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Business Compliance, Employer Obligations
Understanding COIDA and the Return of Earnings Submission: Interview with Vivian Dube
In the world of Compliance, April is known as “COID” month, and for good reason. Every April, those who are registered for COID know that the Return of Earnings Online Submission (ROE) is due at the Department of Labour. This is an annual report that employers must submit to the Compensation Fund, showing how much they paid their employees during the year.
We interviewed one of our Compliance Specialists at Company Partners, Vivian Dube, to answer some frequently asked questions about COIDA Registration and the Return of Earnings including the return on earnings formula.
Understanding COIDA in South Africa
Lets dive right into the most frequently asked questions we get from business owners as well as the answers when it comes to COID and the Return of Earnings Formula:
1. What does COIDA stand for?
COIDA Stands for the Compensation Of Injury and Diseases Act.
2. Is COIDA Registration Compulsory?
Yes, according to COIDA, the Compensation for Occupational Injuries and Diseases Act, most employers are required to register for Workmen’s Compensation. Every employer must sign up with COIDA within 7 days of hiring their first employee.
Let's take a look at the COIDA registration form and the 6 Parts that need to be completed:
Part 1: Mark with an X what type of entity you are, then complete the employer information such as Company Name, Company address etc,
Part 2: This section is related to the information regarding the owner of the entity you have listed in Part 1.
Part 3: This is an important section. You will need to explain exactly what you are doing with your business so that the Department of Labour understands your nature of business. For example: If you are in construction, you need to further explain what type of construction work your business does, eg: mechanical engineering construction or demolition.
Part 4: Who is the main contact person in the company? Their details are required in this section. This is the person the Department of Labour will contact if they need to get in contact with your company.
Part 5: This is also a very important section as it affects your Return of Earnings Submission.
The employer needs to complete the information for their employees including the number of employees they have as well as the total estimated salaries to be paid to these employees. This needs to be the total estimated amount for the period listed on your form. These factors will influence the Return of Earnings Formula.
Part 6: This information is important for companies. You will need to provide your Company Banking details so that the Fund can compensate you, should the need arise. You will not be compensated in your personal capacity (using your personal banking details) so it is important to have a business bank account in order for your application to be successful.
3. What are the benefits of COID Registration?
- Employees and employer financial security: By the employer contributing on an yearly basis to the department, they will be covered by the Department of Labour, should any of their employees get injured or ill. The employees also benefit because they get taken care of should they become ill from any work related injuries or diseases.
- Tenders and contracts: Having a Letter of Good Standing is a basic requirement for applying for government tenders or contracts.
4. What is a COID assessment?
The assessment is simply the amount the Workman’s Compensation Fund decides applies to you, considering the risk involved in the type of work your employees do and your total, annual wage/salary expenses.
You get an assessment based on the Return of Earnings you submit to the fund.
Your assessment fees are payable to the Workman’s Compensation Fund up to 30 days after receiving a Notice of Assessment.
Let's take a look at the Return of Earnings submission form. Here there are 3 Sections that need to be completed:
Section A: This section is all about the owner/employer and all the information pertaining to them and the Company.
Section B: On the top left, you will find the actual earnings section and top right is the provisional earnings. Actual earnings relate to the actual number of employees and their earnings for the current period listed on the form. The Provisional Earnings is an estimate of the number of employees and their earnings for the period listed on the form.
Section C: This section is to confirm that all the information you have completed on the form is correct. If it is found that you have entered incorrect/false information, you will be held liable. If you get a representative to do your declarations or submissions on your behalf, you will need to provide a power of attorney form.
Try our Free 2024 ROE Calculator
5. Do COIDA registration assessment fees change?
Yes, as we have just demonstrated on the ROE form, there is lots of detailed information required that could affect the assessment fees – they adjust annually based on business categories and classes. For instance, a high-risk industry like construction might see a different rate change compared to a retail business. Your business could also employ more employees over time which will also change the assessment fee.
6. Why do you need to be registered for COIDA before you can get a Letter of Good Standing?
A Letter of Good Standing is an official certification that verifies your business maintains compliance with the South African Workmen’s Compensation Fund. This crucial document, issued directly by the fund, signifies that your business is in good standing. To obtain this letter, it’s essential that your company is not only registered for COID but also possesses a valid COID registration number and has its Return of Earnings submissions timely updated. This will allow your company to complete the letter of good standing renewal process.
7. I don’t employ anyone yet. Should I still register for COIDA?
Yes, it’s a legal requirement under Section 80 of COIDA to do your Compensation Fund Registration, which is crucial for future hiring. If you are a new business, and don’t have any employees yet, you can list yourself as a working director to register for COID and add new employees as and when your business grows. COIDA is not just a legal formality but a critical step for your own protection as well.
8. What is the Return of Earnings Formula?
At the time of writing the Department of Labour calculates your Return of Earnings (the same formula applies to your assessment fee) as follows:
Earnings divided by 100 X rate = assessment payable.
The earnings refer to your total payroll for the applicable 12 months. After being divided by 100 it is multiplied by your Nature of Business Risk rate (it differs from industry to industry).
Use our ROE calculator to obtain an estimate of your minimum Return of Earnings fees.
