Workman’s Compensation Myths That Could Cost Your Business

For many South African entrepreneurs, especially those juggling lean teams and limited admin capacity, labour regulations often feel like red tape you’ll “deal with later.” One of the most commonly misunderstood obligations is Workman’s Compensation, also known as the Compensation for Occupational Injuries and Diseases (COID), governed by the Compensation for Occupational Injuries and Diseases Act (COIDA) No. 61 of 1997.

The problem? Misconceptions about who it applies to, what it covers, and when to register lead to costly mistakes, not just in fines, but in lost business credibility and missed contract opportunities.

In this article, we’re setting the record straight by unpacking the most damaging myths about Workman’s Compensation.

Myth 1: It Only Applies to Construction and Manufacturing Businesses

Workman’s Compensation applies to any registered business that employs one or more people, even if you run a digital agency, bakery, delivery startup, or home-based cleaning company.

Whether an employee is full-time or part-time, they’re covered under COID. If an intern gets injured on the job, you could be personally liable for medical costs if you’re not registered.

Myth 2: I Can Register Only When a Client Asks For It

You are legally required to register for COID as soon as you hire one or more employees, not when you land your first big contract.

Many SMEs only rush to register when asked to provide a Letter of Good Standing for a government tender or supplier agreement. But businesses can find themselves having penalties if you’ve been operating with staff before registering.

Failing to register can delay your ability to sign contracts when it matters most.

Myth 3: My Staff Are Freelancers, So I Don’t Need COID

If you have freelancers in your business, this is one of the trickiest grey areas. If someone operates under your supervision, on your premises, with tools you provide, even if they’re called “independent contractors”, the law may classify them as employees for COID purposes.

If your freelancers control how, when, and where the work is done, then you do not have to worry about workman’s compensation. However, if your business’s freelancers are not in control of how, when, and where they work, COID may still apply.

Don’t assume that using the “freelancer” status gives you a pass. Rather consult with the Department of Employment and Labour and ensure you’re on the side of caution.

Myth 4: Registering For COID is Too Complicated For a Small Business

While the process isn’t instant, it’s completely manageable, even for a one-person admin team.

Here’s how you can register:

Once approved, you’ll receive login credentials and can begin the CompEasy registration. Keep in mind that processing may take time due to submission volumes, so don’t leave it to the last minute.

Myth 5: COID Only Protects Employees

While COID does provide medical and income support to injured employees, it also protects you as the employer.

Once registered and fully compliant. This is how you benefit:

• You’re shielded from civil claims for work-related injuries.
• COID becomes the primary source of medical and income support, not your business.
• You’re demonstrating operational credibility, which is an important factor for funders, corporates, and public tenders.

What Does COID Actually Cover?

Before you register for COID, it’s important to know what’s included in the COID cover for employees.

• Medical Costs: Workman’s Compensation covers reasonable medical costs for work-related injuries or illnesses for up to two years, with no co-payment required for work-related incidents.
• Temporary Total Disablement: Temporary Total Disablement (TTD), or temporary income replacement/days off benefit, provides a portion of your salary for at least three days off work due to illness or recovery from a work-related injury following a temporary disability.
• Permanent Disablement: Workman’s Compensation provides benefits for permanent disabilities resulting from work-related incidents. For disabilities between 1% and 30%, a lump sum is paid, while disabilities greater than 30% result in a monthly pension based on the employee’s earnings at the time of injury.
• Death: In the event of a work-related death, beneficiaries may receive a lump-sum payout for the spouse, a monthly pension for the spouse, a monthly allowance for children (typically up to age 18, with potential extensions for disabled or studying children), and funeral cover. These benefits aim to provide financial support to the deceased employee’s family.