3.2 Compensation Fund Amendment Bill
Aspects of the COID Bill (Compensation for Occupational Injuries and Diseases Amendment Bill) have been added to this workbook to bring this section up to date as at the time of writing (late February 2023).
Background
The COID Bill (Compensation for Occupational Injuries and Diseases Amendment Bill) was issued on 18 October 2018, and after a lengthy process of public comment, NEDLAC, internal discussions, etc. an amended COID Bill was published on 27 August 2020 in Gazette No. 43658.
This is the latest amendment Bill, but it has not yet been promulgated (signed into law by the State President).
According to media reports, there is opposition to the aspects of the COID Bill that prevent medical service providers (MSPs) from ceding their claims to third-party pre-funders and administrators for payment by the Fund.
Perhaps this is what is delaying promulgation.
LATE FLASH:
The State President has just signed the final Bill, so it has now been promulgated and we have a Compensation for Occupational Injuries and Diseases Amendment Act published in Government Gazette No. 48431 on 17 April 2023.
However, at this point in time we still do not have an effective date from which the changes will be put into operation.
Note that the information that follows beneath has not been changed by the promulgation. The workbook reflects the amendments included in the final COID Amendment Bill, and the COID Amendment Act will not differ from the final Amendment Bill that was approved by Parliament.
Structure of the COID Act
As far as the application of the COID Act is concerned, payroll suppliers (and employers) must comply with the ‘’front-end’ administration provisions as I call them. These are the requirements of the COID Act that provide for employers, employees, earnings, the ROE (Return of Earnings), and the annual assessment.
Employers are of course also interested in the ‘back-end’ administration requirements – claims, payment, etc.
The summary of the COID Bill that follows focuses on the proposed amendments to the ‘front-end’ requirements, but it also mentions one important change to the ‘back-end’ requirements.
Domestic workers to be included as Employees
The COID Act currently defines an employee to be:
“… a person who has entered into or works under a contract of service or of apprenticeship or learnership, with an employer, whether the contract is express or implied, oral or in writing, and whether the remuneration is calculated by time or by work done, or is in cash or in kind, and includes—
(a) a casual employee employed for the purpose of the employer’s business; …”
The definition goes on to include other categories of employees that are not important for this discussion, and then excludes:
“(v) a domestic employee employed as such in a private household;”
Once promulgated, the COID Bill will delete clause (v) above that excludes domestic employees from the definition of an employee. This means that from the effective date, domestic workers will be included as employees because they will no longer be excluded.
Domestic workers will then be entitled to the same benefits under the COID Act as other (commercial) employees.
It is interesting to note that the concept of a ‘domestic employee’ is only referred to in the wording of the exclusion that is planned to be deleted.
Domestic employees are not defined in the COID Act as they are in the BCEA and in the two Unemployment Insurance Acts. After the exclusion is deleted, there will no longer be any reference in the COID Act to a domestic employee – they get no special recognition in the Act at all. They will be employees just like any other (commercial) employee.
This means, for example, that in the event of the death of a domestic worker, the dependants of the deceased worker are entitled to claim a benefit.
Incidentally, the final COID Bill has widened the definition of a “dependant” by adding life partners, and a person who was married to the employee according to civil law, civil union, customary law, or any other marriage recognised in terms of any other law.
This has been supported by the ConCourt judgement (see section below).
‘Casual’ Domestic Workers
Note the ‘casual’ workers are defined to be employees, therefore a domestic worker who works on a ‘casual’ basis is an employee by definition.
The COID Act does not have a ‘less than 24 hours pm’ exclusion of employees as there is in the Unemployment Insurance Contributions Act.
For example, this means that a householder who employs a gardener once per week for mornings only (5 hours x 4 weeks = 20 hours; 5 hours x 5 weeks = 25 hours), must declare and pay the Compensation Fund for this individual.
Domestic Employers
Note that it is not necessary to change the definition of an ‘employer’ to include a ‘domestic employer’ because the definition is non-specific:
‘‘‘employer’ means any person or legal person, including the State, who employs an employee, …”
This means that the householder who employs a domestic worker is a (domestic) employer because the domestic worker is a (domestic) employee.
At this stage, we can only assume that domestic employers (householders) will have to submit an annual Return of Earnings in the same manner as commercial employers are required to do, and that they will be assessed on the earnings declared in the ROE in the same manner as commercial employers.
ConCourt Judgement – Domestic worker claims can go back 10 years
As discussed above, for many years domestic workers have been excluded from the protection umbrella of the Compensation Fund.
In a judgment handed down in November 2020, the Constitutional Court declared a section of the COID Act unconstitutional to the extent that it excludes domestic workers employed at households from the definition of ’employee’, preventing them from being able to receive compensation for illness or injury incurred at work. The dependants of these employees were also not able to claim if their breadwinner sustained a fatal accident at work.
The ConCourt order applies retrospectively for 10 years, and covers illness, injury, and death at the workplace.
To support the ConCourt order, the COID Bill added a new section headed “Transitional Arrangements” that states that domestic employers and domestic workers must submit a claim within three years from the effective date of the COID Amendment Act (once the COID Bill is promulgated) if they want to claim for any injury, disease, or death that occurred within the 10-year period prior to the promulgation date of the COID Amendment Act.

Domestic Employer Registration
According to section 4 of a notice issued in Gazette No. 44250 on 10 March 2021, the ConCourt ruling on domestic employees:
“means that all employers of domestic employees are obliged to register as employers with the Compensation Fund and submit the necessary returns as obliged by the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA). All employers of domestic workers are therefore encouraged to register with the Compensation Fund without delay.”
In my opinion, prior to promulgation and an effective date, registration is voluntary, and this notice was simply an appeal to domestic employers to register.
Until the COID Amendment Bill that removes the current exclusion of domestic employees from the COID Act is promulgated and made effective, domestic employees are excluded, and there can be no such thing as a COIDA domestic employer if there is no such thing as a COIDA domestic employee.
Minimum Assessment Amount for Domestic Employers (Gazette No. 44702 on 15 June 2021)
This notice issued by the Director-General of the Department of Employment and Labour, introduces a minimum assessment amount of R381 for domestic employers in terms of section 83(1) of the COID Act, but it is unsigned, undated, and there is no effective date specified.
Presumably this notice was issued in preparation for the promulgation of the COID Amendment Bill, but it is not yet in operation.
LATE FLASH:
As an aside, the minimum assessment for employees in general was increased to R1,443 by Government Gazette Number 48065 issued on 17 February 2023, and for domestic employers it was increased to R498.
‘Earnings’ replaced by ‘Remuneration’
The concept of “earnings” that payrolls and employers must understand and comply with has been a problem for many, many, many … years (see the COID Earnings – Interpretation Issues section below for an explanation).
In a late but very important change to the COID Amendment Bill, the current definition of “earnings” is proposed to be replaced by the Fourth Schedule definition of “remuneration”.
This is such an important change that I have included the actual wording from the COID Amendment Bill, something that I don’t normally do in order to keep the workbook as simple as possible.

‘‘‘earnings’ means the remuneration [of an employee at the time of the accident or commencement of an occupational disease as calculated in terms of this Act] as defined in paragraph 1 of the Fourth Schedule to the Income Tax Act, 1962 (Act No. 58 of 1962), but does not include any amount paid or payable to an employee—
(a) by way of any pension, superannuation allowance or retiring allowance; and
(b) which constitutes an amount contemplated in paragraphs (a), (cA), (d), (e) or (eA) of the definition of ‘‘gross income’’ in section 1 of the Income Tax Act, 1962;’’

The wording in ‘bold’ between square brackets [] will be deleted from the current definition, and the wording from “as defined” until the end of the definition has been added.
This proposed definition of remuneration for the COID Act is exactly the same as the definition of remuneration in the Unemployment Insurance Contributions Act with one exception – ‘commission’ is excluded from the remuneration used to calculate the UI contribution, but (correctly in my view) commission is not excluded from the proposed definition for Compensation Fund purposes.
Could this be an indication that the unfair exclusion of commission from remuneration will be removed from the Unemployment Insurance Contributions Act at some stage in the future?
The PAGSA has been asking for this to happen for nearly twenty years … so we can but hope.
Assuming that this proposed amendment is promulgated in its current form, life will be much easier for all parties – payroll suppliers, employers, and the relevant statutory body – because the various definitions of remuneration will be closely aligned to one another for the following employment taxes:
• PAYE
• Skills Development levies
• Unemployment Insurance contributions
• Compensation Fund
• Employment Tax Incentive (that is until the change effective from 1 March 2022).
Of the legislation that the PAGSA supports, only the BCEA and the Employment Equity Act will have different definitions of remuneration.
Standardisation of the concept of remuneration is of huge value to all parties as it results in better understanding, simpler administration, less mistakes, and improved compliance.
And of course, this opens the door for the future consolidation of the systems that administer employer payments to some statutory bodies … unlikely, but it makes sense.
Lastly, and just for interest’s sake, about 6 years ago I presented a proposal to the Fund on behalf of the PAGSA to motivate the replacement of the concept of ‘earnings’ with that of the Fourth Schedule definition of remuneration. I hoped that something would come of this proposal in future years, but now that it has actually happened, I don’t think that it is as a result of the presentation – I think that there are other reasons.
COID Earnings – Interpretation Issues
For many years, different opinions have been expressed on the concept of “earnings” that employers and payrolls must apply for the annual Return of Earnings report (the ‘ROE’ or ‘W.As 8’) annual return. Different opinions create uncertainty, resulting in unnecessary calls to the call centres of PAGSA members and the Fund.
The provisions in the current COID Act (i.e. prior to the COID Amendment Bill discussed above) that refer to “earnings” are summarised below.
Currently, the Compensation Fund makes use of the concept of “earnings” for two purposes:
1. To calculate the value of the compensation at the time of the accident or illness
2. To calculate the employer’s annual assessment value from the ROE.
The calculation of the compensation benefit value is not important for payroll administration, but the concept of earnings used for the ROE results in the assessed amount that the employer must pay and is therefore very important for employers (and the Fund’s income).
It must be correctly understood and compliantly applied by employers in their payroll systems.
The COID Act currently defines “earnings” to be:
“… the remuneration of an employee at the time of the accident or the commencement of the occupational disease as calculated in terms of this Act”.
Remuneration is not defined by the COID Act, but it must be “calculated in terms of this Act”.
Section 60 then instructs the Director General to calculate the earnings of an employee “at the time of the accident” in order to determine the compensation value in such manner as in his opinion is best. This section then provides some guidelines to assist the determination of the earnings value for the calculation of the compensation amount from these earnings.
Section 63 deals with the calculation of earnings but is of no help to payrolls.
It appears to be clear from the above wording that the purpose of the current definition, section 60 and section 63 is to provide for the calculation of the compensation benefit “at the time of the accident or … the occupational disease”.
From this follows that the COID Act does not define earnings specifically for the purposes of the Return of Earnings, nor does the Act make any provision for the concept of earnings for assessment purposes.
This vacuum in the legislation resulted in the Fund, after consulting with and acting on advice from the PAGSA in the mid-nineties, creating an interpretation of earnings for the purposes of the ROE.
This interpretation, unchanged since then, is printed at the end of the Return of Earnings form that employers must complete annually and is the only guidance on the concept of earnings for ROE and assessment purposes that is available to payrolls and employers.
However, some aspects of this interpretation have been overtaken by time and should be revisited to align them with current remuneration principles and practices.
For example, the concept of a ‘package’ in the nineties was substantially different from that of ‘cost to company’ today, and a travel allowance is always difficult to value and to administer in practice.
Replaces the concept of ‘Mandators’ with that of ‘Contractors’ and ‘Subcontractors’
This change appears to be intended for building sites, roads, bridge building etc. The COID Bill aligns the legislation with modern terminology and practices and clarifies the responsibility to protect these workers.
Provides for rehabilitation facilities, services, and benefits
The current provisions that provide for the rehabilitation of employees who have been injured or contracted a disease while on duty, are outdated, inefficient, expensive to administer, and result in delays of payments to medical service providers.
Modernisation of this aspect of the COID Act is long overdue and will hopefully result in significant improvements.
The COID Bill provides comprehensively for ‘rehabilitation’, but while this is important, this workbook does not go into the details as this is one of the processes that I classify as ‘back-end’ administration.
Inspection, Compliance & Enforcement
The COID Bill Introduces a Chapter that provides for ‘Inspection, Compliance & Enforcement’.
To improve compliance the Compensation Fund announced its intention in June 2018 to appoint payroll auditors to improve controls in its enforcement systems.
Vusi Maluleke, deputy director: Employer Assessment for large accounts at the Fund, spoke some time ago of the training sessions that are being held across the country focusing on teaching employers how to register online and how to submit the annual Return of Earnings (ROE) online.
Maluleke said that over 300 000 companies failed to submit their Return of Earnings in the past three years. This is an alarming statistic.
COID Regulation Gazette No. 44409 on 1 April 2021: Correction of Regulation published 3 December 2020
On 3 December 2020, the Minister of Employment and Labour published a regulation in Gazette No. 43959 that amongst other matters, explained that the year in which the ending month falls, indicates the year of assessment.
For example: The 2021 year of assessment is the year starting 1 March 2020 and ending 28 February 2021.
This is the same naming principle as in the tax world, but unfortunately this standardisation was short-lived.
The Department corrected their earlier decision in Gazette No. 44409 of 1 April 2020 (‘yes’, on April Fool’s day) and clarified that the year in which the starting month falls, indicates the year of assessment.
For example: the 2022 assessment year is the year starting 1st March 2022 and ending 28th February 2023.
Those of us in the tax world who are used to the naming principle that the year of assessment is indicated by the year in which the ending month falls, will simply have to remember that the naming principle in the world of labour is different. Best practice is to refer to the start and end month of the year, then there is no possibility of a misunderstanding.
Assessment Classes
The Regulation specifies 13 x main assessment classes from ‘A’ to ‘M’, and within each of the main classes, a range of sub-classes (identified by a 4-digit code) that each employer registered with the Fund is allocated to.
The rates (a percentage) for each sub-class and for each year from 2021 (i.e. from 1 March 2021) to 2025 (up to 28 February 2026) are listed in a table in the notice. These rates multiplied by the total earnings declared each year by the employer in the annual Return of Earnings submission, result in the amount assessed by the Fund.
The assessed amount represents the employer’s expense of insuring itself against the risk of its employees suffering an occupational injury or disease while on duty, and this expense is of course the Compensation Fund’s income.
Domestic employers have been added under Class M (the 13th class) as sub-class 2500 and their assessment rate is ‘1,04’ from 2021 up to and including 2025.
To give the domestic employer rating some context, here are some examples of other industry ratings:
1. Coal Mining: ‘1,41’ for 2021, decreasing to ‘0,65’ for 2025 [Sub class = 0411]
2. Open cast Mining: ‘1,16’ for 2021, decreasing to ‘0,81’ for 2025 [Sub class = 0420]
3. Domestic employers: ‘1,04’ for 2021, unchanged to ‘1,04’ for 2025 [Sub class = 2500]
4. Municipal Service: ‘0,70’ for 2021, increasing to ‘0,81’ for 2025 [Sub class = 1800]
5. Breweries: ‘0,57’ for 2021, decreasing to ‘0,51’ for 2025 [Sub class = 0641]
6. Beauty and Hair Salons: ‘0,12’ for 2021, increasing to ‘0,18’ for 2025 [Sub class = 1920]
It is interesting to note that in some cases, the percentages have been reduced in the transition from 2020 to 2021.
Effective Date of the Regulation
The new assessment classes and the rates are effective from the 2021 year of assessment (1 March 2021)
Note that in my opinion, domestic employers must only register once the COID Amendment Bill is promulgated and made effective, but they can do so voluntarily before then.
*** PAGSA members can refer to Newsflash 2021-20
Return of Earnings and Earnings Threshold for 2023/2024
The Director-General of Employment and Labour issued Government Gazette Number 48065 on 17 February 2023 to announce that the period during which employers must submit the annual Return of Earnings for Actual earnings for 2022/2023, and Provisional earnings for 2023/2024, is 1 April 2023 to 31 May 2023.
As a result of a request submitted to the Fund, a second Gazette with the same number (48065) and the same date of issue (17 February 2023) specified the earnings thresholds as follow:
1. R 529 264 1 March 2022 to 28 February 2023
2. R 568 959 1 March 2023 to 28 February 2024.
President assents to the COID Amendment Act
LATE FLASH
I will discuss the implications of the inclusion of domestic workers and the replacement of ‘earnings’ by Fourth Schedule remuneration in the September 2023 ‘Mid-year Payroll Taxes Update’ webinars.
The following News release (dated 6 April 2023) was published on the Government website on 14 April 2023.
6 Apr 2023
President enacts greater protection for workers affected by occupational injuries and diseases
President Cyril Ramaphosa has signed into law the Compensation for Occupational Injuries and Diseases Amendment Bill, which extends coverage for occupational injuries and diseases to previously excluded vulnerable workers and improves compensation benefits to employees.
The Bill effects a range of amendments to the Compensation for Occupational Injuries and Diseases Act (Act No 130 of 1993) which governs compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees, or for death resulting from injuries or diseases.
The new provisions enacted by the President include one that gives effect to a Constitutional Court judgment in the matter of Mahlangu and Another v Minister of Labour and Others in which the Court declared parts of the Compensation for Occupational Injuries and Diseases Act unconstitutional.
The unconstitutionality related to the exclusion of domestic workers employed in private households from the definition of “employee” and the effective denial of compensation to such workers who contracted diseases or suffered disablement, injuries, or death in the course of their employment.
The amended legislation also protects the livelihoods of workers affected by occupational injuries or diseases by introducing a multi-disciplinary employee-based process of rehabilitation and reintegration of injured employees or employees who contracted occupational diseases.
This requires employers to exhaust all rehabilitation and reintegration processes before laying off an employee.
In turn, employers will be incentivised for full compliance with the provisions.
The new law also addresses institutional arrangements, such as the appointment of members of the Compensation Board.
In closing, we must now wait and see what the impact of these significant new legislation requirements is going to be in the workplace and what the impact on the economy is going to be.