Certificate Of Good Standing: A Guide For Employers & Employees

A letter or certificate of good standing is an official document that proves that you are registered with COID and up-to-date with the associated payments. It ensures that employers are willing and able to take full responsibility for their employees and are operating legally.

The Compensation Fund is housed under the Department of Labour. Its mission is to provide efficient, quality Compensation for Occupational Injuries and Diseases (COID). 

Many businesses may require a Letter or Certificate of Good Standing in order to apply for tenders and contracts. But what is COIDA, or COID, what are the requirements for it, and how does one get it? 

In this article, we’ll cover everything that you need to know. 

What Is A Certificate Of Good Standing? What Is COID Or COIDA?

As mentioned previously, a COIDA certificate of good standing is a document that serves as an official statement. The purpose of this document is to confirm a company or business’ ability to meet the requirements of the Compensation for Occupational Injuries and Diseases Act (COIDA). 

There are various kinds of letters or certificates of good standing. These include: 

  • tenders 
  • foreign investment 
  • tax clearance letter of good standing 
  • COIDA letter of good standing 
  • emigration. 

Be sure to be aware of the kind that is required from you, or things can get confusing. 

Aerial view of an office with cubicles where employees are hard at work

COID or COIDA is an act that serves to protect employees from any personal illness, injury or death that may occur due to the nature of their occupation. The act applies to all employers and anyone working as a casual or full-time employee. 

In order for businesses to be a part of this fund, an annual assessment fee must be paid. In addition, they require a certificate of good standing. 

If you’re already registered with COIDA and are looking for extra protection for your business, consider getting a business insurance quote.

How To Register For COIDA

All employers who employ one or more workers need to register with the Compensation Fund and pay the necessary annual assessment fee. This fee is dependent on employees’ earnings and the risks associated with the nature of their work. 

The following employers do not have to pay assessment fees:

  • national and provincial governments
  • local authorities with valid exemption certificates
  • municipalities, and
  • employers who are fully insured by a mutual association.

These fees may be subject to increases or decreases, depending on the employer’s accident costs. Employers with lower accident costs may qualify for assessment fee rebates. 

But before any person or business is able to register for COID, they need to meet various requirements. 

How Do I Get A Letter Of Good Standing Through COIDA? 

This part is simple. As long as you follow the COIDA requirements and regulations, you will be eligible to receive a letter or certificate of good standing. 

Keep reading for more information on the registration requirements, fees, inclusions and exclusions.

COID Registration Requirements

In order to be eligible to receive the certificate of good standing, employers must meet the following requirements:

  1. Employers must be registered with the Compensation Fund, and have a COID registration number as proof. 
  2. As per the act, all employers who have registered with the Compensation Fund must submit all earnings statements and pay their annual fees.

Only once the following requirements have been met can the certificate of good standing be provided. Employers can register for COID by finding the COID registration form and submitting it.

COID Registration Fee And Assessment Fee

So far, we’ve discussed the registration requirements for COID and how to go about it. Next, we’ll go into a little more detail regarding the fees involved with a COIDA registration.

Based on the legislation in Section 80 of the Compensation for Occupational Injuries and Diseases Act, all employers with one or more employees must register and pay the annual assessment fees.

All employers and contractors need to submit a statement of earnings prior to the end of March. This statement will include the earnings that have been paid to their workers from the beginning of March of the previous year to the end of February of the current year. 

People exchanging pens and documents while signing paperwork

Based on the legislation in Section 82 of COIDA, the annual assessment fee will be calculated according to employees’ earnings and an assessment tariff based on the types of risks involved with the nature of their work. For personal cover related to a high-risk lifestyle outside of work, employees should consider getting a life insurance quote.

This tariff is reviewed annually and employers are generally grouped into one of 100+ subclasses. Based on Section 85 of COIDA, each subclass has its own assessment tariff. A higher accident cost of an employer within a subclass may increase the assessment tariff of that subclass. The same applies if the accident costs are lower. 

Based on Sections 86 and 87 of COIDA, assessment fees are payable in advance within 30 days of the date on the annual assessment notice. Failure to pay the annual assessment fees will result in a fine. 

Employers may be refunded with a merit rebate by the Compensation Commissioner. This may apply if:

  • The employers actively prevent accidents 
  • The employers show favourable costs over a three-year cycle, and
  • There are excess funds

Who Does The Compensation Act Include And Exclude?

There are various regulations surrounding the registration requirements, costs of assessment fees, and who the fund includes and excludes.

Employees who are eligible to be covered by the Compensation Fund include:

  • Those who are permanently employed 
  • Domestic workers living in a boarding house
  • Workers paid by a labour agency, and
  • Apprentice or trainee farmworkers

Aerial view of three people sitting at a desk covered with documents, having a business meeting

Those excluded from cover by the Compensation Fund include:

  • Workers who are completely or partially disabled for less than 3 days
  • Domestic workers
  • Any person that receives military training
  • Members of the South African National Defence Force or the South African Police Service
  • Any employee found guilty of wilful misconduct, unless they are seriously disabled or killed
  • Any person employed outside of South Africa for twelve or more months continuously 
  • Employees working mainly outside of South Africa and only temporarily employed within the country

For any further queries, feel free to contact the Compensation Fund directly.

Conclusion

A letter of good standing ultimately serves as a form of security for clients to ensure they’re not held responsible for any damages or injuries that may occur in work-related incidents. Companies without a letter of good standing likely owe money to the Compensation Fund.

In addition, it means that employees are not covered by COID and that clients are not safeguarded against a work-related incident that may occur on their property.

A COID certificate is therefore vital for the efficient operation of any business or company in South Africa.

We will be happy to hear your thoughts

Leave a reply