Dear All.

One day I look forward to a bright and cheery newsletter full of rainbows and unicorns, today, unfortunately, is not one of those days.

After a dystopian week, which found many of us single mindedly protecting our property and our loved ones at all sorts of strange hours, the riots have faded into a surreal past whilst we numbingly start counting the cost and once again start the process of rebuilding.


I personally believe we have lived through a critical event which will change the path of the country to the positive, in a yank the plaster off type of way, but I’m a ‘last one out turns off the lights’ guy so you are most welcome to call me bad names. It is not my place to give opinion but rather to try and guide MRM clients and offer support and advice with regards to their businesses. For this reason I felt it imperative to get something out to touch on a few areas of apparent confusion.


Before I start, on behalf of MRM, our sympathy goes out to Mark, Sbonelo and John for the tragic loss of your businesses and properties. I would have liked to have spoken to more of you this week to find out who else has taken damage but we are understandably under the whip dealing with post riot issues. If anyone else has sustained material damage to your businesses you are most welcome to reach out to us for assistance.


I will briefly cover SASRIA and Employment issues stemming from the riots. Thank you to Graham for the information he shared with me in this regard. I am neither an Attorney nor an Insurer and provide here my layman’s view on these topics. I have not had time to research this as much as I would have liked and urge you in the direction of both these specialists if you find the need to use this information.

SASRIA

  1. SASRIA stands for South African Special Risks Insurance, was established in 1979 to cover damage from political riots and is owned by the South African Government.
  2. This is not an automatic insurance, it is part of your business insurance policy and you would have paid a premium for this cover. If you are not paying for it, you haven’t got it. To answer a question I have been asked many times in the past week.
  3. The necessity for SASRIA is pertinent as the nature of the risk covered is generally an exclusion from your standard business policy. I say generally, as I believe it is possible to have the exclusion removed. I could be wrong here but not really pertinent for the sake of this discussion.
  4. SASRIA have indicated that damage from the riot falls under their definition of insurable risks. There is some argument as to what section the damage would fall under but that’s above my pay grade and probably not really significant in the greater scheme of things.
  5. To answer the next question I have been frequently asked, exactly what is covered depends on the extent of cover purchased. You should go through your policy document and speak to your insurance advisor for clarity on your individual position.
  6. I have read that SASRIA were initially confident that their R10 billion in reserves would cover their damage estimate of R7 billion. Their initial estimate was wildly optimistic as the potential claims have now been revised as high as R20 billion. The truth of it is that no one will know until the claims have all been lodged.
  7. If SASRIA does not carry the reserves to settle the claims, as this situation appears, then the RSA Government needs to top them up. No prizes to guess where that’s going to come from as we know they have no money.
  8. The other awesome news is I believe we can all expect our SASRIA premiums to skyrocket going forward as they attempt to claw themselves out of the hole that the looters have flung them into.

I would also imagine that SASRIA is going to be stretched processing all these claims, so aside from the potential shortfall in funds, I would make the claim submission a priority in the hope of a first come first served basis of approval. I also believe that claims under R1 000 000 are being fast tracked, claims up to R50 000 are authorised to be paid by the insurers agent and claims in excess of R1 000 000 will have loss adjusters appointed.


Just a heads up, SASRIA are linked to SARS so it’s ill advised to put anything forward that does not tie to the various figures at SARS disposal. Consider yourself forewarned.


LABOUR ISSUES AS A RESULT OF BUSINESS INTERRUPTION
Many businesses have been forced to close, some temporarily, some permanently. We lost a week of productivity last week that few of us can afford, especially when viewed in the light of the COVID lockdown. I will once again throw out a few points for guidance but urge you to consult your labour attorneys for more professional advice.

  1. An employment contract is a reciprocal contract which means an employee has a duty to make himself available for work which then means the employer has a duty to remunerate.
  2. The Occupational Health and Safety Act places a duty on Employers to provide a safe working environment for employees. I would imagine this means it is unrealistic to ask an employee to be at his station when the building is burning down around him.
  3. If an employee cannot attend to his work and that non attendance is beyond either parties’ control (business premises destroyed for example) then it becomes up to the employer as to how to treat this. The options would be either :
    a. Regarding the absence as special leave which entitles the employee to be paid. This could create a
    materially negative effect on the business cashflow so you are urged to consider this route carefully
    before being too philanthropic.
    b. The days could be converted to annual leave. Fine in principle however annual leave in short supply after many businesses have had to deal with employee absence over the various stages of COVID lockdown.
    c. Concluding a temporary layoff agreement with employees. This keeps the relationship in place except the employee is not required to attend work for a period and the Employer is not required to pay them. This is a viable option if a business is going to be closed for a few months for rebuilding and then reopened.
    d. Imposing short time.
    e. Worst case scenario is that it is unlikely for the business to continue trading in which case I would
    advise immediately taking the steps necessary to shut the business down as opposed to throwing good money after bad.
  4. The thought process is similar, if not the same, as that we faced under level 5 lockdown except we have no TERS to bail us out. If both the Employer and Employee cannot perform under their contract of employment due to a legal impossibility of performance then the reciprocal obligation of both parties is suspended for the period of the legal impossibility. In English, no work no pay for the period the business was closed during the period of civil unrest.

I have put this forward very simplistically and I once again stress that you need to take professional advice as every situation can be materially different. I don’t believe that there is any one size fits all solution.

Anyway, I hope this has created a bit of clarity for everyone.


At MRM we are eternally grateful for the steps we took last year to enable ourselves to work remotely. We
understand that our business is fortunate in that we can do so however we once again urge you to identify any portion of your business which can work remotely and to take steps to implement this. We have many clouds still on our horizon from COVID to ESKOM wrapped in a big bundle of political unrest and we don’t know where the next bit of excitement will come from. The more you implement procedures to make nodes of your business sustainable off site, the more resilient you will be to the effects of outside influence.


I have waxed lyrical in previous correspondence about changes in purchasing patterns, migration to online business models and the establishment of remote solutions. I also commented how COVID has accelerated South Africa untold years in the advancement of such. In a week an indigent element of our population has further accelerated this significantly complements of hundreds of destroyed shopping malls, shops, factories and warehouses. If you don’t factor this into your strategic business plans moving forward you may well end up devaluing your enterprises.


Keep safe, protect what is yours and get vaccinated, it’s unlikely you will grow any new appendage worth speaking of.


Take Care
Chris, Shireen and the MRM Team