What is the Workman’s Compensation Fund?
In a sense, the Workman’s Compensation is a bit like nationwide workplace insurance.
It’s a national fund that helps businesses pay for the remunerations or medical bills of employees who suffer work-related injuries or harm.
The Fund will only cover your employees if all your due payments are up-to-date.
What is a Letter of Good Standing and why do you need to be registered for COID to get a Letter of Good Standing?
A Letter of Good Standing is a letter that the Workman’s Compensation Fund issues as proof that your payments to them are up-to-date and that you are in “good standing” with the Fund.
This implies both that you are registered with the Fund (this is known as COID registration) and that you are up-to-date with all your due payments to them.
This is important because the Fund only covers your business if ALL your payments are up-to-date.
In short, a Letter of Good Standing proves that you are registered with the Fund and covered for financial support in the case of work-related harm to your employees.
Is COID Registration compulsory?
Yes, it usually is. According to South African legislation, every employer needs to register for the Workman’s Compensation Fund (COID). There are a few exceptions.
Why is the Workman’s Compensation Fund important to have?
Let’s say one of your employees breaks a finger while doing a work-related activity.
It’s your responsibility to cover the medical bills, but it’s also your responsibility to pay your employees salary while they are unable to work as normal, and if there’s any permanent damage, it’ll be your responsibility to reimburse your employee for any loss in potential earnings – forever.
That’s 3 tiers of expenses to one.
Perhaps nothing ever happens at work, however, the small fee associated with the Workman’s Compensation Fund is worth the financial security.
One significant accident, or a few smaller ones, can permanently set back your business’s finances.
How does the Workman’s Compensation Fund important to have?
The Workman’s Compensation Fund demands a small fee, and in return, they offer financial support in work-related cases.
It’s a small fee to remedy the complete financial vulnerability of a South African business when something does go wrong.
Without a Letter of Good Standing, potential clients have no proof that your employees are insured in the case of work-related accidents or injuries.
You can pay your fees annually or monthly. However monthly payments imply that your Letter of Good Standing will be renewable every month too.
Why is COID Registration important for Tenders and Contracts?
Potential clients want to know your employees are covered in the case of a work-related accident because they do not want to take on the risk.
When you are registered with COID, and when your payments are up-to-date, clients can rest assured knowing your employees are covered by the Compensation Fund. This means they won’t have to take responsibility when they, for example, subcontract you and something happens to one of your employees on their premises.