Amongst all the risks that business owners face is the additional risk of employees getting injured at work. These injuries can become very expensive for employers, thus an ‘insurance fund’ called the Compensation for Occupational Injuries and Diseases (COID) was created to safeguard workers and employers in the unfortunate event of a worker sustaining an injury or contracting a disease in the course of their duties. This fund, often referred to as the Workmen’s Compensation Fund, is governed by the Compensation for Occupational Injuries and Diseases Act (COIDA) 130 of 1993, which sets out the legal requirements for tariffs, compensation and the limitations for claims from the fund.
WHO MUST BE REGISTERED WITH COID?
It’s a legal requirement that all companies who employ people are registered with COID – even if you only have one employee, and regardless of the industry you operate in. The possibility of injury is everywhere.
At this moment, the following people are excluded from the Act:
- Domestic workers employed in a private household;
- Anyone receiving military training;
- Members of the South African National Defence Force, or the South African Police Service;
- Anyone employed outside of South Africa for 12 or more continuous months; and
- Workers working mainly outside South Africa and only temporarily employed in South Africa.
So, unless your employees fall within the exclusions above, you need to comply with the Act.
HOW MUCH WILL IT COST?
The tariffs payable will vary depending on your company size. Your Company’s total estimated wage and salary expenses for the year (according to financial years) will be used to calculate the amount payable to the Compensation Fund - the fee is worked out as a percentage of your yearly total wage and salary expenses. This means you must submit your wage and salary expenses (in a Return of Earnings document) every year. The industry classification of your company will also affect the tariff, and the amount of claims by your company in the past will also be considered when they calculate your next fee.
HOW DOES A COMPANY GO ABOUT JOINING THE FUND?
You need to register your business with the COID (Department of Labour) and pay the registration fee. After this, you will need to submit your Company’s total estimated wage and salary expenses for the year via a Return of Earnings document. The Department of Labour will then send you a Notice of Assessment (NOA) stating the amount payable to the COID.
After you’ve paid that amount, you’ll receive a Letter of Good Standing proving your employees are covered for a year. This Letter of Good Standing is your proof that you are covered for any OHS eventuality, and will be needed if you want to do business with large corporate companies or the state.
WHAT CAN BE CLAIMED FOR?
Employees who sustain a workplace injury or contract an occupational illness can claim from the Fund – if the claim is approved, all the medical expenses of a worker will be paid for up to two years, from the date of the accident or the diagnosis of the disease. In the event of a death, the relatives of the deceased may submit a claim.
In terms of compensation, if the employee is booked off due to an accident or occupational disease for longer than 4 days, but less than 3 months, the employer must pay the injured employee at a rate of at least 75% of his earnings, from the first day of absence until the employee returns to work. The employer can claim this back from the Fund.
Once the first 3-month period expires, the injured employee must claim compensation directly from the Compensation Fund.
HOW ARE CLAIMS SUBMITTED?
Claims can be submitted electronically – the Compensation Fund launched its online claims management system, Umehluko, in August 2014. It can be used by employers, medical service providers or representatives and has been designed to capture information relating to occupational injuries, diseases and fatalities.
WILL CLAIMS ALWAYS BE HONOURED?
The payment of the claim remains the prerogative of the Fund. In general, claims will not be paid in the following cases:
- If the claim is submitted more than 12 months after the accident or death of the employee, or more than 12 months after the occupational disease is diagnosed.
- If the employee is off work for 3 days or less - sick leave may be used in this case.
- If the accident was caused due to serious and wilful misconduct of the employee. However, compensation will be paid if the accident results in the serious disablement or death of the employee.
- If the employee unreasonably refuses to have medical treatment.
Employers are compelled by law to register and contribute to the COID. The Fund is there for the benefit of both employee and employer. It provides free medical care and some compensation for injured employees, and at the same time, it serves as ‘insurance fund’ for employers. Non-compliance is very risky – companies can face huge fines or even prosecution for not complying with the Act. The employer can also be held responsible for huge amounts of money due to claims relating to injury on duty, diseases or death from an employee. Ensuring that you are compliant with the Act is indeed a win-win situation and offers protection for both employer and employee.
Contact Audax Accounting Solutions today if you need assistance in staying compliant with COIDA.