What is a Workmen’s Compensation Fund?

From the employer’s perspective, you should know and understand what the Compensation for Occupational Injuries and Diseases Act entails, more commonly known as Workmen’s Compensation. COIDA is legal insurance that advantages both injured employees and their employer. This act allows employees guaranteed benefits and protects employers against claims for on-duty injuries and occupational diseases.

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

• Domestic workers
• Individuals who contract for the carrying out of work yet engage with 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 undertaking military training in the defence force is not covered by the Act

Workers who obtain an occupational disease or are injured on duty can claim compensation for temporary or permanent impairment. However, if a worker receives an injury on duty that results in death, their dependants will be entitled to claim compensation. In this regard, employers that registered their employees are protected against civil claims. The COIDA avoids employees being covered by the act from suing their employers for damages in terms of common law.

Hills Business Solutions will register you will the Compensation Fund, and all its employees. At the end of the year, there is a form to complete, whereby you declare the actual cost in staff salaries as well as director salaries, and then you project for the following year how much would be paid in salaries for the employees and directors. The Compensation Fund will then send you a statement of your payment amount.  This is based on a percentage of earnings, and as long as you are up to date with both returns and payments, you are able to get a letter of good standing. A letter of good standing with the Compensation Fund is quite a useful tool when negotiating with your suppliers, as well as putting out tenders, for it shows that you look after your staff.