DRAKENSTEIN – Several businesses in the Drakenstein area, including Paarl-based construction companies, are struggling to operate due to ongoing delays at the national Compensation Fund, a state-run body responsible for assisting employees injured or made ill at work.
The fund, established under the South African Compensation for Occupational Injuries and Diseases Act 130 of 1993, provides financial support to workers or their families in cases of work-related injury, illness or death.
Employers are required to register their staff and pay annual contributions based on their payroll to ensure coverage.
A Drakenstein resident who submits Compensation Fund applications on behalf of local companies said a number of his clients had been waiting over a year for their registrations and “letters of good standing” to be processed.
The delay, they explained, has left at least three of his clients unable to operate legally, forcing them to close their doors and leave employees without any income.
Under the Act a valid “letter of good standing” confirms that a company’s workforce is covered by the compensation fund and legally permitted to work. Without it many local businesses are effectively brought to a standstill.
According to the source, who requested anonymity to protect the identity of the businesses they represent, the registration process should ordinarily take between 21 and 30 days.
However, since December 2023, they have faced persistent delays in getting applications approved. Attempts to contact the Compensation Fund have been largely unsuccessful, with “telephone lines and emails not working or the system being offline,” the source said.
They added they had handed in 100 “manual” registrations this year, whereas roughly three years ago between 200 and 300 registrations would typically be completed annually.The source explained that businesses can register their employees through two channels, either directly via the Compensation Fund’s online platform or by using the services of an external specialist.
Errors made during self-registration often require expert intervention, but it is at this stage or when new applications are submitted on behalf of clients, that delays most frequently occur.
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Paarl Post reached out to the department of labour regarding an enquiry about the Compensation Fund, but received no feedback.
The article “Fraud flagged at the Compensation Fund“, published by GroundUp on 17 February 2025, reports widespread dysfunction and suspected fraud within South Africa’s Compensation Fund.
The Auditor-General’s office told Parliament in February that the fund has failed audits for 12 consecutive years, citing systemic breakdowns, weak internal controls and possible fraudulent payments.
Businesses, workers and medical service providers face months- or years-long delays in claim approvals and payments, with many companies unable to obtain letters of good standing.
Despite a Special Investigating Unit probe launched in 2014 the fund remained plagued by inefficiency, mismanagement and lack of accountability, according to the article.
