PRESS RELEASE

3 March 2025

UNEMPLOYMENT INSURANCE FUND (UIF)

TERS AUDITS

A COMBINATION OF ADMINISTRATIVE TERROR AND TURMOIL

According to numerous complaints received by NEASA, employers are facing a relentless onslaught of irrational demands from auditing firms appointed by the Department of Employment and Labour (DoEL). These firms, acting under the directive of the Unemployment Insurance Fund (UIF), issue unrealistic audit requests, followed almost immediately by threats of severe consequences for those who hesitate to comply. The sheer scale of this bureaucratic nightmare has left businesses scrambling to meet impossible deadlines, with intimidation tactics now seemingly standard practice.

In 2020, government-imposed Covid-19 lockdowns almost brought the economy to its knees. To offer relief, the DoEL, funded by UIF reserves, introduced the Temporary Employer/Employee Relief Scheme (TERS) - application for which was an already tedious process at that time. Now, five years later, they are adding insult to injury by demanding extensive documentation at a moment’s notice - often within 7 days, and in some cases, as little as 24 hours.

While the Memorandum of Understanding (MOU), signed by employers with the UIF for purposes of applying for TERS funding, provides for audits, these may only occur when there is reasonable suspicion of a breach of the agreement, fraud or corruption. However, the UIF is failing to provide any evidence of such suspicions before launching audits. Employers are subjected to invasive investigations without any justification or transparency, violating the fundamental principles outlined in the MOU.

This reckless approach comes at a time when many businesses are already overwhelmed with financial year-end pressures. Meanwhile, the ‘appointed auditors’ operate with arrogance, showing little regard for the realities of businesses still struggling to recover. To make matters worse, the looming threat of the Hawks and the Special Investigating Unit (SIU) for non-compliance with the audit firms’ demands casts a long shadow over companies who are inundated with a myriad of red tape and other compliance requirements.

The complaints received reveal an astounding level of mismanagement, procedural inconsistencies and blatant disregard for due process on the side of the auditing firms. Many businesses have been left uncertain about the legitimacy of these audits, as no official verification mechanism exists to confirm the authenticity of audit appointments. Sensitive financial documents are demanded from employers under duress, raising serious security concerns.

The absurdity of the situation does not end there. Many businesses report receiving audit reports meant for entirely different companies, while others - who never even applied for TERS funding - have inexplicably been targeted for auditing. Auditors arrive at workplaces unannounced, without prior notification or proof of appointment. In some cases, employer-appointed independent auditors have uncovered glaring errors in Department-appointed auditors' assessments, casting serious doubt on the credibility of the entire project.

Beyond the chaos of the audit procedures themselves, there is uncertainty about the audit firms conducting these investigations. The Department’s outdated website lists only a handful of officially appointed firms, while sources within the Department and reports from affected employers indicate that a much larger, ever-changing group of auditors is actively carrying out TERS audits.

NEASA has demanded urgent intervention from the DoEL, calling for immediate action to:

• implement a formal verification system for appointed auditors to prevent fraudulent or unauthorised audits;

• ensure reasonable and realistic deadlines for documentation submissions, instead of the punitive timelines currently imposed;

• establish stability in audit firm assignments to prevent endless duplicate requests and disruptions; and

• hold audit firms accountable for misconduct, negligence and intimidation tactics.

The approach to these audits shows incompetence, negligence and outright disregard for the burden placed upon businesses thereby. NEASA will continue to expose these injustices and urges all affected businesses to come forward with their experiences.

ISSUED BY

Gerhard Papenfus

Chief Executive (NEASA)

MEDIA CONTACT

Chanté Dean

Media Liaison (NEASA)

072 618 5912

media@neasa.co.za