Compensation Fund 101

The Compensation Fund The Compensation Fund provides compensation to employees who are injured or contract diseases through the course of their employment. The Fund is governed by the Compensation for Occupation Injuries and Diseases Act (COIDA), which determines how the fund is administered, who is in charge of the administration, and the conditions for eligibility for compensation.

COIDA places an obligation on employers to make contributions towards the Fund and requires employers who employ workers, whether on a part time or full time basis, to register with the Compensation Fund, within seven (7) days after the employment of the first employee. Thereafter, the employer is required to pay annual assessment fees towards the Fund. 


Who is considered an employer in terms of COIDA?

Section 1 of COIDA defines an employer as any person, including the State, who employs an employee, and includes:

  • any person controlling the business of an employer;
  • if the services of an employee are lent or let or temporarily made available to some other person by his employer, such employer for such period as the employee works for that other person; and
  • a labour broker who against payment provides a person to a client for the rendering of a service or the performance of work, and for which service or work such person is paid by the labour broker.


What does COIDA say about employees?

An employee is 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 casual employee employed for the purpose of the employer’s business;
  • a director or member of a body corporate who has entered into a contract of service or of apprenticeship or learnership with the body corporate, in so far as he acts within the scope of his employment in terms of such contract;
  • a person provided by a labour broker against payment to a client for the rendering of a service or the performance of work, and for which service or work such person is paid by the labour broker; and
  • in the case of a deceased employee, his dependents, and in the case of an employee who is a person under disability, a curator acting on behalf of that employee.

Also, importantly, the Constitutional Court recently ruled that domestic workers are now eligible to claim for work-related injuries, illness and death under COIDA and employers have until November 2021 to ensure that they register with the Fund.


What are the consequence of non-compliance?

In terms of COIDA, if an employer fails to pay an assessment and an employee in his employ is injured at work, the commissioner may, in addition to any other penalty, impose a fine not exceeding the full amount of the compensation payable in respect of such accident, upon the employer.

COIDA further states that an employer who refuses and/ or fails to pay any assessment, instalment and/ or any other monies payable, shall be guilty of an offence. The penalty thereof shall be payment of a fine, or imprisonment for a period not exceeding one year.


Register with the fund!

The Compensation Fund essentially works as insurance to compensate employees against injuries on duty and at the same time safeguards employers from being liable against claims by employees. So even if you are but a small entrepreneur with one employee on a part time basis, we recommend that you register with the Fund without delay. 


This article is intended for information purposes only and is a brief exposition of the abovementioned legal position. Mention is not necessarily made of all the finer nuances as set out above. This article should under no circumstances be construed as formal legal advice. Contact VDT Attorneys for assistance in this regard. 012 – 452 1300 

June 24, 2021

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