In terms of section 82 of the Compensation for Occupational Injuries and Diseases Act, 130 of 1993 (COIDA) employers are required to annually furnish the Commissioner with a return of earnings paid to employees during the preceding period, being 1 March to 28 February (the COID year).
On 25 April 2025, the Minister of Employment and Labour published a notice providing guidance on the manner of calculating the return of earnings, with effect from the date of the notice. It is not explicitly stated in the notice whether these guidelines should be applied in respect of the the 2024 COID year (ie 1 March 2024 to 28 February 2025). The return of earnings submission period was extended by notice in the Government Gazette on 19 May 2025 to run from 1 May 2025 to 31 July 2025 (the commencement date was initially from 1 April 2025).
Given that the submission period had already commenced on 1 April 2025, a retrospective application of the guideline would prejudice employers who have already calculated and submitted their return of earnings for the 2024 COID before the notice was published on 25 April 2025. Accordingly, unless the regulator publish a clarification in this regard, in our view the guidelines should apply from the 2025 COID year (ie 1 March 2025 to 28 February 2026) going forward.
The full text of the notice can be accessed
here.
We highlight below some material aspects of the notice for consideration by employers when calculating earnings for the 2025 COID year:
The notice sets out a total of 24 earning types that
must be included when calculating employees' earnings for the purposes of the return contemplated in section 82 of COIDA.
As before, bonuses of any kind, including 13th cheques, service bonuses, holiday or Christmas bonuses, and production bonuses, must be included.
Previously, travel and other allowances
paid regularly as part of the employee's remuneration had to be included, while those
paid occasionally were excluded. The notice now specifically lists 19 types of allowances to be included in the return of earnings calculations. Although not expressly stated, we do not believe this list is exhaustive. The inclusion of a catch-all category for "any other non-pensionable allowance" suggests that all allowances must be included, unless they fall within the exclusion list.
The earning types that may be excluded are reimbursements and ex gratia payments (defined as "voluntary payments to employees without legal obligation").
Notably, the notice includes overtime allowances without qualification. However, the regulations published under COIDA (Government Gazette 30646 of 11 January 2008) provide for the inclusion of "any overtime payment or other special remuneration in cash or in kind
of a regular nature or for work ordinarily performed", but exclude
“intermittent overtime". As the notice does not repeal the 2008 Regulations, the blanket inclusion of all overtime is inconsistent with existing legislation.
As matters currently stand, only overtime worked on a regular basis should be included, as contemplated in the 2008 Regulations.
This anomaly is expected to be resolved when the amendments to COIDA come into effect, which include a revised definition of "earnings". Currently, earnings are defined as
"the remuneration of the employee at the time of the accident or commencement of occupational disease". Following the amendment, “earnings" will mean:
“gross income
as defined
in the Income Tax Act, excluding any amount paid or payable to an employee by way of: (i)
pension; (ii)
superannuation; (iii)
allowance; or (iv)
retiring allowance". This will facilitate a blanket inclusion of overtime in return of earnings calculations.
One issue not addressed in the notice is whether intangible fringe benefits, such as the taxable portion of employer contributions to medical aid or pension funds, remain excluded. Further guidance from the regulator is needed. In our view, and for the 2024 COID year, employers should proceed on the basis that these contributions remain excluded.
Interestingly, the manner of calculating compensation benefits under sections 63 and 67 of COIDA references the same earning types listed for return of earnings purposes. However, the list of allowances to be excluded includes, among others, "payment of allowances of an intermittent nature". This may result in lower annual earnings being recorded in the context of compensation for work-related injuries.
