A Step-by-step guide to getting a Letter of Good Standing so that you are health and safety compliant
Before providing a step-by-step guide to getting a Letter of Good Standing so that you are health and safety compliant, it is first necessary to understand what it is, why it is required, and what the workman’s compensation is.
What is a Letter of Good Standing and why is it required?
A Letter of Good Standing is an official document which proves that an employer has the backing of the Workmen’s Compensation Fund (COID) in assisting with payment of work-related injuries or harm to employees, as payments to the Fund are up to date.
The Letter of Good Standing is important as it serves as a form of security that the employer can be assured that they will not be responsible for paying medical bills or any other compensation to employees in case of a work-related injury or illness.
Employers who do not have a Letter of Good Standing either did not register with the Compensation Commissioner or they owe the Workmen’s Compensation Fund money. It subsequently means that employees are not covered by COID and that clients are not safeguarded if a work-related accident occurs on their premises.
What is COID and why do employers need to pay the Fund?
All employers who employ one or more employees must, within seven days following the registration of the business, register with the Workmen’s Compensation Fund - Department of Employment and Labour, with a few exceptions.
COID is government-funded and it helps employers cover medical expenses and all other compensation owed to employees following an injury while the employee was on duty, disablement, diseases, and even death, during the employee’s duration or employment.
However, employers are required to pay a yearly assessment fee that must be paid by employers to ensure that they are covered. A Letter of Good Standing subsequently means that the employer is in good standing with COID and that there are no outstanding yearly payments.
Without registering with COID and/or without paying the yearly assessment fee, employers cannot be eligible for a Letter of Good Standing. Apart from consequences relating to having to cover compensation, it may also affect the ability of the business to obtain contracts or tenders from businesses.
What is the process involved with obtaining a Letter of Good Standing?
Step 1: Register with COID
The first step in obtaining a Letter of Good Standing involves registering the business with COID. Registration can either be directly through the Department of Employment and Labour using their COID service or outsourcing such a task.
The documents needed with registration include:
- Valid South African ID of the business owner.
- The Registration Document of the Company.
- COID Registration Form.
- Power of Attorney, only necessary when outsourcing the task of registration, permitting the third-party to complete the application on behalf of the business owner, and
- Proof of payment of assessment fees to COID.
Step 2: Submit employee expenses
During this step, the employer must submit the total estimated wage and salary expenses of all employees for the year, according to fiscal years, for the Compensation Fund to calculate the assessment fee which must be paid.
COID calculates the fee of the employer as a percentage of their yearly total wage and salary expenses. This means that the employer must submit their wage and salary expenses annually.
For employers who are registering for the first time, the submission document will be included in the COID registration form, as submitted according to the first step.
However, where renewals are concerned, employers must submit Return of Earnings.
Documents required in this step:
- Return of Earnings, applicable for renewals.
Step 3: Pay the yearly/monthly fee to COID
After the employer has submitted their Return of Earnings document, the Department of Employment and Labour will provide a Notice of Assessment (NOA) which will indicate the amount payable to COID.
After this amount has been settled, the employer will receive their Letter of Good Standing, which means that employee compensation is covered for the next year.
Should the employer be unable to pay the yearly cost in an immediate lump sum, they have the option of making monthly payments. However, the employer must pay a 30% deposit to qualify for this option.
In addition, when choosing the option to make monthly payments, it means that the Letter of Good Standing will be valid from one month to the next and will depend on the ability of the employer to make monthly payments.
Documents required in this step:
- Notice of Assessment, issued by the Department of Labour, and
- Proof of payment for yearly or monthly fees.
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.
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: