Compensation fund – rather safe than sorry!

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Over the last few years we have placed much emphasis on ensuring that our clients are registered with the Compensation Fund in terms of the Compensation for Occupational Injuries and Diseases Act (COIDA), previously known as the Workmen’s Compensation Act.

We find, however, that there are still many unanswered questions, which form the basis for this article. We trust that the content will address whatever questions you might still have with regard to your registration and annual submission.

What is the Compensation Fund?

The Compensation Fund is a government institution that was established to compensate employees for disablement caused by injuries sustained or diseases contracted in the course of their employment, or death resulting from such injuries and diseases. In such cases, the fund provides the necessary compensation to the employee and thus employers do not need to worry about expensive legal claims.

Who needs to register?

In terms of labour law a business is liable to register with the Compensation Commissioner within seven days after its first employee is appointed. Even if you are a sole proprietor, you remain liable to register in terms of the relevant legislation.

What if I am not registered?

Failure to register constitutes a contravention of the relevant legislation and as a result the business might face serious fines and possible prosecution for non-compliance.

For a company especially, such failure to register will be considered as a breach of the directors’ fiduciary duty towards that company and, as a result, might lead to personal liability of such directors in the case of employees’ claims.

What types of compensation payments are made by the fund?

The fund pays five main types of compensation, i.e:
a) Temporary disability;
b) Permanent disability;
c) Death;
d) Medical expenses; and
e) Additional compensation

  • Temporary disability: This is compensation paid in instances where the employee’s health will improve and he/she will return to work in the future. For the first three months during which an employee is not fit for duty the employer has to remunerate the employee as usual, whereafter the Compensation Fund will continue payment of the monthly benefit and reimburse the employer for compensation paid during the first three months.Temporary disability is equal to 75% of the normal monthly earnings in the case of total disability. In the case of only partial disability such compensation is calculated by alternative means.
  • Permanent disability: This is compensation paid when an employee never recovers from the injury or illness.The compensation is based on the degree of disability and is paid as either a lump sum or a monthly pension. Where the disability is more that 30%, a monthly pension is paid whereas in the case of a disability of less than 30%, a lump sum is payable.
  • Death benefits: This is compensation claimed by the widow/er or dependants if a worker dies as a result of a work-related accident or disease. The compensation is paid to the respective parties as follows:The widow/er:
    a. Lump sum payment: 2 x monthly pension;
    b. Monthly pension for life equal to 40% x monthly pension of the worker.Each child under 18 years:
    20% x monthly pension of the worker, paid every month until such child reaches the age of 18 years.Other dependants:
    Full dependants: Compensation the same as for the widow/er.
    Partial dependants: Lump sum according to the degree of dependence.
    Funeral expenses will be paid up to R 6 970.
  • Medical expenses: All medical expenses will be paid for a maximum of two years from the date of the accident.
  • Additional compensation: If an employee is injured, dies, or contracts an occupational disease because of the negligence of the employer or because of a defect in machinery or equipment, the worker will receive additional compensation for temporary or permanent disability.

Any worker younger than 26 will receive additional compensation.

We urge clients to make sure that they are registered and that annual assessment payments are made when they fall due.

For any assistance with your registration or completion of your annual submission, please do not hesitate to contact our salary bureau administrator, Corne Moss, at salaries@asl.co.za


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