With the correct insurance and assurance, companies can be well prepared and assist employees in the case of an injury, disability or death. SHEQ MANAGEMENT takes a look at workmen’s compensation in South Africa.

Most companies have their building and equipment insured against theft and damage. However, it is just as important to protect the greatest asset of any business – the employees. Lennie Samuel, a senior inspector and forensic investigator at the Department of Labour (DoL), notes that there are between 1,5 and 2,5 fatalities in the construction industry per week.

According to a report entitled: Construction Health and Safety in South Africa, by the Construction Industry Development Board (CIDB), a 2007 inspection by the DoL found that 53 percent of construction employers were non-compliant with the Occupational Health and Safety (OHS) Act and construction regulations.

The report also states that 34 percent of top management and 33 percent of site workers had no OHS training in 2007. A decade later, it seems that OHS is still not a priority for many industries, although there is greater awareness and there are more qualified OHS officers.

Failing to meet safety requirements could lead to significant costs for a company and possibly death for employees.

According to the Federated Employer’s Mutual (FEM) Assurance Company, there were 7 721 injuries among its policy holders in 2015, of which 61 were fatal and 603 led to a permanent disability with 34 385 lost days.

In its 2016 annual report, FEM noted that the company paid R163 million in medical claims for the 2016 year.

Deon Bester, OHS manager at the Master Builders Association of the Western Cape, estimates that the national average cost per accident is R27 244. According to a 2004 study, cited in the CIDB’s report, the cost of accidents is estimated at five percent of the value of completed construction.

Indirect costs – such as pain and suffering, incident investigation, lost production and work days, legal fees and the cost of employing staff to work overtime to make up lost days – account for up to 14,2 times more than direct costs, such as wages and medical expenses.

The CIDB report states: “The direct costs of claims, reported by FEM, amounted to about R116 million for 2007, implying indirect costs of around R1,65 billion.”

In May, a historic settlement of R5 billion was made between attorneys representing thousands of mineworkers and the Occupational Lung Disease (OLD) Working Group, which represented various mines in South Africa.

Following the settlement, six gold mines will contribute money towards a trust to pay compensation to miners who contracted silicosis.

The lung disease silicosis is caused by breathing in silica dust released into the air during the drilling, blasting and mechanical loading processes involved in producing gold.

While many of the miners could claim compensation under the Occupational Diseases in Mines and Works Act prior to the settlement, which is managed by the Department of Health (DoH), the process is considered a bureaucratic nightmare.

Rebecca Davis, in an article for Daily Maverick in May, writes: “The body responsible for certifying mineworker claims is the Medical Bureau for Occupational Disease, to which a number of documents have to be submitted: a medical form, worker ID, fingerprints, and labour records. Many former mineworkers lack at least some of these documents.”

Most employees in other industries claim workmen’s compensation under the Compensation for Occupational Injuries and Diseases Act, which is managed by the DoL. This system is considered just as complex and frustrating.

Linda Ensor, in a 2017 article for Business Live, notes that the Compensation Fund is being restructured. She writes: “Department director-general Thobile Lamati said the current backlog consisted of 60 000 old cases, many of which were not processed because of incomplete documentation. The Compensation Fund has been plagued by problems of poor administration, archaic computer systems and a mountain of unpaid claims.”

Ensor states that the backlog was estimated at 700 000 unpaid claims in 2016, which included former mineworkers with lung diseases who were difficult to trace.

In November 2017, Pete Lewis, in an article for Times Live, reported that attempts to address the backlog of claims at the Compensation Fund showed some results.

“Attempts to fix the bottleneck of claims are finally showing results‚ with pension payouts for permanently disabled cases more than doubling in three years. The Fund pays compensation and medical bills for workers who are injured or contract diseases, due to their work. An exception is lung diseases, due to dust in mines‚ which are handled by the DoH,” he writes.

The Fund has invested in new skilled staff, training, better monitoring and reorganisation. This exhausting and futile process could lead to an increase in absenteeism as employees remain injured and ill.

In addition to the Compensation Fund, employers can take steps to provide better protection and services to employees. Some industries have an alternative to the DoL’s Compensation Fund.

Medical aid cover is also a great way of supplementing workmen’s compensation and allows employees to receive immediate, quality assistance. An employer can either supplement an employee’s medical aid contribution, or pay the full premium.

A good medical aid will also help at-risk employees (such as miners and factory workers) to regularly check for illnesses such as lung disease. Employees might even be able to detect and treat an illness before it becomes life threatening.

Personal accident insurance can also act as a supplement to workmen’s compensation. Various insurance companies, such as American International Group (AIG) and Hollard, provide group and personal accident insurance, which covers death, permanent or temporary disability and associated medical expenses.

Hollard also offers employers cover for disfigurements, terrorism, HIV/Aids counselling and assistance with submitting claims at no extra cost.

AIG notes that accident insurance assists companies to go beyond the minimal contractual obligations of workmen’s compensation legislative requirements.

Mining, construction and other companies, which are often faced with accidents or injuries and potential disease, can register with alternative organisations instead of the DoL.

Mining companies can register with the Rand Mutual Assurance (RMA) and construction companies can register with FEM.

These alternative organisations offer added advantages such as rebates and the option to send employees to private hospitals. FEM paid R856 million in annual merit rebates over a five-year period to its claim-free clients.

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