Benefit calculations under COIDA Sandra Sithole

Director

Jonathan Purnell

Candidate Attorney

Norton Rose Fulbright South Africa Inc

Date: 21 May 2015

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Overview

• Background and principles

• Purpose and application

• Employer liability policies

• How to calculate benefits under COIDA

• Some examples

• Let’s go and have a drink Cartman

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Background

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• Compensation for Occupational Injuries and Diseases Act, 1993

• Repeals the Workmen’s Compensation Act, 1941

• Applies since 1 March 1994

• Not a big departure from previous legislation

Kyle

Principles

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• No-fault compensation system

• No damages claims against employers

• Additional compensation where negligence is proved

Stan

Application of COIDA

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• Applies to:

• an employee who is permanently or casually employed (includes a trainee) by an employer

• Who is an “employee”?

• anyone who has entered into a contract of service, apprenticeship or learnership with an employer

• Who is an “employer”?

• any person employing an employee

– labour brokers

– contractors

Kenny

Application of COIDA (cont.)

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• Does not apply to:

• The State – “individually liable employers”

• Domestic workers in private households

• Members of the armed forces or the police force

• Wilful misconduct of an employee (unless causing serious harm or death)

• Workers employed outside SA for a continuous period of 12 months or longer

Benefits under COIDA

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• Paid to 3 categories of claimants

• Employees who suffer a temporary disability

• Employees who are permanently disabled

• Dependants of employees who die

• As a result of:

– injuries sustained in work-related accidents

– an occupational disease

Employer liability policies

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“Any compensation payable by the company for any period of temporary total disability or for medical expenses shall be reduced by an amount equal to the compensation received or receivable by or on behalf of such person under any workmen’s compensation

enactment for temporary disability for the same or a lesser period or in respect of medical expenses”

Mr Garrison

Calculating COIDA compensation

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• Two types of disablement:

• Temporary disablement

• Permanent disablement

• Employee’s earnings include:

• Value of food and quarters

• Any regular remuneration for overtime or other

Temporary disablement

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• Same calculation for total and partial disablement

• Sections 47, 48 and Schedule 4

• Entitled to periodic payments of 75% of employees monthly earnings at the time of the incident

Temporary disablement

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1. Determine earnings

2. Determine 75% of an entire month’s earnings

3. Divide it by 20.5 to determine daily payout

4. Multiply by the number of days the employee is off work

• Example:

• Income R10 000.00 per month

• Food R800.00 per month

• Regular overtime R400.00 per month

• Off for 5 days

Temporary disablement: example

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1. Total earnings: R10 000 + R400 + R800 = R11 200.00

2. 75% of total earnings: R11 200 x 75% = R8 400.00

3. Daily payout: R8 400 ÷ 20.5 = R409.75

4. Multiply by number of days: R409.75 x 5 = R2 048.80

• Total benefit to be subtracted from employer liability policy is R2 048.80

Permanent disablement

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• Lump sum or monthly pension depending on degree of permanent disability

• Section 49

• Schedule 2 lists the percentages for each injury

• If the injury is not on the list, Director General of Labour Department can determine the percentage of disability

• Where an injury has unusually serious consequences on a specific person, Director General may increase the percentage applicable to that individual

Permanent disablement: 30% or less

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• Where an employee is 30% permanently disabled, they’re entitled to a lump sum payment of 15 times the monthly earnings at the time of the accident

• Any percentage lower than 30% receives a lump sum that’s proportionate to the amount less than 30%

• Formula:

• Earnings x 15 x (percentage of disablement ÷ 30)

• Example: Earnings of R11 200.00 with 10% permanently disability

• R11 200 x 15 x (10 ÷ 30)

• R168 000 x 1/3

• R56 000.00 lump sum payout

Permanent disablement: between 30% and 100%

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• Where an employee is 100% permanently disabled, they’re entitled to a monthly pension of 75% of their monthly earnings at the time of the accident.

• Any percentage lower than 100% but more than 30% receives a pension that’s proportionate to the amount less than 100%

• Formula:

• Earnings x 75% x (percentage of disablement ÷ 100)

• Example: Earnings of R11 200.00 with 70% permanently disability

• R11 200 x 75% x (70 ÷ 100)

• R8 400 x 0.7

• R5 880.00 monthly pension

Death of the employee in terms of section 54

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• Keep in mind definition of “dependant of an employee” which identifies widow/widowers, children and other relatives entitled to compensation.

• According to Section 54, this compensation can include the following:

• Reasonable funeral expenses with a maximum of R16 398.00

• Widows and widowers in the definition receive a lump sum of 75% of two months’ earnings and a monthly pension of 40% of a monthly pension for 100% permanent disability.

• Children receive a monthly pension of 20% of a monthly pension for 100% permanent disability until the child reaches 18, dies, marries, completes secondary education or where the employee would have maintained the child during her tertiary education.

• Where there are none of the above but other wholly dependent relatives, they receive a widow’s pension but no lump sum payout.

• Where there are no dependants that fall under the definition but there are partially dependent relatives, they receive a lump sum of a portion of R128 110.00 proportional to their dependence on the employee

• Note that the total monthly pension cannot exceed the monthly pension that would have been given if the employee were 100% permanently disabled

Some examples

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1. Where the employee leaves behind a widow:

• Lump sum:

• R11 200 x 75% x 2

• R8 400 x 2

• R16 800.00

• Monthly pension:

• R11 200 x 75% x 40%

• R8 400 x 40%

• R3 360.00 per month

2. Where the employee leaves behind a widow and 3 children:

• Widow’s lump sum:

• R11 200 x 75% x 2

• R8 400 x 2

• R16 800.00

• Monthly pension:

• R11 200 x 75% x (40% + 3 x 20%)

• R8 400 x (40% + 60%)

• R8 400.00 per month

• (R1 680 per month per child)

Some more examples

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3. Where the employee leaves behind no widow and a child:

• No lump sum

• Monthly pension:

• R11 200 x 75% x 20%

• R8 400 x 20%

• R1 680.00 per month

4. Where the employee only has a wholly dependent relative who is neither a child nor a spouse:

• No lump sum:

• Monthly pension:

• R11 200 x 75% x 40%

• R8 400 x 40%

• R3 360.00 per month

Let’s go and have a drink

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