Do you need a Letter of Good Standing to apply for the thousands Tenders out there? Here’s everything you need to know: what it is, why you need it for Tenders and how to get it in three, simple steps.
A Letter of Good Standing is essentially an official document that proves the Workman’s Compensation Fund (COID) will assist you in paying for any work-related injuries or harm to your employees, because your payments to the fund are up to date.
Why is a Letter of Good Standing required when applying for most Contracts and Tenders?
A Letter of Good Standing is basically a form of security to most clients as they want to make sure they’re not responsible for picking up the medical bill or life cover for anyone hired to work on their premises, in the case of work-related accidents or illnesses.
If you don’t have a Letter of Good Standing, your business probably owes the Workman’s Compensation fund money and more importantly, it means your employees aren’t covered by COID and your clients are not safeguarded in the case of a work-related accident on their property.
What precisely is the Workman’s Compensation Fund (COID) and why do you need to pay them?
Almost every employer (with a few exceptions that you can see by clicking HERE is required by law to register with the Workman’s Compensation Fund (COID).
This government fund helps employers pay medical bills or compensation, in the case of death, related to an injury on the job to any employee. However, there’s a yearly fee connected to this fund.
To find out more about the COID and why it will benefit your business, click HERE to read our article, What is Workman’s Compensation (COID) and why do you need it?
A Letter of Good Standing proves that you are in good standing with COID, with no outstanding yearly payments.
Without registering with COID or without paying your yearly fees, you’re not eligible for a Letter of Good Standing.
Here’s exactly how the process works in three steps:
STEP 1: Register your Company with COID
The first step in getting your Letter of Good Standing is registering your business with COID. During the process, you will have to pay a registration fee.
You can either register directly with the Labour Department or use our COID service, where our team of Experts will complete the process for you.
Our COID process only takes 25 days whereas working directly through the Labour Department can take up to 3 months or more. Plus we’ll send you all the forms and the updates straight to your email inbox.
Documents you’ll need:
- Valid South African ID
- Your Company’s Registration Document
- 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: Submit your employee expenses
In this step you have to submit your Company’s total estimated wage and salary expenses for the year (according to financial years) in order for the Compensation Fund to calculate the amount payable to them.
They work out your fee as a percentage of your yearly total wage and salary expenses. This means you have to submit your wage and salary expenses (in a Return of Earnings document) every year.
The deadline for submitting your Return of Earnings and getting your new or renewed Letter of Good Standing is 30 April.
For first-time registrations, the submission document is included in the COID Registration form, as submitted in step 1.
Renewals, however, require a document called the Return of Earnings.
Once again, you can either work directly through the Department of Labour or you can use our streamlined service, avoiding long queues and confusing admin altogether.
SPECIAL FOR THE MONTH OF APRIL ONLY
Letter of Good standing (new or renewal) from COID at only R490 (SAVE R300).
Documents you’ll need:
- A Return of Earnings Form (only for renewals)
Step 3: Pay your yearly / monthly fee to COID
In about 3 working days after your Return of Earning document submission, the Department of Labour will send you a Notice of Assessment (NOA) stating the amount payable to COID.
After you’ve paid that amount, you’ll receive a Letter of Good Standing proving your employees are covered for a year.
If you can’t pay the yearly cost in one go, you have a monthly payment option. However, you will still need to put down a 30% deposit.
Unfortunately, this option also means you’re Letter of Good Standing will only be valid from month to month, upon payment.
Whenever you neglect to pay your account or forget to renew your Letter of Good Standing by the end of April, the Compensation Fund will not cover your employees in that time.
Documents you’ll need:
- Notice of Assessment (sent to you by the Department of Labour)
- Proof of Payment for your yearly fees
Contact Company Partners today if you’d like to set your Business up for success on the following toll-FREE (from landlines), number: 0800 007 269.