Category: dearSA

The burden is on the party claiming force majeure to prove that the coronavirus falls within the contract wording and that non-performance was a result of the outbreak.

“It must also show there were no alternative means for performing its obligations and that it has taken all reasonable steps,” writes Liz Pinnock, head of legal at audit, tax and consulting firm RSM, in a recent article on force majeure.

Companies will be seeking to be excused from liability for non-performance, which in most cases will mean renegotiating the terms of the contract by, for example, extending timelines for delivery.

‘Impossibility’ needs to be proven

In a recent article, Justine Krige of Cliffe Dekker Hofmeyr says SA law does not excuse the performance of a contract in all cases of force majeure. “There are certain conditions that must be fulfilled in order for a force majeure to trigger the type of impossibility that extinguishes a party’s contractual obligations.”

She says these are:

1. The impossibility must be objectively impossible.
2. It must be absolute as opposed to probable.
3. It must be absolute as opposed to relative (in other words, if it relates to something that can in general be done, but the one party seeking to escape liability cannot personally perform it, such party remains liable in contract).
4. The impossibility must be unavoidable by a reasonable person.
5. It must not be the fault of either party.
6. The mere fact that a disaster or event was foreseeable, does not necessarily mean that it ought to have been foreseeable or that it is avoidable by a reasonable person.

While companies have highly-paid lawyers to protect their interests, individuals do not. When they apply for a bank loan, they sign an agreement drafted by the bank and heavily skewed in the bank’s favour. In such cases, debtors falling behind on their mortgage and car payments will be unable to plead force majeure, says consumer lawyer Leonard Benjamin.

Two sides to every contract

“Default [by a debtor] is purely a factual issue. Even a deceased person would be in default if their bank froze the account out of which payments were being made on being notified of the death. It’s not a question of blameworthiness. The main thing about a loan is that the lender will have performed fully by advancing the money so it falls only on the consumer to honour their side of the contract by repaying the loan.

“If, in an agreement between companies, the obligations under the agreement are reciprocal, one party’s performance is conditional on the other’s,” adds Benjamin. “A force majeure clause simply excuses the supplier’s performance but it will also prevent it from claiming that the consumer perform.

“A loan is different, as the bank would already have performed in full by advancing the funds.”

Banks risk massive reputational damage if they start pursuing customers through the courts for arrears brought about as a result of Covid-19, says Benjamin. However, any bank seeking an eviction against a homeowner will likely get short shrift from the courts, as judges are required to consider all the borrower’s circumstances – including loss of income due to the Covid-19 crisis – before granting an eviction order.

Banks are already coming under pressure for their “underwhelming” response to the Covid lockdown compared to the response in other countries.

Standard Bank’s response appears to be the most generous so far, offering short-term payment holidays for students and small businesses in good standing. The response from the other banks has been more of a “call us if you’re in trouble” approach, while governments elsewhere have made more decisive moves to protect borrowers.

Read: Rate cut not enough

The US has placed a freeze on foreclosures and evictions, while several other countries have announced or are planning to introduce debt repayment holidays for consumers in distress. The UK has announced a three-month payment holiday, and European banks are being pushed to offer similar forebearance.

Calls for decisive intervention

In SA, political parties and trade unions are calling for much more decisive intervention from the banks than the lukewarm response to the crisis so far.

National African Congress of Trade Unions (Nactu) and Lungelo Lethu Human Rights are among a growing number of groups calling for a total freeze on legal action related to debt recovery, particularly mortgage and car payments.

Cosatu wants across-the-board rather than piecemeal loan deferments.

The DA wants a four-month loan repayment holiday.

The EFF wants a payment holiday for a whole range of personal debts.

Nactu says government should invoke emergency powers to jail anyone pursuing legal action against mortgage borrowers and car owners until the economic crisis has stabilised, on the grounds that the country is facing an existential crisis.

US economist Michael Hudson says the massive debts accumulated over the last two decades can never be repaid and must be written off, as was done repeatedly in history. This would be the stimulus needed for an unprecedented economic recovery, he says.

Article by Moneyweb

This is according to Employment and Labour Minister Thulas Nxesi, who announced that a new national disaster benefit will be launched through the UIF by his department to mitigate the effect of the lockdown on workers’ pockets.

“The issue of the informal sector, the workers who are not registered with the UIF or the Compensation Fund, how will they be assisted? Unfortunately, from our side we [are not] able to deal with this matter, because it is beyond this particular legislation,” Nxesi said at an interministerial press briefing on Tuesday.

According to Statistics South Africa’s most recent quarterly labour force survey, there were almost three million workers in the informal sector at the end of 2019. This is almost 18% of the total employed workforce in the country.

On Tuesday, Nxesi said these workers will be assisted through the safety net announced by President Cyril Ramaphosa on Monday night.

“This is still a work in progress,” Nxesi said.

The minister provided more details on how the UIF will be used to help workers at companies that will have to shut down during the 21-day national shutdown.

Emergency personnel, health workers, the army and police, and companies involved in production of food and medicine will be declared essential service workers and will be exempt from the lockdown.

Millions of claims

Nxesi noted that “millions of workers that are going to be claiming from the UIF”. This means that the claims system will have to be decentralised.

To do this, the department has decided to advance the money to companies and bargaining councils to allow them to pay those employees, Nxesi said. There will be strict audits “after the big storm, so there is no abuse of the money”.

These benefits will be calculated on a scale, and will not be less than the R3 500 minimum wage.

The province is currently dealing with 310 coronavirus cases.

JOHANNESBURG – Khayelitsha has become the first township in the Western Cape to confirm a COVID-19 infection.

The province is currently dealing with 310 coronavirus cases.

South Africa’s only COVID-19 related death was recorded in Cape Town on Friday.

South Africa is worried about the coronavirus hitting its townships.

Western Cape Premier Alan Winde has now confirmed a person has tested positive for the virus in Cape Town’s largest township, Khayelitsha.

Thousands of families live in very close proximity to one another in the township and some households have as many as seven to 10 people living together, making social distancing difficult.

Water and sanitation is also a major problem, with many houses that still don’t have access and one block of communal toilets are shared between hundreds of residents.

Meanwhile, in the neighbouring community of Mitchells Plain, five people have tested positive.

This article first appeared on EWN : Khayelitsha becomes first township to confirm COVID-19 case

The address by resident Cyril Ramaphosa on Monday, 23 March 2020, set out certain fiscal relief measures to help small and medium enterprises (SMEs) and vulnerable firms mitigate cash flow
constraints as a consequence of the COVID-19 outbreak.

Certain of these measures will be implemented through the tax system and aim to use the tax system as a means of easing the liquidity constraints currently faced by businesses, notes the legal team at Webber Wentzel.

Specific detail on these measures will be published by National Treasury in the coming days. The law firm has provided a summary of the tax proposals set out in the address by the president below.

Support for businesses

Pay as you earn – SMEs with a turnover of less than R50 million:

• may defer 20% of their prospective pay-as-you-earn (PAYE) liabilities over the next four months; and
• may defer a portion of their provisional corporate income tax payments without penalties or interest over the next six months.

The deferral of provisional tax payments should apply to the first and second provisional tax payments as well as potentially the third top-up payment, Webber Wentzel said.

In order to qualify for these deferrals, the enterprise must be fully tax compliant. Enterprises can check their tax compliance status via SARS eFiling.

“We look forward to additional clarity around whether an application will need to be submitted to SARS or whether the relief applies automatically,” Webber Wentzel said.

Support for employers and employees

Employee Tax Incentive

Government has proposed an additional tax subsidy in the amount of up to R500 per month for the next four months per qualifying employee in the private sector.

The employment tax incentive (ETI) is paid to employers who employ qualifying employees (including the youth) and is considered a labour cost sharing mechanism between government and the private sector to incentivise employment.

The existing ETI is aimed at supporting qualifying employees who earn below R6,500 per month on a sliding scale based on salary where the employer is registered for Employees Tax.

The employer is entitled to reduce the total amount of its PAYE liability by setting off the ETI amount calculated in respect of that month.

Where there is no PAYE to set off against the ETI amount, the employer will be entitled to a reimbursement of the total ETI amount available as at the end of each PAYE reconciliation period.

A further proposal aims at reducing the reimbursement period to a monthly period, Webber Wentzel said.

“This will help over four million workers, while the South African Revenue Service (SARS) will work towards accelerating the payment of employment tax incentive reimbursements from twice a year to monthly, to get cash into the hands of compliant employers as soon as possible,” said Jana Botha, consultant, tax practice, Baker McKenzie Johannesburg.

Compensation Fund

Any employee who falls ill pursuant to exposure to Covid-19 at work will be entitled to claim from the Compensation Fund. Broadly speaking, claimants are required to include such compensation in their gross income for tax purposes.

The amount is, however, exempt from normal tax in accordance with section 10(1)(gB) of the Income Tax Act, the legal firm said.

UIF – Temporary Employee Relief Scheme

Government proposes utilising the Temporary Employee Relief Scheme (TERS) to enable companies to pay employees and avoid retrenchments. TERS was launched in December 2019 and is aimed at assisting businesses who face temporary constraints that will result in retrenchments.

The allowance will be in the form of a wage payment directly to employees, said Webber Wentzel.

“This should support SMEs and other vulnerable firms who are faced with a loss of income to provide support to workers.”

UIF and SDL

“Government is investigating a reduction in employer and employee contributions to the Unemployment Insurance Fund and a reduction in Skills Development Levies.”

The proposal entails using actuarial reserves in the Unemployment Insurance Fund to support workers of SMEs and vulnerable firms who are faced with loss of income and whose
employers cannot provide support,” Webber Wentzel said.

he Department of Small Business Development has made over R500 million available immediately – accessed via a simplified application process – to assist small and medium enterprises that are in distress.

Further, the Industrial Development Corporation has put together a package with the Department of Trade, Industry and Competition that provides more than R3 billion in industrial funding to aid vulnerable firms and to fast-track financing for companies that are critical to Government’s efforts to fight the virus and its economic impact, noted Baker McKenzie Johannesburg.

The Department of Tourism has also made an additional R200 million available to assist SMEs in the tourism and hospitality sector who are under particular stress.

JOHANNESBURG – It’s official. South Africa has been junked.

The global Coronavirus outbreak wasn’t enough to stop Moody’s ratings agency from cutting the country’s sovereign credit rating to sub-investment grade.

The long-term foreign-currency and local-currency ratings have been lowered from Baa3 to Ba1.

Moody’s cites a continuing deterioration in fiscal strength and structurally very weak growth as their reason for the downgrade.

All three major ratings agencies have now moved South Africa to junk status.

Gauteng community health worker Sisanda Kulima says that when her daughter asked about the coronavirus, she was surprised her mother was not afraid.

“She said to me: ‘But you are working hard mom.’ And I felt so proud because that made me aware that people can see how much I love this job,” Kulima says, her voice buoyant over the phone.

Kulima works at Finetown Clinic, in the south of Johannesburg. The 35-year-old is one of the province’s 9000 community health workers, who are a vital link between vulnerable communities and South Africa’s ailing healthcare system.

They will be on the front line of efforts to combat the spread of the coronavirus in townships across the province — which to date has the highest number of confirmed Covid-19 cases in the country.

Last week Gauteng premier David Makhura called these workers the “troops on the ground”. The province will arm this “huge army” of workers with information about Covid-19 and “what families and households can do”, he said at a press briefing last Wednesday.

But community health workers like Kulima say this was the first time they had heard of what was expected of them during the outbreak.

They started organising themselves — collecting information, printing pamphlets to distribute to communities and coming up with strategies on how to tackle the virus — well before President Cyril Ramaphosa’s late-night declaration of a national state of disaster on March 15.

On Monday, the Gauteng Community Health Workers’ Forum wrote to Gauteng Health MEC Bandile Masuku demanding protective equipment, permanent jobs and the reinstatement of dismissed workers.

The letter notes: “This is not the first time CHWs [community health workers] have been tasked with serving the working class to prevent the spread of infectious pandemics … CHWs have been on the front line of the struggle against HIV/Aids and .. illnesses such as tuberculosis. Many CHWs lost their lives in the service of their communities.”

“From my side, I am not scared,” says Kulima. She repeats the phrase “I am not scared” two more times before continuing her thought. “I would have been scared a very long time ago.”

“I am worried,” she admits, however. Although she isn’t scared to fight the virus head on, Kulima is nevertheless worried that many

community health workers in Gauteng say they do not have the protective gear they need to guard themselves and others against infection.

“If we can have the protective gear, I don’t see how we won’t be able to trace in households. But for now there is a little fear of going into the households and not knowing if you will contract the coronavirus.”

At the beginning of March, the World Health Organisation warned of a “severe and mounting disruption” to the global supply of personal protective equipment like medical masks.

Shortages are leaving doctors, nurses and other front-line workers “dangerously ill-equipped to care for Covid-19 patients”, the WHO said in a statement calling on industry and governments to act quickly to boost supply.

This week, the National Education, Health and Allied Workers’ Union — which represents public healthcare workers — released a statement saying that the necessary protective gear had not “materialised” in their workplaces since March 5, when the first confirmed Covid-19 case was reported in South Africa. “This has caused anxiety and distress amongst workers, especially the critical front-line public services.”

A community health worker based in Ekurhuleni says her clinic has enough gloves and masks. But there are only seven community health workers at that clinic, while others accommodating far more workers do not have enough protective gear to go around, she says.

The Ekurhuleni-based community health worker asked not to be named because she says she has seen the effects of becoming known as an “activist”.

“There are other clinics where there are 50 [community health workers]. They are staying in one room … So they are also clustered in that room and they are supposed to go outside and educate the community about the coronavirus and then come back,” she says.

“What if that person is already sick? Maybe she has the flu and she comes in contact with somebody with coronavirus.”

The Ekurhuleni worker says she and her colleagues were not given training or information about the virus until last weekend. “We just googled the information,” she says.

‘We are on our own’

In Bronkhorstspruit, to the east of Pretoria, Klaas Nakedi says a lot of his work has been around combating fake news about the coronavirus. “We’ve been using social media because a lot of people are using it and there is a lot of fake news. So we are using the platforms to counterattack by spreading researched, valid information on the virus.”

Community health workers spent the past two weeks distributing thousands of pamphlets to people at taxi ranks and in townships.

“There are no resources from the government so we are using the pamphlets to raise awareness within our communities and in so doing minimising the risk of us being infected as well as us infecting the community,” he says.

Nakedi, who has been a community health worker for six years, lives and works in Rethabiseng in Bronkhorstspruit, an area plagued by an ongoing water crisis, with residents complaining that the water is contaminated.

Nakedi is worried about what will happen if the virus takes hold in Rethabiseng.

“Unfortunately, I see, as this is one of the poorest communities, we will be one of those that will be abandoned,” he says. “We have to find our own resources and try to communicate to our people. We are not running away because we are committed public servants … but I think we will be abandoned. We are on our own.”

Nakedi says recognising the inadequate provision of services to poor communities is why he became a health worker in the first place.

“I believe that to see the changes I need to be the change. I am the community,” he says.

“So if I see something that needs to be improved — if I see a gap in the community — I think I should be the first to stand up. I’m the one who knows the crisis beneath the challenges of my community.”

‘I am the community’

Kulima, the community health worker from Finetown, shares this sentiment. “We show love through our work because we never chose it because of money. We chose it because it is a calling,” she says. “And we shall protect the South African people.”

There are 54000 community health workers across the country. These workers are well positioned to understand the healthcare needs of the township and rural communities they serve.

Kulima has lived in Finetown for 25 years. “I grew up here. I am very familiar with this place.”

She says her concern is that many of the people she treats are on medications that suppress their immunity. “Those are the people who are in danger. My worry is if it can get to the point that it gets to our township. At some point, this township will have many people who will die of the coronavirus.”

Like her colleagues, Kulima is undeterred, even in the face of the potentially massive task that lies ahead — and even though the department of health has failed to fulfil its promise to make them permanent.

Recognise us

In November 2018, the minister of health at the time, Aaron Motsoaledi, announced the national department’s plan to “absorb and hire” community health workers. Motsoaledi said the workers, who were earning R3500 a month, would earn R6000 as permanent employees.

But to date these Gauteng workers have not been given permanent contracts.

Recognising the global attrition rates of community health workers, and the role they play in the provision of primary healthcare, the WHO published a set of guidelines for countries to support them.

The WHO guidelines strongly recommended that policymakers ensure that community health workers are remunerated with “a financial package commensurate with the job demands, complexity, number of hours, training and roles that they undertake”.

Kwara Kekana, spokesperson in the office of the health MEC, said training of the community health workers last week.

“The situation is changing rapidly and the department is also adapting and amending its plans as the situation changes.”

The workers will be provided with protective clothing and procurement is continuous, she added.

Kekana said “the discussion with CHWs in Gauteng has been taking place on a continuous basis between the MEC and the advisory committee. We have made a commitment to the committee to update them on every step in the process in Gauteng as we try and resolve some of the issues raised.”

She added: “CHWs are an important part of the health system.”

Kulima says community health workers “will continue to do what is right for the community but the government should also do what is right for us”.

“The problem is now they want to use us, but they don’t want to pay us and they don’t want to recognise us.”

Articel by Mail and Gardian

The government insists there is a plan in place to address overcrowded areas which make social distancing and self-isolation impossible.

This is according to Human Settlements Minister Lindiwe Sisulu.

She said the government could not share details of how it planned to “de-densify” some areas as consultations with affected communities have not taken place yet.

We have a plan in relation to how much land we have and how many sites we will be able to put up there. But we still have to relay [this] to communities. We would like to take [our plan] there to see what their response is.”

Sisulu was speaking to News24 on the sidelines of a media briefing held by ministers from the social cluster in Pretoria on Tuesday.

‘Spread of this virus is dire’

The briefing followed an announcement from President Cyril Ramaphosa that he was implementing a national lockdown due to the coronavirus.

South Africa has 554 confirmed cases of Covid-19.

The government has been criticised since the announcement of a national state of disaster last week for not explaining how it would deal with areas such as informal settlements, taxi ranks and train stations which are congested, making it nearly impossible to practice social distancing.

Sisulu told journalists during the briefing there were 29 concerning municipalities and the department was working with multiple departments to move those affected.

“The spread of this virus is dire. By the time it gets to our informal settlements, we have no idea what is going to come out of there. Those are our most vulnerable people and those are our priority.”

She said land had already been identified and the government needed to consult and ensure citizens understood why it was crucial to move people living in densely populated areas.

“We want to go and sit down with them and say this is what we are going to do: Please follow us, trust us, we are doing this in your best interest. But we must consult.”

While Sisulu would not elaborate on what measures the government would take when confronted by communities that refuse to be moved, she said there was recourse through emergency laws, which could be used.

“Eviction is a very harsh description of what we would be doing. We would be saying to them it’s in your best interest to do that,” she added, denying the government would seek to forcefully evict those who refuse to be moved.

Article by News 24

Sweden has become an international outlier in its response to the deadly coronavirus outbreak by keeping schools open and adopting few other restrictions, as the Scandinavian nation embarks on what one health expert called a “huge experiment”.  Since the UK went into lockdown on Monday evening, Sweden is the largest European country with the fewest limits on where people can go and what they can do. Schools for children up to the age of 16 remain open, many people continue to go to work and packed commuter trains and buses were reported this week in the capital, Stockholm. “Clearly, Sweden stands out at the moment,” said Carl Bildt, the former prime minister.

Since the UK went into lockdown on Monday evening, Sweden is the largest European country with the fewest limits on where people can go and what they can do. Schools for children up to the age of 16 remain open, many people continue to go to work and packed commuter trains and buses were reported this week in the capital, Stockholm. “Clearly, Sweden stands out at the moment,” said Carl Bildt, the former prime minister.

Article by Richard Milne for the Financail TImes

Swedish authorities have banned public gatherings of more than 500 people, closed universities and higher education colleges, and advised workers to stay at home if possible. Authorities on Tuesday ordered restaurants and bars only to serve people at tables rather than at the bar.

Local media have been full of stories of thousands of people gathering at Swedish ski resorts, which until Saturday kept their nightlife open. The virus has previously spread easily in mountain resorts in Austria and Italy.

Johan Carlson, head of Sweden’s public health agency, last week defended Sweden’s approach, saying the country “cannot take draconian measures that have a limited impact on the epidemic but knock out the functions of society”.

But he conceded that the 90,000 figure for the number of people who die annually in Sweden would “increase significantly” if its healthcare system became overburdened.

There have been just over 2,000 reported Covid-19 cases in Sweden and 33 deaths. That compares with more than 6,000 deaths in Italy, Europe’s worst-affected country.

“The future still looks manageable,” said Anders Tegnell, Sweden’s state epidemiologist who has become one of the public faces of the outbreak. He argued that schools needed to stay open to provide childcare for health workers, noting that young people appeared to have much lower infection rates.

But a significant number of Swedish health experts disagree. Mr Tegnell has faced a barrage of criticism after details of the country’s antivirus tactics leaked to Swedish TV at the weekend.

Joacim Rocklov, an epidemiologist at Umea University, said the Swedish authorities were taking huge risks with public health when so much remained unknown about coronavirus.  “I do not see why Sweden would be so different from other countries.It is a huge experiment,” he told the Financial Times. “We have no idea — it could work out. But it could also go crazily in the wrong direction.”

Swedish authorities have said they are not explicitly pursuing a strategy of “herd immunity”, where a large segment of the population contracts the virus in order for society to build up immunity. The UK’s chief scientific adviser had previously suggested that Britain adopt such an approach before the government backtracked.

Sweden is instead seeking to slow the spread of infections and ensure that its health system does not become overwhelmed. Mr Bildt said the situation on the streets of Stockholm had changed “dramatically” in recent weeks despite the absence of legal restrictions, with far fewer people going outside.

But Mr Rocklov said it was not yet known how long immunity to Covid-19 would last. “There is a big risk that Sweden would have to go into quarantine when the health system goes into crisis,” he added. Sweden’s relaxed approach contrasts with its Nordic neighbours.

Denmark, Norway and Finland have closed schools, sealed their borders and imposed other restrictions. Stefan Lofven, Sweden’s centre-left prime minister, has called on everyone to play a part in stopping the virus from spreading by, for instance, not visiting elderly relatives and working from home. He used a televised address to the nation on Sunday to warn that more restrictive measures might come as he conceded the next few months would be difficult.

“There are a few crucial moments in life when you have to make sacrifices, not only for your own sake but also in order to take responsibility for the people around you, for your fellow human beings, and for our country. That moment is now. That day is here. And that duty belongs to everyone,” he said. Sweden’s strategy has also been criticised for a different reason, with some arguing that even the lighter measures could cause huge damage to the economy. Kerstin Hessius, a prominent fund manager, is one of those arguing that the country may be swapping one disaster for an even worse one.

Her views provoked a riposte from Leif Ostling, former chief executive of truckmaker Scania, who accused her of living in a “financial bubble”. He urged Swedes not to become cynical and to hold to their “humanist viewpoint”.

Mr Rocklov said it was a “valid discussion” to have over whether the measures aimed at saving lives may do even more damage. But he also said Swedish authorities were not giving enough information for people to make up their own mind.

“More and more experts are feeling uneasy with this stewardship. It is not allowing for an open debate. It is rather trying to push down and make people quiet.”

Companies do not need to be majority black-owned to qualify for support, says minister of small business development Khumbudzo Ntshavheni

As the country prepares to shut down for three weeks, the government is implementing a range of measures from tax deferrals to targeted funding for distressed businesses, in the hope that SA firms can weather the onslaught of the coronavirus.

The details outlined by ministers on Tuesday follow President Cyril Ramaphosa’s announcement of a nationwide lockdown to slow the spread of the disease and prevent overwhelming the country’s health system.

The support measures come at a time when SA’s growth was already dismal and its fiscal position acutely fragile, with little space to spend its way out of the recession that economists now believe is all but certain.

The cost of the necessary support efforts is yet to be tallied but the economic slowdown and the hit to tax revenues that would ensue is expected to have profound consequences for SA’s budget, economists said.