Compensation Fund letters of good standing (LoGS) can be as crucial as SARS’ Tax Clearance Certificates.

Generally, they are required for:

• Tenders
• Government business contracts and renewals
• Contractor work

Legally, mandators can be held liable for Claims and Assessment costs relating to their contractors who are not registered or who are not up to date with the Compensation Fund.

In practice, this obligation is highly unlikely to occur (since the Compensation Fund will normally take other steps when they encounter a claim for an employee whose employer isn’t properly registered and paid up) but it does create serious problems for contractors whose mandators insist on LoGS.

We have often encountered situations where contractors are locked off site because they cannot procure a LoGS for their mandator.

Needless to say, the loss of business resulting from such a lock-out can far exceed the costs associated with remaining in good standing and the effort required to obtain the LoGS.

However, in our experience, employers who are tardy in obtaining LoGS are often NOT in good standing and require our help in determining the cause for failure to be in good standing – and rectifying it.

This isn’t to say that all employers who do not have a LoGS to hand are poor administrators (or are not de facto in good standing). However, it is true that the requirements for preventing (and navigating) errors that could lead to a loss of good standing are not always obvious.

To ensure that you are in good standing, to obtain a letter confirming same and to determine (and subsequently resolve – at an additional fee) obstacles to being in good standing, please sign up immediately for our Letter of Good Standing service.