South Africa

Why should employers register for Workmen's Compensation?

As an employer, you would have heard of the Compensation for Occupational Injuries and Diseases Act or more commonly known as, Workmen’s Compensation. COIDA is statutory insurance that benefits both the injured employee and his or her employer. It gives employees guaranteed benefits and it protects employers against claims for on-duty injuries and occupational diseases.

All employers in South Africa must be registered with the Compensation Fund. This applies to every employer who has one employee or more, but excludes domestic households. These trades are specifically excluded from registering with the Compensation Fund:

  • domestic workers
  • people who contract for the carrying out of work but engage others to carry out the work (i.e. subcontractors)
  • members of the National Defence Force and the Police Service
  • anyone on ‘service in defence of the Republic
  • anyone performing military service or undergoing military training in the defence force are not covered by the Act

Workers who are injured on duty or obtain an occupational disease can claim compensation for temporary or permanent disablement. If workers die as a result of an injury on duty, their dependants will also be entitled to claim compensation. Employers that registered their employees are protected against civil claims in this regard. The COIDA prevents employees covered by the act from suing their employers for damages in terms of common law.

If you as an employer, do not register with the Compensation Fund and one of your employees is injured on duty, you may face a number of problems such as:

  • The treating doctor or hospital will demand payment from you if they believe they cannot claim from the Compensation Fund.
  • These medical bills could amount to hundreds of thousands of Rands. If you do pay the medical costs of an injured employee and you are not registered with the Compensation Fund, you will not be able to claim back for these payments from the Compensation Fund. You may be prevented from tendering for important contracts because you will not be able to obtain a Letter of Good Standing from the Compensation Fund.

So not only is it legally binding on you, as an employer, to be registered with the Compensation Fund but it meets the needs of both employer and injured employee.

The Compensation Fund's annual assessments are payable annually and based on the nature of business which in turn determines the risk of work-related incidents. The total employee earnings for that year of assessment is also taken into account when calculating the assessment. It is vital that the correct nature of business is used as you could face penalties for under-reporting, or you could end up paying inflated assessments.

At RSM, we assist our clients with registrations, annual submissions, Compensation Fund audit queries and making sure historic returns are up to date. We check our client database to ensure that our clients are compliant with COIDA. Should the Compensation Fund issue an audit due to a significant change in the annual assessment, RSM has experience in dealing with the audit process.

Employers are urged to remain compliant and ensure they are registered for Workmens Compensation. For more information, contact our Outsourced Accounting and Payroll department.

Aaliyah Jacobs

Bookkeeper: Outsourced Accounting & Payroll, Cape Town


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