Is there a new contract or tender that you are eyeing and want to get your hands on? To do this, you need a letter of good standing from the Compensation Fund in South Africa. What is the COID letter of good standing? What steps should you follow to get your letter of good standing South Africa?
What is a letter of good standing? Simply put, this is an official document that verifies that the Workman’s Compensation Fund (COID) will help an employer cover for any work-related injuries that the employees may suffer. As such, this letter goes a long way to show good faith to clients in a contract that they will not be liable to pay for medical expenses or life covers for the employees working in their premises in the event of an accident at work or illness. Additionally, this document is proof that one has no pending claims or debts on the Compensation Fund record.
Where can I get a letter of good standing?
There are several steps involved in obtaining a letter of good standing.
Step 1: COID registration
What is COIDA South Africa? COIDA acronym stands for Compensation for Occupational Injuries and Diseases Act. This refers to a government initiative to provide financial compensation or medical coverage to workers in case they suffer any work-related injuries or illness. The compensation fund covers a worker who is a permanently employed, an apprentice in a farm, domestic worker, or one who works for a labour agency. To be registered with COID, one has to pay a certain fee. All companies must undertake a COID registration to be eligible to apply for a letter of good standing.
Is workman's compensation compulsory in South Africa?
According to South African labour laws, almost all employers except for a few exceptions are mandated to register with the Workman’s Compensation Fund (COID). Lack of a letter of good standing shows that the company owes the Compensation Commissioner money and also that your personnel are not covered by the institution. This will be a red flag for most clients who would like to work with you. So to answer the question, yes it is mandatory to register with Workman’s Compensation as the government fund will compensate all claims for occupational hazards and diseases.
How do I apply for workmen's compensation?
One can choose to register with the Department of Labour letter of good standing or use the COID service which is equipped with a team of professionals to do the registration on your behalf. Registering with the Labour Department takes approximately 3 months or more while the COID service only takes 25 days. As such we recommend that you use COID service as it is faster. For instance, those in Gauteng can contact COID service for Compensation Fund on telephone number 0860 105 350.
Here is what you will need for your COID registration.
- COID registration application form
- A South African identity card
- The company’s registration forms
- Power of Attorney if you opt to use the CPID service method
- Evidence of payment of the registration fees.
You will receive your COID certificate which will have a digit number that you will need when applying for the compensation fund letter of good standing.
Step 2: Submit your employee expenses (Returns on Earnings)
After COID registration, the next step is that you must submit the organization’s total estimated yearly wage and salary costs so that the Compensation Fund can compute the amount you need to pay. The payable amount is a percentage of the yearly total wage and salary which means that you need to submit such amounts every year.
The deadline for remitting the returns of Earnings as well as applying of a new or renewed letter of standing is 30th April of each year. If it’s the first time application, the submission is included in the COID registration document but for renewal, one must submit the Returns of Earnings as well.
Step 3: Remit your yearly/monthly fee to COID
After forwarding your Returns of Earnings, the Department of Labour will in three working days send you a Notice of Assessment (NOA) which will have the amount you need to pay to Worker’s Compensation Fund. Pay this fee and then you can finally apply and get your letter of good standing. To acquire your letter of good standing application form pdf, you will need the Notice of Assessment and proof that you have paid the necessary assessment fees. Fill the letter of the good standing registration form and download the certificate.
How long is a letter of good standing valid?
The validity of the letter of good standing will depend on whether you pay the fees yearly or monthly. If you pay yearly, then it becomes valid for one year which means your workers are covered for that period. However, if you pay the assessment fees in instalments then you will have to renew it on a monthly basis. Note that if you decide to go with the monthly option, you will still have to pay at least a 30% deposit of the amount payable as per the NOA.
Everyone must renew their letter of good standing before 30th April of every year. Please note that this date is not related to the date of application of the letter. For instance, you might give the letter in March and still have to renew it again at the start of May because the letter of good standing expired on 30th April.
UIF payment duration
Every employer who has personnel working over 24 hours per month need to register them with the Unemployment Insurance Fund (UIF) and remit the necessary funds according to Law. The total funds contributed is about 2% deduction of the employee’s gross income. The employee needs to apply for UIF payment with the Department of Labour within 6 months of being jobless. After application, they are entitled to benefits for a maximum period of 238 days depending on the period of their contribution to IUF.
That is all you need to know to get a letter of good standing in 2020. We wish all the best with the acquisition of tenders and contracts.