What is a Letter of Good Standing:

Do you require a Letter of Good Standing but are unsure of the where, how, or why to apply for Contracts and Tenders? Here is all the information you require. The Workman's Compensation Fund (COID) may help you pay for any work-related injuries or harm to your employees if you have current payments to the fund, according to a Letter of Good Standing, which is essentially an official document.

Why is a Letter of Good Standing necessary when submitting an application for the majority of contracts and tenders?

For the majority of clients, a letter of good standing serves as a sort of protection since they want to ensure that, in the event of job-related accidents or illnesses, they won't be held liable for paying the medical bills or providing life insurance for anyone employed to work on their property. Without a Letter of Good Standing, your company is undoubtedly owing money to the Workman's Compensation fund. More crucially, though, it means that neither your clients nor your employees are protected in the event of a work-related accident occurring on their premises.

Why do you need to pay the Workman's Compensation Fund (COID) and what exactly is it?

Almost every employer is required by law to register with the Workman's Compensation Fund, with a few exceptions. This government fund assists companies in covering medical costs or providing compensation in the event that an employee passes away after suffering an injury at work. However, this fund is subject to an annual cost.

A Letter of Good Standing attests to your good standing with COID and the absence of any unpaid annual fees. You are ineligible for a Letter of Good Standing if you have not registered with COID or paid your annual dues.

Here’s exactly how the process works in three steps:

STEP 1: Register your Company with COID

Registering your firm with COID is the first step towards obtaining your Letter of Good Standing. You will be required to pay a registration fee throughout the procedure. You have two options for registering: either do it yourself at the Labor Department or use a COID service provider, where there staff will handle everything for you. While going directly via the Labor Department can take up to three months or longer, a COID service providers process just takes 25 days. Additionally, they will send all the forms and updates directly to your email box.

Documents you'll need:

• Your Company’s Registration Document
• Valid South African ID
• COID Registration Form
• Power of Attorney (this is only necessary when using our COID service, to legally permit us to complete the application on your behalf)
• Proof of Payment for your registration fees

STEP 2: Send in your payroll expenses

In order for the Compensation Fund to determine the amount owed to them, you must provide your Company's total anticipated wage and salary expenses for the year (as determined by financial years) in this phase. Your fee is calculated as a proportion of your annual total salary and wage costs. In a Return of Earnings form, you must annually disclose your wage and salary expenses.

The submission document is a part of the COID Registration form, which is submitted in step 1, for first registrations. However, renewals ask for a record called the Return of Earnings. 

Documents You'll Need:

• A Return of Earnings Form (only for renewals)

Step 3: Pay your yearly / monthly fee to COID

The Department of Labor will send you a Notice of Assessment (NOA) with the sum due to COID in about 3 working days following the submission of your Return of Earning document. Once that sum has been paid, you will receive a Letter of Good Standing attesting to the fact that your employees are protected for a full year.

There is a monthly payment option if you are unable to pay the annual fee all at once. You will nevertheless need to make a 30% deposit. Sadly, choosing this choice also implies that your letter of good standing will only be valid for one month at a time, subject to payment. The Compensation Fund will not provide benefits to your employees throughout the month of April if you fail to make a payment on your account or forget to renew your Letter of Good Standing.

Documents you'll need:

• Notice of Assessment (sent to you by the Department of Labour)
• Proof of Payment for your yearly fees