Exempted Employers

“Oh what a relief that will be! I can be exempted from the COID Act. No more hassles with the office of the Compensation Commissioner. Imagine what I can save in the form of telephone calls. I have to pay the medical bills anyway else doctors won’t treat my employees. I must see my broker tomorrow and find out how to go about it”.
I have never heard this sentiment being expressed in these words but the gist of it is usually the same. I have many a time come across employers who, after having read the COID Act for the first time, are under the impression that they can be exempted from registration with the Compensation Commissioner. Is this in fact possible?  Yes, to an extent, but only for a few select employers. Sorry, I know that might be bad news but that is also the fact of the matter.

What does exemption mean?
Section 84 of the COID Act provides for certain employers to be exempted from the payment of assessments.  These employers include the following:

  • National and provincial governments;
  • Local authorities who have been exempted in terms of the COID Act upon application of the local authority
  • Employers registered with Rand Mutual or Federated Employers Assurance with the approval of the Director-General.

    It means one thing only and that is that these employers are exempted from the payment of assessments to the Compensation Commissioner’s office.  As a quid pro quo for this exemption they become liable to pay the full cost of compensation and medical costs emanating from the injuries on duty of their employees.
    For many employers overseas, being self-insured is the only way to go!

The exempted employer and the administration of the COID Act
How does the exempted status affect the administration of the Act?  Except for different procedures very little if any.  These employers must still report accidents to the Compensation Commissioner and the adjudication to determine liability, which is the decision whether the incident is an “accident” as defined, still remains with the Compensation Commissioner’s office. As soon as that has been confirmed the Compensation Commissioner informs and instructs the exempted employer to continue and pay the benefits due in respect of the injury on duty. You will, therefore, appreciate that the exempted employer has no discretion as far as the administration of the COID Act is concerned. All disputes between the injured employees and the employer are referred to the Compensation Commissioner for a decision.  So, when the COID Act is properly read it will become clear that the exemption you were wishing for is, unfortunately, either not applicable to you as an employer or over and above that, has a very limited scope.

What does this all mean for you, the employer?
In view of the above it means that unless you are the State, a provincial government or a local authority there is only one way in which you can be exempted from paying assessments to the Compensation Commissioner.  To achieve that is to apply for approval to obtain a policy from a mutual association to cover the full liability for your employees.  These mutual associations, as provided for in section 30 of the Act, are (were?) established in terms of the Insurance Act, 1943, an Act which has been repealed by the Long Term Insurance Act of 1998.  What has happened to the mutual associations is not clear.  In the past only two mutual associations were allowed to carry on business as envisaged by sections 30 read with section 84 and I far as I can gather it is still the case.
The Compensation Commissioner’s policy always was to allow employers in the mining industry (class IV of the industrial rating) to obtain policies from the one association and the building industry (class V) from the other one.  I presume that it is still the case.  But again let me remind you that the Compensation Commissioner remains in full control as far as the legal administration of the COID Act is concerned.
Is that fair competition I presume you would pose as the logic question?  I do not know whether it is or not. 
It would be interesting to know what the Competition Tribunal’s stand would be on this.  Competition is generally a prerequisite for improving service but that, I am afraid, is not possible under the present legislation as it appears on the statute-book.  After all, is competition possible when the state (read
Director-General, Labour) has the full and last say about the total administration?

Till next time.