As a business owner and subsequent employer, you may be wondering: do you need a Letter of Good Standing from the Compensation Fund (COIDA)? The short and simple answer is yes. However, it is crucial to look at what a COIDA Letter of Good Standing (LoGS) is, what you need to get one, and how you can go about obtaining a LoGS.

What is a Letter of Good Standing (LoGS)?

A Compensation Fund Letter of Good Standing, simply defined, is an official letter provided to an employer, proving that they are registered with COID and that they are up to date with their payments to COID.

The reason so many tenders and contracts require employers to be in possession of a WCA Letter of Good Standing is attributable to ensuring that employers are accountable. This accountability specifically refers to employees and making sure that employers operate within legal parameters.

Employers who are not registered with COID or who are not in Good Standing with the Compensation Fund, are not covered and neither will their employees qualify for compensation from COID should work-related accidents occur, attracting medical expenses or compensation in the event of permanent, disabling injury, or even death.

What documents are required to obtain a Letter of Good Standing?

There are certain prerequisites that apply to an employer or a business owner, in obtaining a COIDA Letter of Good Standing along with the correlating legislation. These prerequisites are:

  • That the employer or business owner has registered with the Compensation Fund, as per Section 80 of the Compensation of Occupational Injuries and Diseases Act (COIDA).
  • That the employer or business owner is up to date with their Return of Earnings submissions, as per Section 82 of COIDA.
  • That the employer or business owner has been assessed, in terms of their payable amount, as per Section 83 of COIDA.
  • That the employer or business owner is up to date with their due payments, as per Section 86 of COIDA.
  • Should the employer or business owner have an instalment arrangement to pay their assessment fee monthly, they will receive a COIDA Letter of Good Standing monthly.
Compensation Fund letters of good standing (LoGS) can be as crucial as SARS’ Tax Clearance Certificates.

Generally, they are required for:

  • Tenders
  • Government business contracts and renewals
  • Contractor work

Legally, mandators can be held liable for Claims and Assessment costs relating to their contractors who are not registered or who are not up to date with the Compensation Fund.

In practice, this obligation is highly unlikely to occur (since the Compensation Fund will normally take other steps when they encounter a claim for an employee whose employer isn’t properly registered and paid up) but it does create serious problems for contractors whose mandators insist on LoGS.

We have often encountered situations where contractors are locked off site because they cannot procure a LoGS for their mandator.

Needless to say, the loss of business resulting from such a lock-out can far exceed the costs associated with remaining in good standing and the effort required to obtain the LoGS.

However, in our experience, employers who are tardy in obtaining LoGS are often NOT in good standing and require our help in determining the cause for failure to be in good standing – and rectifying it.

This isn’t to say that all employers who do not have a LoGS to hand are poor administrators (or are not de facto in good standing). However, it is true that the requirements for preventing (and navigating) errors that could lead to a loss of good standing are not always obvious.

To ensure that you are in good standing, to obtain a letter confirming same and to determine (and subsequently resolve) obstacles to being in good standing, please contact us immediately for our Letter of Good Standing service.


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