Compensation Fund New Assessment Model

On 16 October 2018, the South African Department of Labour issued Government Notice No. 1105 regarding the implementation of the Compensation Fund’s New Assessment Model.

Currently the Compensation Fund assess employers on the basis of the industry they operate in, and are assigned a specific assessment class for the basis of determining their liability to the fund.

The existing 102 sub classes will be mapped into 6 new main classes.

The Compensation Fund is of the opinion that the new assessment model will minimise dispute and audit referrals, and will simplify the process of dealing with the fund.

New assessment classes and rates

*The new main class 6 (workers employed by households) will be included as soon as the Compensation for Occupational Injuries and Diseases Amendment Bill is passed in Parliament.

Implementation of the New Model

The effective implementation date will be 1 April 2019 by “phasing-in” the new rates through discounts and loadings to employers, over a 3 year period. Employers will be allocated to a new rate, but receive a discount or loading to phase in the changes as follows:

Class 1: Agriculture, Forestry and Fishing, Mining and Quarrying and Construction

Class 2: Manufacturing, Transport, Storage and Communication

Class 3: Electricity, Gas and Water Supply; Wholesale and Retail; Repair of Motor Vehicles and Motorcycles and personal and household goods, hotels and restaurants

Class 4: Financial Intermediation, Insurance, Real Estate and Business Services and Community, Social and Personal Services (excluding Security Services)

Class 5: Security Services

Class 6: Households

Taking all of the above into consideration it is clear that some employers will benefit from the proposed new model by receiving discounted rates and others will be impacted negatively through loading.

Example for Class 4 Employers

Employer: ABC Bank (Sub-class 1600)

Assessment period: 1 March 2016 – 1 February 2017 (2017 Year of Assessment)

Assessment period: 1 March 2017 – 1 February 2018 (2018 Year of Assessment)

Assessment period: 1 March 2018 – 1 February 2019 (2019 Year of Assessment)

The above example is an indication of the impact loading will have on some employers, with an increase of roughly 30% over a period of 3 years.

ABOUT THE AUTHOR

Nidene Lourens has been with SEESA as Legal Advisor since 2012. She started at the SEESA Bloemfontein office and moved to SEESA Head Office in 2017. Nidene is currently the SEESA UIF & Compensation Commissioner Manager and holds three graduate degrees including a B.Com Law degree, B.Com Honours degree, and an LLB obtained in 2010.