Compensation Fund Registration

Employers are obliged to register with the Compensation Fund or the respective licensee and pay annual assessment fees. This includes anyone who employs one or more fulltime or part-time employee.

By Tinus Boshoff

2022/07

The COID Act:

In South Africa, work-related compensation claims and related matters are mainly governed by the Compensation for Occupational Injuries and Diseases Act, Act 130/1993, as amended by the Compensation for Occupational Injuries and Diseases Act, No 61/1997 (COID Act).

The main objective of the COID Act:

The main objective of the COID Act is to provide compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees, or for death resulting from injuries or diseases, and provide for all related matters.

Employers’ protection against civil claims:

Registration with the Compensation Fund or the respective licensee provides protection for employers against claims from employees and dependants. The COID Act prevents employees or their dependants from suing their employers (who are covered by the COIDA) for damages in terms of common law.

The Compensation Fund:

The COID Act is administered by the Compensation Fund. The Compensation Fund is liable for the administration of all work-related claims in South Africa. It is a trust fund controlled by the Compensation Commissioner.

Who contributes to the Compensation Fund?

Only employers contribute to the Fund. The Fund generates its revenue from levies paid by employers. These levies consist of annual assessments paid by registered employers as a fixed rate or as a percentage of the annual earnings of their employees.

Services provided by the Compensation Fund:

The Compensation Fund provides the following services:

• Employer Services
• Claims Services
• Medical Services
• Finance Services
• Legal Services
• Rehabilitation and orthotics

Who is considered an employer?

The COID Act defines an employer as any person, including the State, who employs an employee, and includes:

• any person controlling the business of an employer;
• if the services of an employee are lent or let or temporarily made available to some other person by his employer, this other person is an employer for the duration of the temporary agreement;
• a labour broker who against payment provides a person to a client for the rendering of a service or the performance of work, and for which service or work such person is paid by the labour broker.

Sole proprietors, partners or a non-working director are not employees in terms of the Act.

Who may claim compensation in terms of the COID Act?

Employees who are injured on duty or who contracted occupational diseases can claim compensation for temporary or permanent disablement according to the degree of disablement and death.

The Compensation Fund covers an employee who is:

• permanently employed
• a domestic worker in a boarding house
• an apprentice or trainee farm worker, and
• a worker paid by a labour agency.

Anyone who is employed under a contract of service and receives wages or a salary on a weekly or monthly basis may claim compensation in terms of the Act. Dependants of an employee who is fatally injured can also claim compensation. A casual employee has exactly the same rights as that of a full-time employee.

Licensees:

The Compensation Fund approved and appointed two other licensees to assist in this regard. They are:

• The Federated Employers Mutual Assurance (FEMA) for the building industry; and
• The Rand Mutual Assurance Company (RMA) for the mining industry and CLASS XIII employers (Iron, Steel, Artificial Limbs, Galvanizing, Garages, Metals, etc.)

When must the employer register with the Compensation Fund / Licensee?

An employer would be obliged to register with the Commissioner within seven (7) days after the day on which he employs his first employee in the prescribed manner. After registration with the Compensation Fund, employers form the building industry, the mining industry and CLASS XIII can then apply to move over to the respective licensee.

How to determine the employer’s industrial classification:

Employers who conduct business in the Republic are required to provide their respective carrier (the Compensation Fund or the applicable licensee) with the particulars of their businesses. The nature of the employer’s business (dominant work factor) will determine the presided assessment tariff. Assessment tariffs are calculated based on the risk associated with the employer’s particular type of work.

The employer’s assessment tariff can be prescribed according to his/her classification of businesses for the purpose of contribution to the Compensation Fund based on the nature of the business operation and the risks associated with the particular business activities. A business is regarded as a unit, including all operations incidental thereto and all administrative staff.

Employers are classified according to an industrial classification system; each rate is fixed according to the class of industry the employer conducts business in. The Compensation Fund adopted 13 Assessment Classes, but the new rates or tariffs will be phased in over a 5-year period.

How to determine the employer’s assessment tariff:

The nature of the employer’s operations determines the industry class. Each industry class has its own prescribed tariff. Assessments are calculated as a percentage of the annual earnings paid to employees. The rate is calculated per R100.00 of the employee’s earnings for the particular year.

Please note that earnings are not just the basic salary of the worker. The earnings of the worker must be the remuneration that he or she receives from the employer, including the following:

• the value of any food or quarters, or both, supplied by the employer;
• any overtime payment or other special remuneration in cash or in kind of regular nature, or for work ordinarily performed;
• any other remuneration in cash or in kind to an employee by virtue of his/her contract of service, including commission, cost of living allowance, and incentive or other bonuses.

It does, however, exclude:

• payment for intermittent overtime
• payment for non-recurrent occasional services
• amounts paid by an employer to an employee to cover any special expenses
• ex gratia payment whether by the employer or any other person
• travelling and subsistence allowances.

Calculation example: Assessment fee = total employee’s earnings ÷ 100 (R 100.00) x Compensation Fund assessment tariff.

Maximum amount of earnings: It is very important to note that there is a maximum amount of earnings (a ceiling amount for earnings) on which the assessment of an employer shall be calculated. This amount is amended by the Compensation Fund on a yearly basis. Any earnings above the maximum amount should not be included in the employee’s earnings for that particular year.

Minimum assessment amount: The Act also makes provision for a minimum assessment to ensure that the assessment is not less than the administration cost.

Assessment review:

Assessment tariffs are also reviewed on an annual basis.

How to register with the Compensation Fund:

Employers’ organisations that have a company registration number from the Companies and Intellectual Property Commission (CIPC) and have a PAYE number can register online via the CF FILING system.

You can register online: https://cfonline.labour.gov.za/OnlineSubmissions/?1

The following employers cannot register on CF ROE online system:

• Sole proprietors and partners
• Trusts
• NPOs
• Body corporates
• Schools / churches
• Companies / close corporations without a PAYE number.

The abovementioned employers could register with the Compensation Fund by submitting to the Commissioner the W.As.2 form (registration of employer form) containing the required particulars.

A separate registration is required for each separate branch of a business that has its own CIPC registration certificate.

Documents required to register with the Compensation Fund:

• Registration of employer form (W.As.2) / click here to download the W.As.2 form:
• Copy of Companies and Intellectual Property Commission (CIPC) documents / Trust documents (J246) / NPO and NGO certificate
• Copy of ID document

To find out more about registering with the Compensation Fund:

Tel: 0860 105 350

E-mail address: cfenquiries@labour.gov.za

For further information, training, audits or consultations, contact Tinus Boshoff

at tinus@labourguide.co.za. We will continue to keep you informed and updated.

This article does not constitute legal advice. For an informed opinion and/or assistance with health and safety related matters, readers are encouraged to arrange a formal consultation with the author.