Finally COVID-19 Relief which SHOULD lessen the load on the Employers but has it?

• South Africa

• Coronavirus - Business resilience

10-09-2020

In terms of the Compensation for Occupational Injuries and Disease Act 130 of 1993 (“the Act”) anyone who employs one or more part- or full-time employee(s) must register with the Compensation Fund (“the Fund”) and pay an annual assessment fee. The Compensation Fund is a trust fund that is controlled by the Compensation Commissioner (“the Commissioner”) and employers contribute to the Fund through their annual assessment fees. The Commissioner is appointed to administer the Fund and approve claims lodged by employees for occupational injuries or diseases sustained or contracted in the course and scope of their employment, or by the employees’ dependents for death resulting from such injuries or disease, and to pay reasonable medical expenses incurred.

On 17 July 2020, the Director-General (“DG”) of the Department of Employment and Labour published a Government Notice no.780 (“the notice”) in which it cancelled “loadings” that were applied to employers’ annual assessment fees in terms of section 85(2) of Act effective from 1 March 2019 and going forward. The notice went on to state that the annual assessments that have been invoiced for that period would be reviewed accordingly.

For those that do not know what is meant by a section 85(2) “loading”, it was a mechanism which allowed the DG to impose a higher tariff of assessment on an employer’s annual assessment fee. The imposition of this higher tariff of assessment was based on the DG’s discretion: if the employer in question had an accident record during a particular period which was in the opinion of the DG, less favourable than those of employers in comparable businesses and the DG was of the view that such a state of affairs would probably continue for the 12 month period in question, then the DG “loaded” the employer with a higher tariff of assessment.

In practice, employers can elect to pay their annual assessment fees (which may include a loading) within 30 days of receipt of the notice of assessment or by concluding a monthly payment plan with the DG for that period of assessment. For employers that make use of the latter option: an employer is furnished with a certificate of good standing upon payment of the agreed monthly instalment, which certificate expires at the end of each month. The consequence of not complying with this monthly payment plan is that the employer will not receive a certificate of good standing, the full amount of the assessment becomes due and payable immediately and penalties may be imposed. Without the certificate of good standing, the employer may in certain circumstances be in breach of its contractual obligations with its clients and will not be permitted to carry out its services in respect thereof. This will obviously impact on the revenue of the employer and indirectly the employees.

Given the date on which the notice was published, it implies that the DG should have commenced reviewing employers’ assessments and making the necessary adjustments. However, that is not the position! The DG seems to be dragging its feet as its IT unit is yet to finalise its investigation into the cancellation functionality on its systems and there is no anticipated timeframe within which the DG will even commence the review process.

Be that as it may, whilst the “loadings” have been cancelled as a matter of law, the DG still expects and demands employers to, firstly, wait patiently for any refund (which in some cases will amount to millions of Rands) and secondly, continue to make payments in terms of the payment plan it concluded with the DG (which in most cases includes the “loading”) in order to receive the certificate of good standing.

In closing, the purpose of the cancellation of these “loadings” was to provide COVID-19 relief to employers who are under extreme financial pressure following the national lockdown. This is clearly not the position as employers are still held ransom by the DG. The question therefore begs to be answered: how much longer must employers wait for the intended relief, especially in circumstances where there is no legal obligation on employers to pay the “loading”?

Co-authored by: Kristy Bassingthwaighte, Candidate Attorney.