Your Guide to Letters of Good Standing

Your Guide to Letters of Good Standing

A letter of good standing, also known as a certificate of good standing, is an official document provided to South African companies for whom the Workman’s Compensation Fund will offer sufficient coverage in the event that something goes wrong, and an employer needs to claim compensation for injuries sustained on the job.

In essence, while the letter of good standing won’t hold much bearing over your internal operations, it will ensure that external contracts can be gained with much greater ease. Rather than leaving it up to change, prospective clients can feel confident that, should one of your employees be injured on their property, they will not be liable for paying compensation.

Read more about what letters of good standing are, and how to procure one, below.

Your Guide to Letters of Good Standing

What Exactly is a Letter of Good Standing?

A Letter of Good Standing basically confirms two things to prospective clients:

  • That your employees are covered by the Workman’s Compensation Fund, which is covered by the Compensation for Occupational Injuries and Diseases Act (COIDA) of 1993. If they are injured or fall ill at work, you – or the tender with whom you hold a contract – will not be asked to pay their compensation yourself. This covers injury, workplace-related illness, permanent and temporary disability, and death
  • It also verifies that you have no outstanding claims awaiting processing with the WCF.

In a less official sense, offering a Letter of Good Standing will simply confirm to prospects that you are a reliable, well-run business. There are very few companies for which registration with COID is not a requirement; if you are unable to offer a Letter of Good Standing as proof that you are registered and making your payments, then other businesses will likely turn away from you.

Who Needs a Letter of Good Standing?

This question necessitates an answer of two parts.

First, any business with employees must register with COID. From construction companies to different kinds of online businesses, all reputable businesses will be registered COID, and paying either a yearly fee or a monthly installment – if not, they risk a considerable fine and, of course, being branded as a disreputable company.

Much like an insurance policy, you will then begin to make assessment fees based upon the employees’ salaries, and the inherent risk factor of their jobs. Of course, these payments can be made in monthly installments, but it is important that you do not fall behind.

Only when these steps have been completed can you receive your Letter of Good Standing.

As such, a Letter of Good Standing is as essential as the registration itself – both in terms of avoiding penalties from COID, and ensuring that you are seen as a trusted business by other businesses.

Is it a Legal Requirement?

Registration with COID is a legal requirement, and the Letter of Good Standing is, in essence, a tangible verification of your ability to complete those legal requirements.

How Do I Get a Letter of Good Standing?

By registering with COID, and fulfilling the requirements for assessment – and paying the relevant fees. You can still receive a letter of good standing if you choose to pay your fees in monthly installments, but you will have to re-apply each month for your letter. Any missed payments will mean that you lose this invaluable document.

Final Thoughts

While it may well be yet another chore to add to the long list that comes with running a business, procuring your letter of good standing ensures that you are always able to offer evidence to prospective contracts of your company’s validity, and ability to protect its workers from illness and injury.

For those who are paying on a monthly basis, ensure that you are always making your payments on time. If not, you could miss out on your letter of good standing, and sustain some damage to your reputation as a result.


Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.