Is a Letter of Good Standing from the Compensation Fund Necessary?
Do you need a Letter of Good Standing from the Compensation Fund (COIDA)?
As a new business owner and subsequent employer, you may be wondering: do you need a Letter of Good Standing from the Compensation Fund (COIDA)?
The short and simple answer is yes. However, it is crucial to look at what a COIDA Letter of Good Standing (LoGS) is, what you need to get one, and how you can go about obtaining a LoGS.
What is a Letter of Good Standing (LoGS)?
A Compensation Fund Letter of Good Standing, simply defined, is an official letter provided to an employer, proving that they are registered with COID and that they are up to date with their payments to COID.
The reason so many tenders and contracts require employers to be in possession of a WCA Letter of Good Standing is attributable to ensuring that employers are accountable. This accountability specifically refers to employees and making sure that employers operate within legal parameters.
Employers who are not registered with COID or who are not in Good Standing with the Compensation Fund, are not covered and neither will their employees qualify for compensation from COID should work-related accidents occur, attracting medical expenses or compensation in the event of permanent, disabling injury, or even death.
If you have any questions, please feel free to speak to one of our Experts
What documents are required to obtain a Letter of Good Standing?
There are certain prerequisites that apply to an employer or a business owner, in obtaining a COIDA Letter of Good Standing along with the correlating legislation. These prerequisites are:
- That the employer or business owner has registered with the Compensation Fund, as per Section 80 of the Compensation of Occupational Injuries and Diseases Act (COIDA). Employers can become subscribers of SafetyWallet and receive the assistance that they need in their COID registration.
- That the employer or business owner is up to date with their Return of Earnings submissions, as per Section 82 of COIDA.
- That the employer or business owner has been assessed, in terms of their payable amount, as per Section 83 of COIDA.
- That the employer or business owner is up to date with their due payments, as per Section 86 of COIDA.
- Should the employer or business owner have an instalment arrangement to pay their assessment fee monthly, they will receive a COIDA Letter of Good Standing monthly.
Steps in Obtaining a LoGS
Step 1: Registration with COID
Register with COID either directly through the Department of Employment and Labour or subscribe to SafetyWallet to obtain the necessary assistance with such a registration.
Documents needed during registration includes:
- A Valid South African ID of the business owner.
- The Company’s registration document.
- COID Registration Form.
- Power of Attorney – necessary should the subscriber wish for SafetyWallet to complete the application on behalf of them, and
- Proof of payment of assessment fees to COID.
Step 2: Submission of employee expenses
The employer or business owner must submit the total estimated wage and salary expenses of all employees for the year. This allows COID to calculate the assessment fee payable.
The fee is calculated as a percentage of the total yearly wage and salary expenses of the employer, which must be submitted annually. Employers who are renewing their registration must ensure that they submit their Return of Earnings.
Step 3: Paying the yearly/monthly fee
Once the Return of Earnings has been submitted, the Department of Employment and Labour will send the employer their Notice of Assessment (NOA) which indicates the assessment fee that must be paid to COID.
After this amount is paid to COID and thus settled, the employer will receive their Compensation Fund Letter of Good Standing, which is valid for a year until they are required to submit their Return of Earnings for the next period.
This ensures that employees are covered with regards to compensation for a year. Where employers cannot pay the fee once-off, there is a monthly instalment payable. However, the employer must pay a 30% deposit and the Letter of Good Standing is valid from one month to the next, depending on the employer’s commitment to paying the monthly instalment.
How can SafetyWallet help Employers and Contractors’ Health and Safety Compliance?
SafetyWallet works to ensure that its subscribers are supported and assisted in all matters relating to health and safety, and through a partnership with MAKROSAFE and OHS Online, subscribers can ensure that they are a part in creating a safer, healthier, and more compliant working environment.
Click on the image below to find a SafetyWallet Solution that suits your business (Branch/Site specific) and get the 21 benefits along with the subscription:
MAKROSAFE have been assisting clients for more than 23 years with WCA Letter of Good Standing and health and safety in the workplace, contact us now to find out how we can assist you.