Businesses in distress given time to breathe

Insurance businesses in distress are being encouraged to apply to participate in Government’s recently launched Training Layoff Scheme by the Insurance Sector Education and Training Authority (INSETA).

The Scheme was announced by President Jacob Zuma last year as a means to assist businesses that are struggling with the effects of the recent economic downturn and came into effect in September.

Companies in the insurance sector are now being encouraged by INSETA to participate.

“The effects of the global economic crisis were first felt in South Africa from October 2008. Any material reduction in turnover after this date serves to link the distress to the global economic crisis. A reduction of turnover in excess of 10% qualifies a business as being in distress,” explained INSETA CEO Sandra Dunn.

“Companies that participate in the Scheme will experience a reduction in labour expenses for the period of participation,” she said of the benefits of signing up.

For the Scheme to be effective, the business expense for labour costs must contribute 25% or more of its total operating expenses.

What is a Training Layoff?

• A Training Layoff is a temporary suspension of work of a worker or group of workers that is used for training purposes.
• Workers remain employed during the training layoff period but forego their normal wage for a training allowance.
• Participation in the Training Layoff Scheme is voluntary and it is an alternative to retrenchment.
• Training is flexible but linked to the skills needs of the employer.
• The envisaged training period is three months or less.
• The training layoff may be combined with short-time work arrangements during the period of the training.
• The Scheme is aimed at positioning workers and employers to take advantage of the next economic upturn.

Who qualifies for a Training Layoff?

• Businesses that are in distress due to the economic crisis and that may benefit from the short term relief and re-absorb the affected workers at the conclusion of the training layoff.
• In businesses that are in distress, only workers earning up to R180000 per year and who face possible retrenchment qualify to participate in the training layoff scheme.

How is the Training Layoff Scheme funded?

• Employers pay full contributions towards a basic social security package.
• Workers will be paid a training allowance up to a maximum of 50% of their basic wage or salary up to a maximum of R6239 per month.
• SETAs will pay for the cost of training and allowance from their discretionary grants, Workplace Skills Plan Grants and NSF/UIF allocations.
• The Department of Labour’s R2.4 billion from the National Skills Fund (NSF)/Unemployment Insurance Fund (UIF) will provide top-up funding to SETAs to pay for training allowances and training costs where necessary.  

How do I access the Training Layoff Scheme?

• Complete a Request to Participate in the Training Layoff Scheme form and submit it to the CCMA. If you and the other party have reached a written agreement on a training layoff, include it with the request.
• The Training Layoff Scheme may become an option during the facilitation or conciliation process, whereby the facilitator will assist the parties to reach an agreement on participation in the Scheme.

What is the process involved in the Training Layoff Scheme?

• The CCMA, SETAs and the Department of Labour are the implementing partners of the Scheme.
• All requests to participate in the Training Layoff Scheme must be made via the CCMA.
• The CCMA recommends participation in the Scheme and facilitates the conclusion of a Training Layoff Agreement.
• The relevant SETA will interact with the affected employer and workers on type, cost, duration and provision of training and submit an application to the Department of Labour.
• The Department of Labour’s adjudication committee will process the application for funding, conclude an agreement with a SETA and transfer funding to the SETA.
• SETAs will in turn conclude an agreement with the relevant company, facilitate the provision of training and transfer funding to employers on agreed dates.

For more information contact traininglayoff@ccma.org.za or the CCMA call centre on 0861 16 16 16.