This month I will concentrate on the history of workers’ compensation.  The reason behind this is not an academic approach but to evaluate the status quo of certain basic principles which were advocated when the legislation was introduced.  The idea is to judge whether the promises incorporated in the original legislation have been adhered to.

The Original Legislation and the Present

The legislation had its origin in Germany in 1880 followed by England in 1897.  In the USA the first state was Maryland in 1902.  New York’s act faced fierce opposition from the labour unions but was eventually passed.  The reason for the opposition cannot be discussed due to a lack of space.

Crux of the Legislation

Three basic principles underly the concept of workers’ compensation as we know it.  They are the following:

1. No-fault compensation: Workplace injuries are compensated regardless of fault. The worker and employer waive the right to sue. There is no argument over responsibility or liability for an injury. Fault becomes irrelevant, and providing compensation becomes the focus;
2. Collective liability: The total cost of the compensation system is shared by all employers. All employers contribute to a common fund. Financial liability becomes their collective responsibility;
3. Security of payment: A fund is established to guarantee that compensation monies will be available. Injured workers are assured of prompt compensation and future benefits. The benefits include compensation as well as medical costs.  In the case of fatal accidents pensions are payable to dependants.

The above are the pillars on which the so-called trade-off was based; the statutory trade-off between the employers and employees.  It was introduced in South African legislation exactly in the same manner and is still unchanged since the nineteenth century. Our own legislation was originally based on the Canadian version and was in some cases exactly the same.  For a comprehensive Report on the history of workers’ compensation in South Africa, refer to the report produced on 27 March 2008: “This publication was produced for review by the United States Agency for International Development. It was prepared by Giampaolo Garzarelli, Lyndal Keeton-Stolk, and Volker Schoer, School of Economic and Business Sciences, University of the Witwatersrand, Johannesburg, Republic of South Africa.”

The background of workers compensation in South Africa is explained as follows in this report:

“The Kruger government had considered passing an Employers’ Liability Act but before this could be finalised the Anglo-Boer War occurred (Katz 1994).  After the War, the first Workmen’s Compensation Act (WCA) was passed in 1914. Prior to the passing of the Act, employees injured at work had to institute a common law suit against the employer for negligence. Compensation would only be paid if fault could be laid directly with the employer. However, the difficulty of proving negligence, the common law defences, and the high cost of litigation rendered the worker’s common law right minimal, to such an extent that the British Parliament abandoned reform of the common law in favour of the German idea of workers’ compensation. While the 1914 WCA only recognised injuries, amendments to the Act in 1917 extended coverage to provide for specified industrial diseases. In its early form, the WCA was ineffective in providing adequate compensation because employers were not compelled to insure their workers against the risk of workplace injuries. Contemporaneously, employers that did not have insurance could face insolvency from a serious incident; while the employee affected could face poverty. As a result, by 1930, workers, industry and government recognised the need for compulsory insurance. In any event, risk aversion and market forces had resulted in the birth”

If I peruse the different dictionaries “trade-off” means the following:

• Collins English Dictionary: “an exchange esp. as compromise”

• The Concise Oxford Dictionary: “such an exchange” “Exchange the act or an instance of giving one thing and receiving another in its place”

The impression that I get is that the underlying factor of the trade-off is that it should be equitable.  Was it so and is it now the case?

To be continued with the evaluation.

Till next month.

            Baixar              Bytebaixar

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How often do you read or hear reports or press releases so delusional that it sounds as if it cannot be true? A popular one is to state that they will solve their problems through the upgrading/replacement of their information technology (IT) infrastructure? I have seen and heard this promise on numerous occasions from both state departments as well as large private sector organisations. Every time an organisation is under-performing the solution seems to be to introduce hardware and software. Not long after that has been implemented it is obvious that the so-called solution was a flop and the costly exercise is repeated, usually accompanied with a change of vendor and all that goes with it. No wonder that the administration costs of especially the state departments are going through the roof. The solution to the problem is constantly overlooked.

The idea that the IT infrastructure of especially the state is a magic wand that can fix all problems is a total misconception. A computer cannot (yet) think logically like some human beings are capable of. You have heard the cliché of “garbage in, garbage out” many times; it is still appropriate.
What then is the secret to the solving of the problem if an organisation is not functioning as is expected? The best people for the job should be appointed and then they should receive on-going training. The training should never stop as the administrative environment continuously changes – the administrators of the Act who are supposed to inform the clients especially so. I experience daily the ignorance of people who are supposed to assist the client or the employer in some cases. The idea that the IT can solve the problem is a fallacy. Although it’s a must as an administrative aid, it is nothing more and nothing less.

Another common occurrence is that legislation is changed to suit the level of the expertise of the civil servants administering the Act. If the officials cannot cope with existing legislation, the Act is altered. The result is the lowering of standards. Training, once again is the solution, not a legislative amendment.

When in trouble, another approach is to decentralise the problem. Create offices where the standard is even lower than the so-called head office. I have serious doubts that the IT can be “decentralised” if the main infrastructure in the head office is in a mess; I did not guess the latter fact, the CC told the parliament committee so. What is, however, disturbing is what such a decentralisation is going to cost although money does not seem to be a problem. Decentralisation in the true sense of the word means the total service scope not a “post office” receiving forms and passing them on to the head office for adjudication and rendering the total service. If the head office’s IT is in such a state as was explained to the portfolio committee, how do they intend to create a wide area network? Putting it bluntly, it is a pipe dream.

Now verbatim quotes of some of the press releases by the Department of Labour dated 27 March 2012 to illustrate my viewpoint.

“The compensation Fund has promised a bright future for its clients free from glitches of delayed claims that have characterised the institution for decades”

“Time has come for us to move away from a paper-based institution to one that is automated and therefore quickening claims capturing, assessment and adjudication:

He said the future would see an organisation staffed with a knowledge worker who is rounded and who understands the entire value chain of the Fund”

Try to work that one out for yourself.

“.. The future Fund would be decentralised in order to bring services closer to the people once agreement with trade unions have been concluded. He said all the processes and case management would be done in provinces rather than Pretoria”

I am not sure since when trade unions are involved in the management of the Compensation Fund. What I do know is that waiting for the blessings from trade unions to administer employers’ contributions is highly irregular and ultra vires the Act.

See what I mean. It sounds familiar and a repeat of numerous previous attempts. At the risk of sounding critical I point out what the future holds for employers. That is, once the pies (in the sky) have landed.

Till next month

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I have studied the Department of Labour’s press release dated 3/2/2012 regarding their intention to decentralize the administration of the COID office with scepticism and amusement at the same time.  Amused you may ask!  Yes when this was suggested during 1995 as an alternative to closing all decentralized offices in the then ex-TBVC countries, it was met with massive opposition from the new management.  I got the idea that the central authorities feared that decentralization was tantamount to affording more power to the second level of government namely provincial authorities.  That was a total misconception as the COID Act cannot in the present form be administered by the provinces.  To put it bluntly, they are nothing but ordinary employers in terms of the Act, thus it is impossible to administer it.  Twenty odd years down the line they seem to have realised this but I am afraid to say it is too late to turn the ship around.  For those of you who have not read the press release of the Labour department, I intend to discuss their intentions.  It will start with a road show by the CC to inform all the ”stakeholders” of their intentions.  The department has stuck to the practice of calling such exercises “road shows”.  Ag please can we not find a more informative term.  Road shows sound so much like a circus or something in that category.

Decentralisation as the department sees it

I will not try to interpret their intentions and objectives with the decentralization excersice but wil rather quote from the department’s press release and comment on it for you to form your own opinion.  I have not space to deal with the whole of the document but will stick to the more relevant parts.  The main objective of the decentralization move is the following according to the department:

“Decentralisation is an initiative whereby services of the Compensation for Occupation Injuries and Diseases Act (COIDA) are now extended and rendered at provincial level, rather than be solely provided at the CF’s head office in Pretoria (Tshwane). The initiative to introduce decentralisation in the provinces is intended to bring COIDA services closer to the people and stakeholders.”
“Mkhonto said the latest initiative follows a national pilot to test the efficacy of decentralising the services of the Compensation Fund, which had proven successful. The decentralisation is expected to be implemented in the new financial year which starts in April 2012, Mkhonto said.”

I am not aware of any amendment to the COID Act but the Act defines the financial year as from 1 March of each year and not “in April” as alleged.

“He estimated that the cost of the decentralisation would be about R274-million. Mkhonto reassured employees of the Fund that no retrenchments would occur out of the unfolding process.”

“This restructuring will instead result in a number of employment opportunities including contract workers,” emphasising that the headcount would be increased from the current 711 to more than 1000 in the new structure.
“The Commissioner expects the operations at CF head office to be lean. He said the speed of rolling out decentralisation would be determined by readiness of the provinces in infrastructure in terms of accommodation and furniture among others.

Prior to the decentralisation’s pilot all information and documentation had to be sent to the national office for registration, adjudication and payment. We felt from the feedback of the stakeholders and clients that this arrangement was frustrating. Before the decentralization the turnover time for registering and adjudication was about 90 days and this has now been reduced to 60 days, and we feel that there is still room for further improvement.”

Those, dear readers are the main issues that you should take note of and for which you should prepare your own worker’s compensation procedures.

A few worrying aspects about the intended decentralization

I will be brief with my concerns because I have over the years realised that the road to hell is paved with good intentions.  So ponder the following

• The Head Office is in chaos, by their own admission, even before the portfolio committee of Parliament;
• If that is the case who will be training the personnel in the “branch” offices?;
• Decentralization is supposed to enhance the service, it is not supposed to supply the full service afforded by the Act.  I can now predict that the people in the branches will be nothing but a static courier service.  Decentralization is not an objective in itself, a complete business plan should have been drawn up before the “stakeholders” are informed;
• To state that the effort will be “about R274 million” is not sufficient.  A break down estimate should be available such as IT-infrastructure, salaries and accommodation, etc;
• The increase in staff from 711 to “more than 1000” could have been funny if it was not for a financial burden on employers.  To say that the “CF head office to be lean” is not reflected in the above figures as the 711 will remain the same; and
• I suspect this exercise has more to do with job creation than decentralization.

Decentralization which costs a large sum of money without the value that it is supposed to add is a waste.  In other words decentralization is not an end in itself; it is supposed to better the service.  You be the judge whether this will be the case

Till next month

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