The COIDA letter of good standing, is a letter issued by the compensation fund commissioner in Pretoria.

The letter of good standing is issued to companies and individuals, who would have duly submitted their return of earnings either in person at the compensation commissioner or online by login onto the commissioner’s website.

The compensation of occupational and injuries diseases act, was established by an act of parliament in 1993, amended in 1997 and again in 2020 when it was agreed that a number of construction companies, do carry out operational duties that might injure their employees.

For this reason, the act was established to deduct funds from companies based on the annual amounts of funds that the company spends on its employees.

Tariff’s to be paid towards the compensation fund commissioner on an annual basis, are therefore based on the amounts spent on employees per annum.

The compensation fund acts like a government insurance, in the event that should any of your employees, including the director or owners of the company be injured at work, the compensation fund shall pay for their medical bill claims.

The requirements for registration are fairly simple, and any company that has a valid company registration number as well as directors ID copies, can easily be registered for the compensation fund.

Challenges for registration or obtaining a COIDA letter of good standing, start when an unsuspecting user on the compensation fund’s website, attempts to submit a return of earnings that differs by more than 30% from the previous assessments.

This generally triggers an audit discrepancy assessment, leading to the compensation funds website in being unable to issue an assessment which will make it impossible to obtain the COIDA letter of good standing.

In the event that this happens, normally, all online submission of the return of earnings shall be suspended, and the user, shall be unable to complete the assessment online.

In this instance, the user is now required to pay a physical visit to the commissioner in Pretoria.

Once in Pretoria, the user, shall be given a list of documents required to manually override and raise the assessment manually in Pretoria.

The list of documents required, include the following

  • A set of audited financial statements for the assessment periods under review
  • An EMP501 employer reconciliation certificate
  • A duly completed payroll report that must match the EMP501 submitted
  • A valid Tax Clearance Certificate
  • A SAPS sworn affidavit stating valid reasons for the understatement
  • A power of attorney signed by the director to act on behalf of the company

Once the above documents have been submitted to the compensation fund commissioner, only then, will the commissioner start to analyze them and possibly accept the reasons for the understatement.

Once the commissioner has accepted the reasons, only then, will the audit discrepancy be lifted.

Only then can you begin to think about obtaining the assessment, which shall enable you to settle the assessment fees raised so that you can obtain the COIDA letter of good standing.

Normally the duration for this exercise can be extremely daunting and can although on the commissioner’s website it states that the process can take you approximately 21 working days, in reality, this can at least take 2 to 3 months.

Mind you, this is in exclusion of the time it takes to prepare the audit assessment documents that were mentioned above.

In our accounting firm, we normally encourage clients to use the services of a professional, who is well versed in the requirements of the compensation fund commissioner.

If a client elects to use an accountant, that accountant should know what they are doing and shouldn’t be learning on the job.

Otherwise, the client shall find themselves even in the most unfortunate situation, whereby this problem can just keep going on and on.

We have seen actual situations, whereby this becomes so much of a problem, directors of companies have eventually elected to abandon and start the registration of a new company altogether.

Therefore, when dealing with issues of the COIDA letter of good standing application as well as the annual returns, it is advisable to use the services of a professional.