COIDA Compliance Mistakes and How Employers Can Avoid Them

The Compensation for Occupational Injuries and Diseases Act (COIDA) plays a crucial role in protecting both employees and employers in South Africa. Under this Act, all employers are legally required to register with the Workmen’s Compensation Association (WCA) and to submit their Return of Earnings (ROE) annually.

Despite these clear requirements, many employers still make critical errors that result in financial penalties, claim delays, and unnecessary administrative burdens. Two of the most common compliance mistakes involve incorrect Nature of Business registrations and errors in ROE submissions.

Mistake 1: Incorrect Nature of Business Registrations

When a business registers with the Compensation Fund, accurate classification of its Nature of Business is essential. An incorrect classification can result in the organisation being placed within the wrong industry category, which directly affects the assessment rate payable by the employer (Compensation Fund, 2021).

For example, a low-risk office-based company incorrectly classified under a high-risk construction category would be liable for significantly higher premiums than necessary. Conversely, under-reporting business risk can expose the employer to non-compliance penalties and complicate Injury on Duty (IOD) registrations. In severe cases, the Compensation Fund may even reject medical claims if discrepancies exist between the registered business classification and the actual operations (Compensation Fund, 2021).

How to Avoid It

Employers should ensure that their registration accurately reflects their operational activities in line with the WCA’s official classification guidelines. It is best practice to periodically review registration details and, where necessary, apply for a Change of Nature of Business in terms of Section 83 of COIDA (Republic of South Africa, 1993).

Mistake 2: Incorrect Return of Earnings (ROE) Submissions

The annual Return of Earnings (ROE) submission is another common source of error. Typical mistakes include misreporting earnings, excluding certain categories of workers, or missing submission deadlines (Compensation Fund, 2022).

For instance, excluding directors’ remuneration or allowances may result in under-declaration, while overstating total remuneration can lead to inflated assessments. Confusion also often arises around subcontractors. Although employers may assume subcontractors are independent, they must be declared if they meet the COIDA definition of an employee:

“An employee means any person who has entered into, or works under, a contract of service, apprenticeship or learnership, whether written or verbal, express or implied, and whether the remuneration is calculated by time, by work done, or otherwise” (Mahlobo, 2020).

How to Avoid It

To prevent these errors, employers should maintain accurate payroll records throughout the financial year to simplify ROE submissions. Engaging compliance specialists or accredited service providers can further reduce the risk of misreporting and ensure that all submissions are completed accurately, timeously, and in accordance with legislative requirements (Compensation Fund, 2022).

Conclusion

Compliance with COIDA is not only a statutory obligation but also an ethical responsibility to safeguard employees in the event of workplace injury or occupational disease. Mistakes in Compensation Fund registrations and ROE submissions can be costly and damaging to an organisation’s reputation; however, they are entirely avoidable.

By maintaining up-to-date and accurate records, reviewing registration details regularly, and seeking professional compliance guidance, employers can protect both their workforce and their business from unnecessary penalties and administrative complications.

SDC COIDA assists businesses across all sectors in navigating these compliance requirements effectively, ensuring that employers remain fully compliant and avoid the costly pitfalls outlined above. Please feel free to contact Lezanri at lezanri@sdcconsult.co.za for professional assistance.

References

Compensation Fund (2021) Industry classification and assessment rates. Pretoria:

Department of Employment and Labour.

Compensation Fund (2022) Annual Return of Earnings (ROE) guidelines. Pretoria:

Department of Employment and Labour.

Mahlobo, S. (2020) ‘Common compliance challenges under COIDA’, Journal of Labour

Law in South Africa, 14(2), pp. 45–57.

Republic of South Africa (1993) Compensation for Occupational Injuries and Diseases

Act 130 of 1993. Pretoria: Government Printer.