The electrical industry’s national sick benefit fund

June 2nd, 2017, Published in Articles: Vector

 

The Bargaining the Council for Electrical Industry has established a national sick benefit fund, which became effective on 1 May 2017. The new national fund replaces the old regional sick benefit funds in Regions A and B, C and D, respectively. It should be noted that the old regional sick benefit funds each had different benefit structures, which resulted in employees in the same sector enjoying different benefits based on where they were located geographically. The new fund is truly a national fund resulting in the same benefits for all employees in the electrical sector.

All firms that were participating in their respective regional sick benefit funds automatically transferred to the new fund upon its inception. The new fund introduces a number of variations to how the old regional funds used to operate. Firstly, the national fund is compulsory for all scheduled employees. Remember that some of the old regional funds were party-only arrangements, like in Cape Town and in KwaZulu-Natal, that only permitted ECA member firms and their employees to participate.

The second major change for other regions is that all firms will now be invoiced on the actual earnings for sick benefit fund purposes and no longer on the prescribed minimum wages.

The third change is that employers and employees will now each contribute at the rate of 0,3% of actual wage to the new fund, so bringing the total contribution to 0,6% of an employee’s actual earnings. This is a substantial change from the 70 cents per week in Regions A and B payable in terms of the old regional sick benefit fund. It is therefore imperative that all firms inform their nearest regional council office of the actual earnings of each employee. This change to the cost structure was necessitated by the need to keep the fund sustainable to continue relieving employers of the obligation to pay employees during periods of absence due to sick leave.

Financial impact

Understanding the financial impact that this new cost structure brings to bear on both employers and employees in Regions A and B, the council resolved to provide a subsidy to alleviate this new burden. As a result, all employers and employees in Regions A and B who contributed to the old regional sick benefit fund will contribute to the new fund at the rate of 0,1% of actual wage in the first year and 0,2% of actual wage in the second year. The council will subsidise these contributions at 0,2% of the actual wage in the first year and 0,1% in the second year. In the third year, both the employer and the employee will contribute at 0,3% of the actual wage and the council’s subsidy will cease.

However, note that no employer who is in arrears shall receive any subsidy from the council. Any employer who is in arrears for a period in excess of three months shall forfeit the right to the subsidy and shall contribute to the new fund at the rate of 0,3%.

All claims that arose up to and including 30 April 2017 will be processed and paid by the old regional sick benefit funds in terms of their respective rules, to not place an undue financial burden on the new fund. Similarly, any claims incurred up to and including 30 April 2017, but which had not been lodged, will be honoured by the old regional sick fund in terms of their respective rules.

In addition, any previous benefit received by an employee in the current annual cycle up to and including 30 April 2017 will be taken into account when calculating such employee’s entitlement to benefits under the new fund. For example, an employee who was paid for four days’ benefits under the old regional sick benefit fund will continue from day 5 in the new fund (see Table 1).

 

Table 1: The benefit structure of the new fund.
Category of employee Work days absent per year Benefit amount
All categories as specified in the Main Collective Agreement 1st – 10th 100% of actual earnings
All categories as specified in the Main Collective Agreement 11th – 30th 60% of actual earnings
All categories as specified in the Main Collective Agreement 31st – 130th 33% of actual wages
Non-scheduled employees Same as above Same percentages as above but up to maximum earnings of R30 000 per month.

Additional Benefits:

Pension\provident fund waiver of premiums from the eleventh day onwards in an employee’s annual leave pay cycle in terms of which the SBF shall pay both the employee and the employer’s contributions towards the employee’s pension/provident, as long as the employee is unfit to return to work and remains a member of the fund.

Note that the benefits have also changed as reflected above. Instead of employees in some regions being paid 65% of the minimum wage for absence due to illness, the benefit has been staggered to be different at various stages. It is critical to reiterate the importance of providing the council with an employee’s actual earnings as it is relevant to determine the quantum of payment to the employee for periods of absence due to ill health. Failure to do this will result in an employee being disadvantaged as his benefit will be paid out on the minimum wages for the category he is employed in. It is also significant that employees will enjoy risk cover paid by the new fund for periods of absence due to sick leave. This certainly strengthens the social security network.

Please note that all new employees participating in the new fund will commence their cycle from their first day of employment.

All sick fund claims should be submitted to the respective regional office of the council within 90 days of the first absence from employment. Claims will only be paid from the date of consultation. It is imperative for employees to submit a valid sick note for any period of absence, including absence for one or two days due to illness. No claim will be met without a valid sick note.

Note also that claims will be paid from the council’s national office in Johannesburg on the last day of each month. Furthermore, there will not be any waiting period imposed, i.e. firms/employees are eligible to submit valid claims from day one of inception of the fund.

Conclusion

I urge all employers and employees to embrace this very important social security benefit structure that has been put in place for their benefit. Please familiarise yourself with the rules and procedures of the new fund contained in Part III of the council’s Collective Agreement, published on 24 March 2017, which can be found on the council’s website (www.nbcei.co.za). Should you seek any clarity regarding the operation of this new fund, please contact your nearest council or ECA office.

Stephen Khola, ECA national labour relations and HR director.

 

 

 

Subscribe to our leading email newsletters

FREE-OF-CHARGE

CLICK for other EE Publishers information products