Compensation for Occupational Injuries and Diseases Amendment Bill: DEL response to submissions; with Minister

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Employment and Labour

02 June 2021
Chairperson: Ms M Dunjwa (ANC)
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Meeting Summary

Video: Portfolio Committee on Employment and Labour, 02 June 2021

The Department of Employment and Labour briefed the Committee in a virtual meeting on its responses to the Compensation for Occupational Injuries and Diseases Amendment (COIDA) Bill. Responses were provided on issues raised in the socio-economic impact assessment study and during consultations on the Bill, the performance of the Compensation Fund in the fulfilment of its mandate, the myths and misconceptions surrounding the CompEasy claims management system, and on the proposals for inclusions or amendments.

The Committee asked why many stakeholders had not been consulted during the impact assessment, and the justification for the suggested changes on the legal challenge. Questions were also raised around the issues of transport, employer liability, and the cover available for employees.

The Department was asked about the proposed amendment of section 73(4) and its seeming failure to address and improve on its prevalent operational issues. Several questions were raised with regard to the disparities between the report of the Department and the Auditor- General, particularly with respect to the processing of claims and the poor administration of the Compensation Fund. Members also sought clarity on the constitutionality of unequal benefits for workers in similar situations, and pending cases or litigation that had resulted.

The Department responded that the National Economic Development and Labour Council (NEDLAC) had represented all businesses in its consultations, and that had provided clarity on the issue of the constitutionality of unequal benefits. However, it recognised the need to address the legal problems that could result in unintended operational consequences.

It pointed out that COIDA was just one of the many social security instruments in South Africa, and persons who got injured outside the ambit of the COIDA would not lose social security cover. The Department clarified that the AG’s report was related to its 2019 financial year, and was not a reflection on the operation of the new system.

Meeting report

Chairperson’s opening remarks

The Chairperson welcomed everyone to the meeting, and said that it would be the last opportunity for the Department to take the Committee through on the issues that had been raised by stakeholders, individuals, companies, interest groups and civil society on the Compensation for Occupational Injuries and Diseases Amendment Bill (COIDA Bill).

The presentations or responses would assist the Committee when it deliberated, due to the gravity and sensitivity of the issues that had been raised. Members could still ask questions of clarity if was needed.

No apologies had been received.

Minister’s Overview

Mr Thulas Nxesi, Minister of Employment and Labour, said part of the mandate of the Department was to continuously strive to regulate and strengthen the conditions for decent work for South African workers, and to inspect and enforce laws and regulations relating to health and safety in the workplace. The Department’s mandate also included providing support for workers who were injured or became ill in the workplace, which was part of the social security network that the government had developed over the years.

Referring to section 73(4) of the Amendment Bill, he said the legal problems with the third party agents included the fact that they fell outside the ambit of the National Health Council for medical schemes, and there was therefore no regulatory oversight. Secondly, they did not qualify as authorised institutions or health care providers in terms of the National Health Act. Thirdly, they did not qualify as neutral associations, as per the Compensation for Occupational Injuries and Diseases Act (COIDA). The legal gap raised further challenges in the area of patient confidentiality, and receiving necessary information from third parties in order to process claims, which then led to delays in payments, for which the third-party agent would then blame the fund. There were currently hundreds of thousands of delayed claims in the system which had impacted on third party interests in the fund, and the justification for the existence of third parties.

The Fund therefore needed to improve its efficiency, take responsibility and consequently avoid third-party agents' costs to service providers.

The Department was fully supportive of the oversight and the accountability that the Committee provided, and was doing its best to redress the issues within its institutions so that it could deliver on its mandates adequately.   

DEL's response

The Department of Employment and Labour (DEL) presented its response to oral representations on the COIDA Amendment Bill.

The presentation was divided into four parts:

  • Socio-economic impact assessment study (SEIAS) and consultations on the COIDA Amendment Bill;
  • Performance of the Fund in fulfilment of its mandate;
  • CompEasy: Breaking down myths and misconceptions;
  • Response to Section 73(4) Inputs; and
  • Response on proposals for inclusions/amendments

See document attached for further detail


Mr M Bagraim (DA) thanked the Department for the report. He observed that on the impact assessment, it seemed that many stakeholders were not consulted, and asked for the Department's response on this.

He also asked for clarity on the justification for the suggested changes on the legal challenge. He noted that the issues had been previously addressed by the court.

He asked for clarity on what constituted free transport by the employer, and if employees commuting to and from work would be covered.

On the issue of borrowing compensation, he observed that the three-year limit, if the staff could prove that the employer knew about the accident, may cause difficulty in some cases. There were cases where employees got injured at work and reported it, but the employer made no record of it. How then would the employer or the union prove to the Department that they knew about the injury?

Mr Bagraim observed further that changing the word ‘may’ to ‘must’ in section 70A meant no change could be effected, and the Minister would have no choice. It seemed that the Congress of South African Trade Unions (COSATU) had no faith in the Minister and this was worrisome, particularly because the Department seemed to be supporting the proposal.

Regarding the last proposal from CompSol and COIDLink, the Department had said that the Commissioner would issue rules on the process for payment, but there was no control over what rules the Commissioner issued or whether they were going to put it through publications and the gazette for comments. He also hoped that the Committee would have the opportunity to comment on this.

The Chairperson requested that Members ask only straight-forward questions of clarity.

Ms C Mkhonto (EFF) commented that some of those who had made submissions had proposed that instead of doing away with the refunding, they were willing to work in a regulated department. She wanted to know why the Department had decided to remove them completely, instead of adopting a framework of oversight to ensure that the concerns raised by the Funds were addressed.

Secondly, the issues raised by the Department in support of the proposed amendment of section 73(4) appeared to be operational in nature, which could have been addressed through an improvement in its efficiency. She asked why the Department was proposing to address operational issues by legislation and not by operational improvement. Was this an indication that the management had failed to improve the operational issues of the fund, and was resorting to using Parliament to legislate and thereby cover up management's incompetence? She also asked why the Department had failed to include this section amendment in their first presentation until public responses were received on this section.

Ms Mkhonto thanked the Department for listing the third parties, as it had provided better clarity. She said that though the operational issues and legal framework presented seemed to accept all third parties equally, section 73(4) on the other hand tended to bail only pre-funders. She asked if there was any particular reason for this. Were pre-funders the only ones with the locus standi to make the management of the Compensation Fund accountable by taking it to court to meet its total mandate?

It was evident from the Auditor General’s (AG's) presentation that the data from the Department's system could not be relied upon, and the AG had issued disclaimer for the last ten years. The Department, however, seemed to be painting an unreal picture. If the processing and payment of claims were indeed as good as presented, there would be no third parties in the environment and the clients of third parties would not be compelled to pay fees. During oral presentations, it had been made clear that if the Fund was efficient, then all stakeholders would deal directly with the Fund and not through intermediaries. When would the management of the Fund begin to present realistic and reliable data, because the Committee was being made to consider amendments to legislation without credible data? Also, could the Department provide the social impact studies they were referring to?

Ms Mkhonto observed further that there were a number of open claims in the Department's system, and comparing the figures to the actual number of registrations per year, it could be concluded that there were almost two years' volume of cases that needed to be adjudicated. She asked how this aligned with the report of 95% of claims being adjudicated within 60 days. The oral submission clearly showed a very different picture, and she wondered why the information on the management of the Fund differed so much from that of the AG and their clients. There was a very clear contradiction which could not be relied on.

Ms H Denner (FF+) asked for clarity on the personal information that the third parties had access to. Did the Protection of Personal Information Act (POPIA) not apply to these parties too? Was the information they had access to not regulated by the POPIA as well?  

In slide 15, it was indicated that 6 461 employers were registered on the CompEasy system, but the Compensation Fund had previously stated that they had nearly 450 000 registered employers, which was about 1.5% registered on the CompEasy system. What was the reason for this anomaly, because this could not be attributable to peoples’ documentation being not in order?

She asked for examples of the rules and regulations that were proposed by the Department and the Compensation Fund to regulate use of third parties.

Mr S Mdabe (ANC) asked for clarity on the constitutionality of unequal benefits for workers in similar situations, and if there had there been any other claims or litigation that had been raised against the Department on the constitutionality of this unequal benefit.

He said that the Compensation Fund Act of 1941 had been enacted within a different environment, and asked if the Department had considered reviewing or rewriting the Act under the new environment in which it would operate.

On the agreed penalty with the social partners on 10% of the total annual earning of employees, the Department had provided a response only on the total number of employees. It did not clarify whether the 10% was for the total employees that were involved in an accident, or if it was the total workforce of that particular company.

She asked the Department to explain the difference between the rules that would be gazetted in relation to the confidentiality of a patient, and how they would be reconciled with those that would not be allowed at all in the system.

Dr M Cardo (DA) asked why the South African medical fraternity and third party administrators were not consulted during the social and economic impact assessment exercise conducted on the Bill. He was particularly concerned, because the current form of the Bill would completely change the way third party administrators interacted with the Compensation Fund.

The AG's office had given a disturbing report on how dysfunctional the Fund was, and why it kept receiving an audit disclaimer, and the evident poor administration of the fund. The CompEasy system had also been an unmitigated disaster, according to several reports received, and the submissions during the public hearings were pleas around section 43 that the Bill in its current form would make the situation worse. He asked the Department to clarify how this Bill would help alleviate the Fund's administrative difficulties.

Department's responses

Mr Thembinkosi Mkalipi, Chief Director: Labour Relations, DEL, said the Department had indicated in its proposal that an enabling provision must be made to allow the registration of all organisations that wanted to interact with the Fund as third parties, and that the Minister must be able to publish the condition for registration and what would be needed for them to register with the Fund. All the regulations had been published for public comment, and Members of Parliament could request to view these regulations. He observed that most questions asked were with regard to the current state of the Bill, so questions about third-party interaction had been dealt with.

On the question whether the Fund must pay all transport, the issue raised by the Minerals Council was that the section dealing with transport must be amended and include that the Fund must pay for any transport arranged by the employer. The current legislation states that payment shall be made for any injury that occurred in a transport that was involved in the furtherance of the business of the employer. Saying that the provision should be redrafted to read ‘arranged’ instead of ‘furtherance’ of the business of the employer, would result in a danger where the Fund would be held liable for every accident that took place in any transport arranged by the employer. The Department did not think that it was viable for the Fund if it was held liable for every form of transport, whether those arranged by the employer, or personal employee vehicles for which employees were paid a car allowance.

The details of the regulation could not be presented at this stage, until there was an enabling provision that allowed for that, at which time the Committee could ask that the regulation be presented.

A copy of the social economic impact assessment had been given to the Committee secretary after the first presentation, and had been circulated to all Members. On whether the social economic impact assessment covered all the areas that the Committee expected it to cover, the Department of Performance Monitoring and Evaluation (DPME) gives all departments the same template of what should be in the assessment. The department provides the information, and then they issue the certificate. If they were not satisfied with the information provided, they would not issue the certificate. The Department does not decide what should be included in the assessment.

On whether all the stakeholders were consulted, he said all businesses were consulted. In the consultation process, National Economic Development and Labour Council (NEDLAC) had represented all businesses. The consultation took place in a public hearing, where all affected individuals were called to make input. Specific individuals were usually not called, but all parties who were affected were called. The Department was unable to do anything where parties refused to attend the public processes arranged. Further meetings could also have been arranged if requested.

On why the DEL did not draft fresh legislation and cancel the old one, the Department had two options; to delete the old legislation, or amend the old one. It had opted to amend, to enable the legislation to meet the test of time.

On the issue of the constitutionality of unequal benefits, the case that was well known was that of domestic workers, where it had been found that the exclusion of domestic workers in COIDA was unconstitutional. There had not been a case of unconstitutionality on the benefits offered by the Occupational Diseases in Mines and Works Act (ODIMWA) and COIDA. ODIMWA offered benefits in some areas that were better than COIDA, and vice versa. However, discussions needed to be held between the Department of Health and the other parties to consolidate these processes.

The Bill did not refer to the 10% of the wage of the employee that was injured, but to the 10% of the overall declaration that had been made annually by the employer.

Mr Vuyo Mafata, Compensation Fund Commissioner, referred to the transportation of workers in South Africa, and said there were many social security instruments and the COIDA was just one of them, COIDA did not cover all aspects of income relief as a form of social security. Where a person got involved in a motor vehicle accident that was not in furtherance of the business of the employer, such a person would not lose social protection cover. There was the Road Accident Fund which had been established to cover such cases.

On the operational issue, the Department had legal problems which, if not addressed, had unintended operational consequences. The primary beneficiary of the COIDA legislation was meant to be the injured worker, but with the current situation, the injured worker did not seem to be the primary beneficiary but someone else, and that was what these amendments were seeking to correct.

Regarding the constitutionality of the Compensation Act of 1941, in 1993 the COID legislation was enacted and there was a modernisation process to try and bring it into line with the International Labour Organisation (ILO), as well as to make sure that all other excluded forms of workers were incorporated in the COID legislation. In response, there had been a migration from the Workmen's Compensation Act to the Compensation for Occupational Injuries and Diseases Act. There was indeed scope for further improvement, because matters evolve in the labour market and the Department would continue to work on them.

The input made by the Minerals Council was that those workers who were entering the mining sector for the first time should not be covered under ODIMWA, but should enjoy their cover under the COIDA legislation. The issue of constitutionality raised was that workers working in the same sector would be subjected to different types of benefits when they got injured or suffered an occupational disease. What a worker would get as benefit under ODIMWA would be different under COIDA for the same injury.

The Chairperson said that the Committee would still interact on all the issues. It would rise on Friday and would be back in August, but it would need to apply to hold sittings during the constituency period. The application would be made and communicated to the Members.

The Chairperson noted that the documents were not numbered, and apologised to the Members for that.

Mr Thobile Lamati, Director-General, DEL, added that on the issue of mine workers, there had been a Cabinet decision in 1999 on the need to integrate the occupational level and safety competencies with the Compensation Fund competencies. The Department had been mandated to start the process, which had duly started, and there was a proposed bill which was supposed to provide the framework for these competencies, but the process was stopped in 2009. Over the years, it had been resuscitated and stopped for several reasons. That was the only way to ensure that all the workers in all the sectors got compensated for the same amount of money -- with one Compensation Fund that took care of all the workers in the various sectors. The licensed mutuals would, however, still be available to take care of the respective sectors. The exercise was pending and not yet finalised. Putting it in the Compensation Fund without addressing the several issues that were causing its challenges, and also in the ODIMWA, would be adding to the problem.

The AG's report had stated that their audit finding was related to 2019 financial year, and it was in no way a reflection on the operation of the new system. Everything in the audit had to do with the old system and not the CompEasy, and the AG had not expressed an opinion on the adequacy of the controls that had been put into the system.

Certainly, the bill would improve the administration of the Fund if all the issues were addressed and ensured it worked according to the rules, and it would help the Department to ensure that whoever submitted a claim would have it processed.

Minister’s closing remark

Minister Nxesi, in response to the question whether the relevant sectors had been consulted, said that consultations had been carried out at the level of NEDLAC. When the consultations with NEDLAC on a matter affecting a particular sector were completed, the parties to NEDLAC would delegate their representatives and ensure that the relevant people from the affected sectors were part of the discussions. The Department had been engaging on a lot of sectoral issues, and NEDLAC had been present in all these consultations, which the Department believed were most inclusive.

On the issue on the Fund being poorly administered and the effect of the bill in its current form, the Minister said that the Department had acknowledged all the issues and was dealing with them with the programmes in place. He thought that questions would be asked around the systemic steps taken by the Department on the weaknesses that had been identified, so that they did not hinder the implementation of this Bill.

The Department had made its proposals on the Bill in relation to the role of third parties who were acting on behalf of service providers. He referred to the experiences with the Road Accident Fund.

Chairperson’s closing remark

The Chairperson said that the Committee had come to the end of its processes in terms of preparing for its deliberations. Committee Members would be notified about when deliberations would commence. The Committee would apply for another special sitting, where it would call the DEL and the Minister and the affected departments in the AG’s reports, to enable the Committee ask questions. It would, however, be scheduled in such a way to allow Members conduct their constituency work in July and August. She hoped Members had documented all the responses. There would still be a separate week for deliberations on the Employment Equity Amendment Bill, and another week for COIDA.

The meeting was adjourned.

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