Why it is important for businesses to be insured against workers’ injury, illness or death

The Compensation for Occupational Injuries and Diseases Act (COIDA) provides compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees in the course of their employment, or for death resulting from such injuries or diseases. In terms of the Act, all employers conducting business in South Africa are obligated to register with the Compensation Commissioner and pay contributions to the compensation fund.

“As all employees are covered, we suggest employers review the need for additional accident and illness insurance for those earning in excess of the current statutory limit of R377 097. Importantly, the maximum benefit payable is limited to 75% of the actual salary of the employee, but with a salary cap of the statutory limit. So, for example, a person earning R500 000 per annum would have a shortfall on the total salary cap of around R125 000 per annum,” explains Joe Szemerei, Executive Director at Indwe Risk Services.   

The Workmen’s Compensation Act was replaced by COIDA on 1 March 1994. The Act has a wider scope, protecting all casual and full-time workers, with a few exceptions. These include domestic workers who work in a private home; employees guilty of wilful misconduct, unless the accident results in serious disablement or the employee dies and leaves a dependent who is wholly financially reliant upon him or her; and a person who spends 12 or more successive months working outside of South Africa, unless there is an agreement between the Director-General, the employee and the employer concerned. 

Members of the South African National Defence Force and the South African Police Services have a separate fund from COID from which they claim. Employees in the mining sector will be covered under the Occupational Diseases in Mine and Works Act (ODMWA) and therefore not by COIDA. 

A business that has one or more employees is required by law to contribute to a central compensation fund. This amount varies according to how dangerous the industry is, the number of employees, and their salaries. According to the Act, the fund provides compensation for: death, permanent disablement, temporary disablement, medical expenses and additional compensation. 

“Workers that fall within the scope of COIDA no longer need to prove that an employer has been negligent, they can claim compensation through the ‘no-fault’ system,” says Szemerei. “However, we recommend additional business insurance as there are situations where employees can sue their employers under common law. One example is where an employee commits a non-accidental injury against another employee.” 

COIDA protects a company against claims made by the employee, or his or her dependents, in a court of law. According to Szemerei, “An employer can be found independently liable for an accident, contraction of a disease, or the death of an employee, and will have to pay the compensation from their own pocket.” While the accident has direct costs, there may be additional expenses such as legal and medical benefits, supplementary wages and maintaining the dependents until the employee can work again. 

“We advise all companies to take out this extra insurance, as it protects both the employer and the employee in the event of an accident, illness or death,” concludes Szemerei.