Written by Dingumuzi Ndhlovu, Associate and Chantelle Gladwin-Wood, Partner
Introduction
The primary function of the Compensation for Occupational Injuries and Diseases Act 103 of 1993 (“COIDA”) is to facilitate the provision of assistance in the form of compensation to workers who suffer debilitating injuries, diseases, or even death during the course and scope of their employment. The compensation awarded in such instances is funnelled from funds accumulated by the Compensation Fund established by COIDA, which is financed by each employer’s contributions to such Fund.
Assessment Fee
In terms of COIDA, all employers must register with the Compensation Fund and are expected to pay an annual Assessment Fee (“Fee”). The Fee is based on the calculated risk associated with the type of work performed by employees, as well as a percentage of the workers’ earnings. Given the fact that each employer’s accident costs differ, this Fee tends to vary from employer to employer.
Failure to pay Assessment Fee
During the month of April, every year, the Compensation Fund notifies each employer of the amount that is to be paid for the assessment. In the event that an employer fails to pay the Fee, they will be fined in terms of section 87 of COIDA.
Classification of the Assessment Fee
A key issue that employers are often faced with is whether the Compensation Commissioner’s offices can claim unpaid Fees from an employer that have been owing for more than 3 (three) years. An example of this would be if an employer disputes an assessment and the matter is not resolved after 3 (three) years, or if the Compensation Commissioners brings forward an outstanding assessment from 3 (three) years ago. This gives rise to the question of whether the Fees due to the compensation commissioner are a tax (which would only prescribe after 30 years) or some other form of charge, such as a levy (prescribing after 3).
Although taxes and levies have very nuanced differences, these differences have significant consequences in respect of prescription. This issue has been grappled with extensively by our Courts, with the locus classicus on this issue being the Maize Board v Epol (Pty) Ltd case (“Maize Board Case”).
In the Maize Board Case the issue to be decided was whether the charges claimed (which were not Fees in terms of COIDA but another type of levy) constituted a tax or not. In reaching its decision, the Court used the following criteria to ascertain what constitutes a tax: –
- The charge must be compulsory and not voluntary or optional;
- the charge must be imposed by the legislature or other competent authority;
- the charge must be levied upon the public as a whole or a substantial sector thereof;
- the purpose of the charge must ordinarily be the raising of public revenue;
- the revenue accruing from the charge must be used for the public benefit and to provide a service in the public interest;
- the charge must not be either a service charge or fee payable in respect of the provision of specific charges; and
- the charge must not be a regulatory charge raised as part of the administration of a regulatory scheme.
In the Maize Board case, the court found that charges imposed by the Plaintiff were not a tax and held the claim for payment of same had prescribed after 3 (three) years.
Prescription Act
In terms of section 11 of the Prescription Act 69 of 1969, any debt in respect of any taxation imposed or levied under any law shall be prescribe after 30 (thirty) years and any other debt shall prescribe after 3 (three) years.
Conclusion
In light of the above, the Maize Board Case supports the view that a “levy” is not a tax and it can be used by employers to argue that the amounts payable to the Compensation Commissioner fall outside the definition of 11 (a) of the Prescription Act and have prescribed after a period of 3 (three) years.
Disclaimer:
It is advisable that employers should pay their assessment Fees timeously and regularly. However, should you, as an employer, find yourself in a position in which you dispute unpaid Fees as a result of miscalculations or misallocations of payments by the Compensation Commissioner, and are you unable to resolve the matter, you should seek legal advice on whether or not the Fees have prescribed.
Please note: this article is for general public information and use. It is not to be considered or construed as legal advice. Each matter must be dealt with on a case by case basis and you should consult an attorney before taking any action contemplated herein.
