Workmen’s Compensation – Compulsory Form Of Employee Insurance

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Workmen’s Compensation – Compulsory Form Of Employee Insurance
Workmen's Comp

Workmen’s Compensation – Compulsory Form Of Employee Insurance

Author: Marianne Steinmann

Are you a bookkeepers, an accountant, a business owners, a director, or do you employ domestic workers in your home?

This article is for you.

Register with the Compensation Fund

To cover your workers against occupational diseases, injuries and death, you must register with the Compensation Fund. Also referred to COIDA and, though incorrectly so, sometimes also referenced as work men comp. You can register online.

The 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.

Workmen’s Compensation is a compulsory form of insurance providing compensation in the case of disablement caused by occupational injuries and diseases, sustained, or contracted by employees in the course of their employment, or death resulting from such injuries and diseases.

Employers must register with the Compensation Fund, or can face fines if they do not submit a Return of Earning (RoE) on an annual basis to the Compensation Fund, in order to obtain a Letter of Good Standing. However, there’s a yearly fee connected to this fund.

RoE submissions have been postponed this year to 30 June 2023

What is a Letter of Good Standing?

A Letter of Good Standing proves that you are in good standing with COID, with no outstanding annual payments, and ultimately proves that the COID will assist in paying for any work-related injuries or harm to your employees. A Letter of Good Standing is required when applying for most tenders and contracts.

What is a Return of Earnings (RoE)?

The Compensation for Occupational Injuries and Diseases (COID) Act requires all employers to submit a declaration, known as a Return of Earnings (ROE), of annual earnings (including benefits) paid during the period under review to the Compensation Fund each year. This amount, combined with the nature of business, will determine the amount payable by the employer to the Compensation Fund.

Once the ROE is submitted, employers are issued with a Notice of Assessment / Invoice, indicating the amount payable to the Compensation Commissioner, which must be paid within 30 days to avoid penalties and interest. 

When must the RoE be submitted?

Employers are required to submit a Return of Earnings (ROE) on an annual basis as soon as the ROE Online System platform opens between 1 April and 31 May.

RoE submissions have been postponed this year to 30 June 2023

What is the Earnings Threshold?

An annual earnings threshold is the maximum amount of an employee’s earnings that the COID contribution can be calculated on (currently R529,264 per annum per employee). The simplest way to explain this is to divide the annual threshold of R529,264.00 into a monthly threshold of R44,105.33 per month.

What is the assessment tariff?

The assessment tariff is determined according to hundreds of industry classifications, classes, and subclasses which are based upon the risks associated with the type of work performed. The Commissioner will issue an assessment based on the earnings declared and the tariff applicable to the Industry in which the company operates.

Employers will be required to declare the actual earnings paid and to estimate their employee/s earnings for the following year.

Notes

  • Overtime is only subject to COID if an employee regularly gets paid overtime.
  • If the nature of business is incorrectly classified, it may result in higher assessment rates being payable.
  • The Compensation Fund uses the opening date when referring to the year of submission i.e. the 2020 submission refers to the Return on Earnings for the period March 2020 to February 2021. This can be confusing, since the tax year makes use of the end date i.e. the 2020 tax year refers to the period March 2019 to February 2020.

Reminder:

Recently confirmed labour rules require all South Africans who employ domestic workers, including gardeners whether part-time, casual, part-time or full-time, to register with the Compensation Fund (COID) and make annual payments to cover their employees.

For further assistance please contact our offices

#WVDW #WVDWFinancialServices #bookkeepers #accountants #businessowners #directors #DomesticEmployers #DomesticEmployee #WorkmensCompensation #RoE #MarianneSteinmann

Kindly note this article is intended for general information purposes only and does not constitute accounting, tax, nor regulatory related advice. Should you need advice, please contact one of our practitioners.