Domestic workers’ compensation: Here’s how much employers are required to pay per year
- Domestic workers who are injured or contract an illness on the job will now be able to claim compensation.
- Employers of domestic workers will need to register with the Compensation Fund or face fierce penalties.
- A registered employer is required to pay an annual fee into the fund.
- This amount is calculated based on the amount earned by the employee, and the risks associated with the job.
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Newly confirmed labour rules requires all South Africans who employ domestic workers to register with the Compensation Fund, and make annual payments to cover their employees. The payments are referred to as assessment tariffs, and are calculated according to the employees’ annual earnings.
Following a landmark ruling by the Constitutional Court, which ordered that domestic workers be included in and protected by the Compensation for Occupational Injuries and Diseases Act (COIDA), revised rules were gazetted by the Compensation Fund Commissioner, Vuyo Mafata, on Wednesday.
For the first time, domestic workers will now be afforded temporary and permanent disability compensation. The COIDA also covers medical and funeral expenses, while offering additional compensation to surviving spouses and children.
The activation of those benefits also triggers obligations for those with domestic workers in their employ, similar to any other type of employer in SA.
Employers are required to register with the Compensation Fund, and can face fines if they don't – and will also be open to civil claims if something goes wrong at the place of employment.
Generally, employers are required to register new employees within seven days of the first day of work.
This deadline does not, however, apply to the current COIDA change to include domestic workers. Instead, employers have merely been “encouraged to register with the Compensation Fund without delay”.
“There is no deadline, it is an ongoing process of compliance to the law,” said labour department spokesperson, Musa Zondi, adding that the far-reaching impact of the COIDA amendments required a nationwide campaign to inform both employers and employees of the changes.
“We are in the process of embarking on an educational campaign. We kickstarted this with the notice which was published on the government gazette giving domestic worker employers full information on the COIDA and its processes,” said Zondi.
Because of the timing of the amendments, most employers of domestic workers will miss the regular annual deadline for to file Return of Earnings (ROE) information. The ROE filing window for the previous assessment year closes on 31 March and reopens for the following year on 1 April. Unless the department’s director general revises the assessment date, employers of domestic workers will likely have until March 2022 to comply with the ROE protocol.
This ROE requirement – technically referred to as a W.As.8 CF 2A form – is vital in determining the employer’s annual contribution to the Compensation Fund. Earnings are defined as the total amount paid by the employer to the employee between 1 March to 28 February the following year.
The ROE is used within a standard assessment formula to determine the annual payable amount. This assessment tariff is paid directly to the Compensation Fund which will, in the event of injury or illness, pay the employee. Importantly, the employer may not adjust their employees’ payment downwards to cover the added Compensation Fund’s costs.
The assessment tariff is determined according to hundreds of industry classifications, classes, and subclasses which are based upon the risks associated with the type of work performed. In this way, the highest assessment tariffs – being the percentage of earnings paid by the employer towards the fund – include mining and building. The highest tariff, of 5.85, applies to tunnelling, rock drilling, and blasting.
The COIDA amendments, applicable from 1 March 2021, list domestic workers as Class M, subclass 2500 at an assessment rate of 1.04. Employers can calculate their yearly payments to the Compensation Fund by using the following ROE and assessment tariff formula:
Annual earnings divided by 100 X 1.04 = annual assessment payable
According to a recent survey conducted by SweepSouth, an e-service provider which offers domestic workers jobs on an on-demand basis, a monthly wage of R4,225 will cover basic living expenses. While it’s common for domestic workers to be employed on a part time basis – which, importantly, doesn’t negate the COIDA responsibilities – using the figure of R4,225, which works out to around R200 a day or R50,700 a year for a full-time, five-day work week, the assessment tariff formula works as follows:
R50,700 divided by 100 = R507 X 1.04 = R527.28
Using the above example, R527.28 is the annual amount payable to the Compensation Fund.
These assessment tariffs are reviewed on an annual basis and are subject to change.
To register, employers must submit the following documents to RegistrationCF@labour.gov.za or CFCallcentre@labour.gov.za:
- A completed CF-1E Form (Application for the registration of the domestic worker employer)
- Copies of the ID documents, passports, or similar form of identification for both employer and employee
- Proof of the employer’s residential address
- A copy of the employment contract
Employers can also register online through the department of labour’s e-COIDA portal, which facilitates compensation claims and ROE requirements.
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