s also a question that’s a lot easier to ask than to answer. As Nobel Prize winning physicist Niels Bohr put it: “Prediction is very difficult, especially if it’s about the future” – witness the new COVID-19 coronavirus scare which has suddenly popped up with its game-changing impacts on the world and world economies.

Nevertheless as Clem Sunter (well known for his “High Road or Low Road?” speeches in the late Eighties) reminds us, we can and should still use scenario planning to ready ourselves for any one of a whole variety of possible futures. And in his article “The world and South Africa in the 2020s” (read it on Leader.co.za here) he discusses all the major global and local flags and scenarios to watch out for.

Let’s hope that his concluding “I give a return to the High Road trajectory, with all the flags I talked about turning green, a heads-up with a probability of 80%” holds true!

Will the main provisions of POPIA (the Protection of Personal Information Act) really commence on 1 April 2020 as media reports suggest, or is this just another case of Crying Wolf? This time it seems it may be the real thing, with the Information Regulator having formally requested the President to declare the commencement date.

If that does indeed happen (still unclear at date of writing), any organisation that needs to comply with POPIA will have a one year transitional period expiring on 31 March 2021 to get their house in order.

Watch this space…

“Engage brain before hitting send” (Anon)

WhatsApp comes with a host of business and personal benefits, and its use is growing exponentially here as in the rest of the world. Which brings us to a possible downside – binding yourself to a legally-enforceable agreement without really meaning to.

First principles: Offer + Acceptance = Contract

What makes for a binding contract? In the most simplistic sense, all you need is for one person to make an offer and for another to accept that offer.

There are of course many other requirements – consensus ad idem (‘true agreement’ or ‘meeting of minds’), lawfulness, capacity to contract, compliance with any formalities, certainty of terms, possibility of performance and the like. Lawyers and legal academics love to wax lyrical on the finer ins-and-outs of these and of related concepts like “quasi-mutual assent” (more on that below, it’s actually an important concept), but the core principle applicable in the vast majority of cases remains this: Offer + Acceptance = Contract.

And of course, with only a few exceptions (such as property sales, wills and ante-nuptial contracts), even verbal agreements are fully binding, and the binding effect of electronic messages has been established both by legislation (most importantly the ECTA or Electronic Communications and Transactions Act) and by a series of modern court decisions.

A R20m lottery windfall and a R1m WhatsApp “offer”

• A father was paying R1,000 p.m. child maintenance to the mother of one of his seven children.
• Shortly after becoming the lucky recipient of a National Lottery windfall in the form of a prize of R20.8m, he met with the mother, told her that his health had deteriorated, that he could no longer be employed (by SARS) and that he would get about R600,000 in pension benefits.
• He offered R100,000 out of these pension benefits in full and final settlement of his child maintenance obligations, which the mother accepted and which was paid to her for the child’s benefit.
• At a meeting with the maintenance officer he denied having won R20m but the mother, after getting proof of his win, sent a WhatsApp message to the effect that she knew about it. He replied – also on WhatsApp – “if I get 20m I can give all my children 1m and remain with 13m. I will just stay at home and not driving up and down looking for tenders”.
• The mother sued the father for R900,000 on the basis that he had contracted to pay her R1m and had only paid R100,000. The father denied liability, saying that his WhatsApp message was just to “get rid of” the mother and that he had no intention to make an offer to contract.

When is an “offer” not an offer? The “intention to contract” factor

The mother won in the High Court but lost on appeal to the Supreme Court of Appeal (SCA), which held that the father wasn’t bound because on the facts his message was a denial of having won R20m and it “related what [he] could possibly do in the hypothetical future event of him receiving R20 million. It set out what the [he] might do if he received R20 million … the message clearly did not contain an offer that could on acceptance thereof be converted into an enforceable agreement.”

On the facts of this case, the father “subjectively had no intention to contract and the message did not suggest otherwise.” His “morally reprehensible conduct” lost him his claim for legal costs, but it did not affect his lack of intention to contract. So in this case our WhatsApping father is off the hook and gets to keep his R1m.

But… before you hit send

On slightly different facts his WhatsApp message could easily have been held to have been a valid offer, binding him on acceptance. For example, the concept of “quasi mutual consent” which we mentioned above, means that even if you don’t actually intend to make a binding offer, our law can hold you to it if your actions or conduct lead the other party “as a reasonable person” to believe that you did intend to enter into a contract. So you may not intend your message to be a real offer but if the recipient reasonably thinks it is, you are in trouble.

The lesson for us all is this – all users of electronic communications, whether via WhatsApp, Facebook, email or any of the many other electronic messaging channels open to us, face the very real danger of inadvertently making a promise in haste which down the line a court will hold us to.

Think before you message!

“To support the property market, the threshold for transfer duties is adjusted” (Finance Minister Tito Mboweni)

Transfer Duty Exemption Up

Some good news for property sellers and buyers in particular is the increase in the transfer duty exemption to R1m. See the table below for details and note that with all the brackets being adjusted upwards, buyers at every level will save – for example the buyer of a R2.5m house will save R17,000.

(Source: National Treasury)

Some useful Tax Calculators for you

• How long will you work for the taxman today?

Input your salary into the 2020 Tax Clock calculator and find out how many hours you will spend today working for the taxman, and at what time precisely you will finally start working for yourself (warning – it’s not pretty!).

• How will your income tax change?

Put your monthly taxable income into Fin24’s Budget 2020 Income Tax Calculator to find out.

• How much extra will your sin taxes cost you this year?

Work out how much more you will be shelling out for spirits, wine, beer and cigarettes (or how much you will be saving if you don’t indulge!) with Fin24’s Budget 2020 Sin Tax Calculator.