OPINION | Proposed changes spell disaster for the Compensation Fund

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Proposed amendments to the Compensation for Occupational Injuries and Diseases Act risk turning a dysfunctional Compensation Fund into a collapsed fund, says Tim Hughes. 


The government is about to score a monumental own-goal that will have dire consequences for workers, medical service providers, employers and the economy more broadly. And all of this during the Covid-19 pandemic and just three months away from local government elections.

In effect, proposed amendments to the Compensation for Occupational Injuries and Diseases (COID) Act risk turning an already dysfunctional Compensation Fund into a collapsed fund. The proposed changes are irrational, ill-conceived and would, in-effect, destroy one of the only elements of the entire compensation fund system that works efficiently. 

The offending Section 43 in the COID Amendment Bill removes the right of medical service providers to cede their payment claims against the fund to third parties such as administrators and banks. Currently, due to the immense administrative burden placed on medical service providers and indeed employers to register claims, many medical practices choose to outsource this role to expert administrators. This allows clinicians to focus on their core competence for which they have trained over many years, that is, treating injured workers. But it is not only the administrative burden of dealing with the compensation fund that concerns the medical sector. The existential threat facing medical service providers, is simply not being paid by the fund. 

This is where administrators and banks step in to assist in providing working capital, cash flow and pre-funding simply to keep practices alive and servicing their injured worker patients. The security required by administrators and banks to support clinicians is a cession of the practices’ payment claims against the fund. If passed in its current form, the new COID Bill will remove this right. At a time when our medical front-line workers are operating under the relentless weight of the Covid-19 pandemic, Government is proposing to remove the very financial lifeblood that keeps practices open to treat injured workers. 

Clear consequences

The consequences of such a move are clear. With the removal of the right to cede their payment claims to administrators and banks, medical service providers will be at the mercy of a compensation fund whose dysfunctionality is demonstrated by the scathing comments made by the Auditor General in successive qualified audits. Waiting months to be paid for treating an injured worker is simply not sustainable for practices already working under Covid-19 conditions and carrying a significant overhead. This legal restriction would impact young, newly-qualified clinicians, with student loans and practice set-up costs working in disadvantaged areas hardest. Without the support of expert third-party administrators’ medical practices and clinicians themselves would be forced to spend many hours in dealing with compensation fund claims, rather than treating the very patients most in need of their care, injured workers. 

Without the financial and administrative support of third parties, some medical practices will simply not treat the approximately 250 000 workers injured annually, or may be forced to close their doors. This, in turn, would force workers to be turned away from the best available health care and to join the day-long queues at the already creaking public healthcare facilities. In other words, workers would be denied their rights and the public healthcare system would be placed under acute pressure. But this has a further knock-on impact on the ailing economy. Employers making regular monthly contributions to the fund, amounting to some R8,5 billion annually have a right to expect workers to enjoy the benefits of the fund. This means workers receiving the best possible medical treatment and to return to productive work at the earliest opportunity. Section 43 of the COID Bill effectively threatens this right. 

Domestic workers

Closer to home, domestic workers have, at long last, won the right to be included under and enjoy the benefits of the Compensation Fund. This is to be celebrated. But the celebrations may be short-lived when the reality of trying to register with the Fund, claiming against the Fund and ensuring domestic workers receive the best medical treatment dawns. The Fund will now have another 900,000 potential claimants to deal with, as well as tens of thousands of new domestic worker employers. The Government has been deafening in its silence when it comes to explaining exactly how this process will be rolled out across the country, in every home employing a domestic worker who justifiably is looking forward to enjoying the benefits of this historic legal victory. 

Consequently, the question arises as to why the government is intent on introducing Section 43 of the COID Bill and removing the fundamental rights of medical service providers. The simple answer is that there is no justification. Recently, a chief director in the Department of Employment and Labour claimed that removing third parties would be in the interest of the workers, business and the fund, implying that there would be cost savings. This is either a misunderstanding of the facts or a deliberate misrepresentation. Neither administrators or banks charge the fund or workers for the service they provide. The contractual relationship is between freely contracting medical service providers and administrators or banks. Neither the fund nor a worker is charged a cent. To the contrary, due to their professional efficiencies, administrators effectively save the Fund time and money. 

The highly inadequate socio-economic impact study conducted by the then Department of Labour some six years ago in 2015 provides no justification for Section 43. Notably, the six-year-old SEIA does not include a single interview with a medical service provider, nor third-party administrator. Yet the department of employment and labour is on record in Parliament as saying the intention is to remove third parties from the Compensation Fund arena, but again with no rationale or justification. Fraud and corruption have been referenced by government, but again, the fraud and corruption identified by the Auditor General takes place within the Fund itself. Administrators in fact ‘clean-up’ claims before submitting them to the Fund and ensure a smoother and reduced-risk interaction between claimants and the Compensation Fund. Administrators make the life of medical professionals and the Fund easier.

The only way to preserve the rights of injured workers, and the sustainability of medical professionals is to remove the offending Section 43. 

Tim Hughes is spokesperson for the Injured Workers Action Group. Views expressed are his own. 

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