What is a Letter of Good Standing?
A Letter of Good Standing is a document issued by the Compensation Fund confirming that the employer is compliant with the requirements stipulated in the Compensation for Occupational Injuries and Diseases Amendment Act, No 10 of 2022 (COIDA). In short, it confirms that the employer is in good standing with the Compensation Fund (COID) and that there are no outstanding payments.
Why a Letter of Good Standing?
By being in possession of a Letter of Good Standing, an employer is protected by COIDA against claims from employees, or their dependents, in cases of work-related injuries or diseases. In effect, a Letter of Good Standing serves as a form of security for an employer against work-related injury and disease claims.
A Letter of Good Standing is also an important aspect when a business applies for a tender or contract, as it serves as proof that your employees are covered by COID should a work-related injury or disease occur.
How to get a Letter of Good Standing?
1. Register as an employer
If you are an employer with employees, you must be registered with COID.
Registration can be done on the Department of Employment and Labour’s website or submitted manually at COID.
When the registration is finalised, the employer will receive a Compensation Fund reference number.
2. Submit Return of Earnings (ROE)
Every year, an employer must submit a Return of Earnings to COID.
By submitting ROEs, the employer declares the amounts paid towards remuneration for the financial year (Actual Earnings). The employer must also estimate what will be paid towards remuneration for the following financial year (Provisional Earnings).
COID then calculates the amount payable based on the employer’s nature of business and the amounts indicated on the ROE.
3. Pay COID
After submitting the ROE, COID will provide the employer with an Invoice / Notice of Assessment with the total amount that must be settled. As soon as payment is reflected on COID’s system, the employer will receive a Letter of Good Standing valid for a year.
If the employer cannot pay the total outstanding amount at once, an Instalment Plan with COID can be considered.
SEESA’s UIF & COID team are experts in the entire process – from registering your business with COID to submitting your ROEs and securing your Letter of Good Standing. Don’t let the administrative hassle stand in your way of compliance.
Author:
Michelle du Preez
UIF & COID Legal Advisor
LLB
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