The Compensation Fund's Letter of Good Standing

Overview

The Compensation Fund’s Letter of Good Standing (LoGS) can be viewed just as important as the South African Revenue Service’s (SARS) Tax Clearance Certificates. Letters of Good Standing are especially important for:

Tenders
Government business contracts and renewals, and
Contractor work

Legally, mandators, or employers, can be held liable for claims as well as assessment costs of their contractors if they are either not registered with the Compensation Fund, or if they are not up to date with their fees payable annually.

Letter of Good Standing (LoGS) image 2

The Consequences to contractors in not having a LoGS

However, such an occurrence may not be unlikely as the Compensation Fund normally takes additional steps when a claim is made for an employee whose employer is not properly registered and subsequently paid up, but it tends to create serious problems for contractors whose employers may insist on a Letter of Good Standing before appointing them to do work.

There have been numerous cases where contractors have been removed from the workplace when they cannot provide their employer with a Letter of Good Standing. Thus, the loss of business which results from such lockouts can exceed the costs of remaining in good standing along with the effort in obtaining a Letter of Good Standing.

What is the process involved with obtaining a LoGS?

Step 1: Registration with COID

The first step involved with obtaining a Letter of Good Standing is that the business must be registered with COID. This can either be done directly through the Department of Labour or it can be outsourced. Subscribers to SafetyWallet have the necessary assistance in this regard, making the process effortless in allowing professionals to deal with the paperwork on behalf of them.

Documents which are needed with 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 must submit the total estimated wage and salary expenses of employees for the year for COID to calculate the assessment fee that must be paid.

This fee is calculated as a percentage of the yearly total wage of the employer along with salary expenses. This requires that the employer submit their wage and salary expenses annually.

Employers registering for the first time will have their submission document included in the COID registration form, submitted as per the first step.

Where renewals are concerned, employers must submit Return of Earnings.

Letter of Good Standing (LoGS)

Step 3: Paying the yearly/monthly fee

After having submitted the Return of Earning document, the employer will be provided with a Notice of Assessment (NOA) from the Department of Labour, indicating the fee payable to COID.

After having paid this amount, the employer will be awarded with their Letter of Good Standing, proving that the employer is covered for compensation for the next year.

Where employers are unable to pay the fee once-off, there is a monthly payment option. However, this requires a 30% deposit and when choosing this option, the Letter of Good Standing is valid from one month to the next, depending on the employer’s commitment to paying the fee monthly.

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. To find out how you can ensure employer and contractor’s Health and Safety compliance, click here.

www.safetywallet.co.za/healthandsafetycompliance

OTHER:

www.makrosafe.co.za/Injuries on Duty