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
| Rating Class | Description | Assessment Rate |
| 1 | Agriculture, Forestry and Fishing, Mining and Quarrying and Construction |
2.11 |
| 2 | Manufacturing, Transport, Storage and Communication |
1.44 |
| 3 | Electricity, Gas and Water supply, Wholesale and Retail, Repair of Motor Vehicles and Motorcycles, and Personal and Household Goods, Hotels and Restaurants |
0.75 |
| 4 | Financial Intermediation, Insurance, Real Estate and Business Services, Community, Social and Personal Services (excluding Security Services) |
0.28 |
| 5 | Security Services | 4.04 |
| 6 | Households* | 0.89 |
*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
| Sub-class | Description | Year 1 | Year 2 | Final Year |
| 0111 | Livestock Farming | 2.09 | 2.14 | 2.11 |
| 0114 | Tillage & Forestry | 2.15 | 2.07 | 2.11 |
| 0116 | Mixed Farming | 3.03 | 3.20 | 2.11 |
| 0118 | Sugar & Tea Farming | 1.74 | 1.72 | 2.11 |
| 0300 | Ocean Fishing | 3.17 | 3.21 | 2.11 |
| 0400 | Underground Mining | 4.43 | 4.26 | 2.11 |
| 0411 | Coal Mining | 1.94 | 1.71 | 2.11 |
| 0420 | Opencast Mining | 1.45 | 1.27 | 2.11 |
| 0440 | Quarrying & Crushing | 3.75 | 3.72 | 2.11 |
| 0500 | BLDG & Elec Construction | 2.24 | 2.05 | 2.11 |
| 0501 | General Services | 1.81 | 1.71 | 2.11 |
| 0502 | Rock Drill & Blasting | 6.73 | 6.73 | 2.11 |
| 0505 | Drilling & Boring | 4.13 | 4.13 | 2.11 |
| 0512 | Civil Construction | 2.17 | 1.98 | 2.11 |
| 0521 | Water Works | 1.14 | 1.00 | 2.11 |
| 0530 | Steel Construction & Erection | 4.00 | 3.60 | 2.11 |
| 0531 | Heavy Electric Maintenance | 2.12 | 2.21 | 2.11 |
| 1210 | Cement & Lime Manufacturing | 1.30 | 1.29 | 2.11 |
Class 2: Manufacturing, Transport, Storage and Communication
| Sub-class | Description | Year 1 | Year 2 | Final Year |
| 0610 | Fisheries | 1.21 | 1.23 | 1.44 |
| 0612 | Fruit Packing | 1.13 | 1.11 | 1.44 |
| 0613 | Fruit & Veg Processing | 0.92 | 0.90 | 1.44 |
| 0621 | Milling | 1.45 | 1.67 | 1.44 |
| 0622 | Bakery & Snack Manufacturing | 1.37 | 1.50 | 1.44 |
| 0630 | Food Manufacturing | 1.08 | 1.25 | 1.44 |
| 0640 | Drinks Manufacturing & Bottling | 1.05 | 1.04 | 1.44 |
| 0641 | Brewery | 0.73 | 0.67 | 1.44 |
| 0642 | Distillers & Winery | 1.68 | 1.98 | 1.44 |
| 0650 | Coffee, Tea & Tobacco | 0.89 | 0.81 | 1.44 |
| 0700 | Textile Manufacturing | 1.26 | 1.38 | 1.44 |
| 0701 | Cotton / Wool Manufacturing | 2.11 | 2.11 | 1.44 |
| 0712 | Plastic Product Manufacturing | 0.96 | 1.10 | 1.44 |
| 0720 | Material Product Manufacturing | 0.67 | 0.63 | 1.44 |
| 0801 | Sawmilling | 3.26 | 3.55 | 1.44 |
| 0810 | Woodworks | 2.04 | 2.46 | 1.44 |
| 0811 | Soft Wood Manufacturing | 1.02 | 1.01 | 1.44 |
| 0900 | Printing & Soft Paper | 0.91 | 0.89 | 1.44 |
| 0910 | Hard paper Manufacturing | 1.59 | 1.70 | 1.44 |
| 1000 | Pesticides & Explosives | 0.97 | 0.91 | 1.44 |
| 1005 | Fireworks | 0.86 | 0.99 | 1.44 |
| 1020 | Chemical & Plastic Manufacturing | 1.03 | 1.16 | 1.44 |
| 1025 | Grease Manufacturing | 0.99 | 1.11 | 1.44 |
| 1030 | Pharmaceuticals | 0.66 | 0.58 | 1.44 |
| 1050 | Rubber by Products | 0.75 | 0.75 | 1.44 |
| 1052 | Rubber Manufacturing | 1.39 | 1.60 | 1.44 |
| 1100 | Hides skin & Stripping | 1.16 | 1.16 | 1.44 |
| 1105 | Leather Works | 0.78 | 0.78 | .144 |
| 1200 | Glass Manufacturing | 1.01 | 1.11 | 1.44 |
| 1201 | Glass Works | 1.79 | 1.87 | 1.44 |
| 1211 | Concrete Works | 2.00 | 1.97 | 1.44 |
| 1220 | Bricks & Tile Manufacturing | 1.55 | 1.77 | 1.44 |
| 1230 | Marble & Granite Manufacturing | 2.31 | 2.31 | 1.44 |
| 1300 | Iron & Steel Manufacturing | 1.83 | 1.83 | 1.44 |
| 1301 | Foundry Manufacturing | 1.91 | 1.91 | 1.44 |
| 1331 | Minor Steel Products | 0.80 | 0.80 | 1.44 |
| 1340 | Engineering | 1.24 | 0.80 | 1.44 |
| 1350 | Manufacturing Cable & Razor Blades | 0.76 | 0.76 | 1.44 |
| 1360 | Motorcar Assembly | 0.31 | 0.31 | 1.44 |
| 1401 | Chrome / Electroplate | 1.49 | 1.49 | 1.44 |
| 1420 | Tar, Asbestos, Bitumen | 2.82 | 2.82 | 1.44 |
| 1701 | Aerial Services | 0.51 | 0.44 | 1.44 |
| 1710 | Commute Transport | 1.84 | 1.84 | 1.44 |
| 1711 | Goods Transport | 3.62 | 3.58 | 1.44 |
| 1715 | Transnet | 0.99 | 0.99 | 1.44 |
| 1720 | Transport Agency | 0.74 | 0.67 | 1.44 |
| 1722 | Shipping | 3.62 | 3.59 | 1.44 |
| 1723 | Warehousing & Storage | 1.50 | 1.85 | 1.44 |
| 1730 | Broadcasting | 0.56 | 0.44 | 1.44 |
| 1745 | Telecommunication | 0.60 | 0.50 | 1.44 |
| 1750 | Postal Services | 0.81 | 0.81 | 1.44 |
Class 3: Electricity, Gas and Water Supply; Wholesale and Retail; Repair of Motor Vehicles and Motorcycles and personal and household goods, hotels and restaurants
| Sub-class | Description | Year 1 | Year 2 | Final Year |
| 0600 | Meat Products | 2.34 | 2.83 | 0.75 |
| 0601 | Dairy Products | 0.92 | 1.11 | 0.75 |
| 1041 | Petroleum | 0.58 | 0.68 | 0.75 |
| 1361 | Motorcar Garaging | 0.62 | 0.62 | 0.75 |
| 1363 | Auto Body Repairs | 1.07 | 1.07 | 0.75 |
| 1400 | Jewellery & Optometry | 0.34 | 0.29 | 0.75 |
| 1511 | Food Retail | 0.71 | 0.83 | 0.75 |
| 1520 | Clothing Retail | 0.40 | 0.40 | 0.75 |
| 1532 | Electrical Appliance | 0.44 | 0.42 | 0.75 |
| 1540 | Hardware, Textile etc. | 0.58 | 0.66 | 0.75 |
| 1542 | Builders Scrap & Metal | 1.22 | 1.29 | 0.75 |
| 1550 | General Dealer | 0.53 | 0.55 | 0.75 |
| 1820 | Power Station | 0.59 | 0.59 | 0.75 |
| 1900 | Hospitality Services | 0.68 | 0.70 | 0.75 |
Class 4: Financial Intermediation, Insurance, Real Estate and Business Services and Community, Social and Personal Services (excluding Security Services)
| Sub-class | Description | Year 1 | Year 2 | Final Year |
| 1600 | Finance | 0.11 | 0.11 | 0.28 |
| 1800 | Municipal Services | 0.80 | 0.78 | 0.28 |
| 1910 | Laundry | 0.71 | 0.74 | 0.28 |
| 1920 | Beauty & Hair salon | 0.14 | 0.12 | 0.28 |
| 1940 | Funeral Parlour | 1.11 | 1.01 | 0.28 |
| 1960 | Management Career Agent | 0.41 | 0.45 | 0.28 |
| 1975 | Correctional Services | 0.64 | 0.64 | 0.28 |
| 2000 | Entertainment | 0.40 | 0.38 | 0.28 |
| 2010 | Sports Clubs | 0.45 | 0.45 | 0.28 |
| 2011 | Circus | 4.43 | 4.43 | 0.28 |
| 2020 | Horse Stabling | 2.00 | 2.00 | 0.28 |
| 2100 | Medical Specialists | 0.20 | 0.15 | 0.28 |
| 2110 | Hospitals & Veterinary | 0.53 | 0.46 | 0.28 |
| 2200 | Consultants | 0.26 | 0.24 | 0.28 |
| 2210 | Admin Consultants | 0.15 | 0.15 | 0.28 |
| 2300 | Education Services | 0.24 | 0.20 | 0.28 |
| 2320 | Parks & Nature Reserves | 1.19 | 1.28 | 0.28 |
| 2410 | Organisations & Associations | 0.40 | 0.34 | 0.28 |
Class 5: Security Services
| Sub-class | Description | Year 1 | Year 2 | Final Year |
| 1970 | Security Services | 4.04 | 4.04 | 4.04 |
Class 6: Households
| Sub-class | Description | Year 1 | Year 2 | Final Year |
| NEW | Households | 0.89 | 0.89 | 0.89 |
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)
| Earnings | Rate | Assessment Amount | |
| Final Assessment: 2016 | 10,000,000 | 0.11 | 11000,00 |
| Provisional Ass 2017 | 11,000,000 | 0.11 | 12100,00 |
| Minus Provisional Ass 2016 | 9,000,000 | 0.11 | (9900,00) |
| Total for 2017 Assessment year | 13200,00 |
Assessment period: 1 March 2017 – 1 February 2018 (2018 Year of Assessment)
| Earnings | Rate | Assessment Amount | |
| Final Assessment: 2017 | 12,000,000 | 0.11 | 13200,00 |
| Provisional Ass 2018 | 13,000,000 | 0.11 | 14300,00 |
| Minus Provisional Ass 2017 | 11,000,000 | 0.11 | (12100,00) |
| Total for 2018 Assessment year | 15400,00 |
Assessment period: 1 March 2018 – 1 February 2019 (2019 Year of Assessment)
| Earnings | Rate | Assessment Amount | |
| Final Assessment: 2018 | 14,000,000 | 0.11 | 15400,00 |
| Provisional Ass 2019 | 15,000,000 | 0.28 | 42000,00 |
| Minus Provisional Ass 2018 | 13,000,000 | 0.11 | (14300,00) |
| Total for 2018 Assessment year | 43100,00 |
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.