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A Step-by-step guide to getting a Letter of Good Standing so that you are health and safety compliant
Introduction
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.
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Comments (8)
Morning, I am a Sole Proprietor and looking for Letter of Good . Can you assist me. I can only afford month to month payment
2021-07-26 06:23:01What is the minimum number if employees the employer should have in order to qualify for a registration with WCA?
2023-12-21 12:22:46Dear Sthembiso Thank you for your query via our comments... The minimum number if employees the employer should have in order to qualify for a registration with WCA is one (1)
2024-01-08 11:59:13Good day I have submitted and paid the ROE. How do I get a letter of good standing
2021-08-05 09:03:24I need to register for a letter of good standing. Currently I only use casuals for a 2 week painting project. What must I do and can you assist me with this? Regards Stiaan 0711777740
2021-09-09 12:03:04How much is the letter of good standing
2021-06-12 11:08:57Hi its marchell here i need a letter of good standing for my busniss
2023-07-24 15:23:56Dear Marchell Thank you for your request via our comments... To get a WCA Letter of Good Standing for your business, you need to first register with WCA, after registration a ROE (Return of Earnings) must be submitted for the assessment, WCA with then advise the amount to pay, once paid in full WCA will supply the Letter of Good Standing... Kindly follow the links below: New WCA Registration: https://www.mysafetyshop.co.za/Products/New-WCA-Registration Return of Earnings: https://www.mysafetyshop.co.za/Products/Return-of-Earnings Letter of Good Standing: https://www.mysafetyshop.co.za/Products/Letter-of-Good-Standing
2023-07-25 07:23:57I have a letter of good standing, but for Telecommunications. I have now ventured into constrution and engineering as well, and was wondering whether I can get a Letter of Good Standing for those as well ?
2023-04-19 21:57:33Dear Willem Thank you for taking your time to read our blog and for your query via our comments... We highly appreciate it... You can get a Letter of Good Standing for the Construction and Engineering entities if they are registered company's with those industry types... You cannot get a LOGS for all those Industries under one company, only one Industry type per registered company... Once you have registered the new companies, please do follow this link for new company WCA registrations: https://www.mysafetyshop.co.za/Products/New-WCA-Registration
2023-04-20 07:52:51I want to know why do I need a letter of good standing if I don't have a job yet to employ people. I am registered with the CSD . But didn't have a tender before.
2023-03-14 17:29:08Dear Marshal Thank you for your query via our website comments... You only need to register with WCA / RMA when you employ your first employee, unless you are the employee of your company and you are doing the work, eg a plumber, or electrician... For assistance with New Company WCA Registration, kindly follow this link and approve the purchase by following the prompts: https://www.mysafetyshop.co.za/Products/New-WCA-Registration
2023-03-22 07:41:08