A letter of good standing proves that a contractor is registered for COIDA cover and is paid up. It covers that contractor's own employees for injury at work. It does not cover your tenants, your visitors, or a child hurt on your property.
That distinction decides who pays after an accident, and most clients in South Africa never make it. The letter arrives inside a compliance pack, gets ticked off a list, and is read as general proof that somebody else is insured for whatever goes wrong. It is not.
What the letter is a statement about
An employer is regarded as in good standing once three things have happened. It is registered, it has submitted its Return of Earnings, and it has paid its assessment or is paying it under an instalment arrangement. Section 80(1) of COIDA does not itself name a deadline for the first of those. It requires an employer to register within the prescribed period and in the prescribed manner, and the prescribed period is seven days from the day the employer takes on its first worker.
So the document answers one question, narrowly. If the contractor's plumber falls off your roof, does the plumber have a claim against the Fund rather than against the contractor personally? An in-date letter says yes.
Read what it therefore does not say. It says nothing about whether the firm is competent, whether its cidb grading matches the job, or whether it carries public liability cover. It says nothing about whether the work it is about to start on your building is safe. Those are four separate documents and four separate questions, and the letter answers none of them.
Two injuries a letter would not have touched
Two matters in the past week make the gap concrete, and neither involves an employee.
News24 reported that two Johannesburg boys were electrocuted at a Pretoria holiday resort pool. One remained in an induced coma while engineers investigated the cause. Whatever that investigation finds about the electrical installation, no letter of good standing held by whoever last worked on it is relevant, because the boys were not employed by anybody.
GoLegal's write-up of a gate collapse puts the same point in a courtroom. A tenant instituted a delictual claim against her landlord, in her capacity as the mother and natural guardian of her minor son. A large heavy sliding gate at the rented premises had come off its track and toppled onto the boy, who was eight. The landlord denied liability, said a stopper and guide were fitted and in working order, and pleaded that the mother was contributorily negligent for letting the child close the gate unsupervised. He was held liable anyway.
In both matters the argument runs at the person who controlled the property. A compliance certificate held by a contractor is not a defence to that, and it was never designed to be. The document that answers an injury to a member of the public is a public liability policy, and it is the one clients ask for least often.
The date is the whole document
A letter of good standing is a snapshot of an account. It is normally issued valid for a year, and it records that the assessment was paid or being paid on the day it was printed. An account can fall into arrears the month after.
Most clients check that the letter exists. Far fewer read the date on it, and fewer still check it again at the point where the contractor has been on site for eight months. On a long maintenance contract the letter you accepted at onboarding is almost never the letter that describes the position today.
Check who issued it as well, because in construction it is usually not the Compensation Fund. The Federated Employers Mutual Assurance Company, FEM, is licensed under COIDA to carry workmen's compensation for the building and construction industry. A contractor covered by FEM does not sit with the Compensation Fund at all. Its letter comes from FEM, which runs its own service for verifying one.
That cuts both ways. A letter on the wrong letterhead for that employer proves nothing about the account that matters. A client who only knows to look for a Compensation Fund letter will reject a valid FEM one, or accept a Fund letter from an employer whose cover actually sits elsewhere. If the issuer is not obviously the body that carries this employer, ask, before you accept the page.
What to ask for instead of one document
Four things, and each answers a different failure.
- An in-date letter of good standing from whichever body actually carries that employer, which covers the contractor's people for injury at work.
- A public liability policy with the sum insured on the schedule, which covers everyone else.
- The written appointments the Construction Regulations require for the work, which decide who is answerable on site.
- The trade certificate specific to the scope, which is the electrical or plumbing or gas document, not a general one.
A contractor who can produce all four in a morning is a contractor who has been asked before. One who needs a week is telling you something useful about how the last client managed them.
Arabella checks the letter and the date on it for every contractor in the network, and re-checks it. The letter that was valid at onboarding is the one that quietly lapses while nobody is watching. What that verification covers is set out on the client page, and the compliance changes we read each week sit in insights.
On Monday
Pull the compliance file for whichever contractor is working on your property this week and find the letter of good standing. Read the date first. Then read the letterhead, and check it is the body that actually carries this employer rather than the one you were expecting.
If it has expired, or if there is no letter in the file at all, ask for a current one before the next invoice is paid. That payment is the only pressure you will have. Then ask for the public liability schedule in the same email, because that is the document that answers the injury the letter does not.
