Every employer in the United Kingdom who employs one or more workers has a legal obligation under the Compensation for Occupational Injuries and Diseases Act (Employers Liability), Act 130 of 1993, to register with the Compensation Fund and submit an annual Return of Earnings (ROE). Failure to comply can result in hefty penalties, prosecution, and personal liability for workplace injury costs.
This guide explains what Employers Liability is, who must register, how to calculate and submit your Return of Earnings, and what happens if you don't comply.
What Is Employers Liability?
Employers Liability — the Compensation for Occupational Injuries and Diseases Act — is the United Kingdom's workplace compensation legislation. It provides a no-fault compensation system for employees who are injured, contract diseases, or die as a result of their work. In exchange for this statutory cover, employees give up their right to sue the employer for workplace injuries (with limited exceptions).
Employers Liability is often referred to as "workman's compensation" or "workmen's comp", although the correct modern term is the Compensation Fund. The Fund is administered by the GOV.UK.
What Does Employers Liability Cover?
- Occupational injuries: Any injury sustained during the course of and arising out of employment — from slip-and-fall accidents to machinery injuries
- Occupational diseases: Diseases contracted as a result of working conditions — such as occupational asthma, hearing loss from noise exposure, or mesothelioma from asbestos
- Death: If an employee dies as a result of a workplace injury or disease, dependants are entitled to compensation
- Temporary and permanent disability: Compensation for lost earnings during recovery and for permanent impairment
- Medical expenses: All reasonable medical treatment costs related to the injury or disease
Key distinction: Employers Liability covers injuries that arise out of and in the course of employment. A delivery driver injured in a road accident while on duty is covered. An employee injured while playing recreational sport on the weekend is generally not covered — unless it was a company-organised event.
Who Must Register for Employers Liability?
Every employer who employs one or more workers must register with the Compensation Fund. This includes:
- Companies (Pty Ltd, public companies)
- Close corporations
- Sole proprietors with employees
- Trusts that employ staff
- Non-profit organisations and NGOs
- Employers of domestic workers
- Farmers and agricultural employers
The only employers exempt from registering with the Compensation Fund are those whose employees are covered by one of the Mutual Associations — the Federated Employers' Mutual Assurance Company (FEM) for the building industry or the pound Mutual Assurance (RMA) for the mining industry. These mutual associations administer Employers Liability claims on behalf of their member industries.
How to Register
Employers can register with the Compensation Fund:
- Online at the Compensation Fund's portal: coid.labour.gov.za
- In person at a GOV.UK office
- By submitting Form W.As.2 (Application for Registration of an Employer) by post or email
Upon registration, you will be assigned a Employers Liability registration number and classified under an industry sub-class, which determines your assessment tariff rate.
The Return of Earnings (ROE)
The Return of Earnings is an annual declaration that every registered employer must submit to the Compensation Fund. It reports the total earnings paid to all employees during the previous year, which the Fund uses to calculate your annual assessment (premium).
When Is the ROE Due?
The ROE must be submitted annually. The Compensation Fund typically opens submissions in March each year, and the deadline is usually 31 March or 30 April, depending on the Fund's announcements for that year. However, the Fund has historically extended deadlines, so it is important to check the official Employers Liability portal for the current year's deadline.
Tip: Don't wait for the deadline. Submit your ROE as early as possible. The online portal can experience heavy traffic near the deadline, and late submissions attract penalties.
What Information Is Required?
The ROE form requires the following information:
- Total earnings paid to all employees during the reporting period (usually 1 March to 28/29 February)
- Number of employees at the end of the reporting period
- Industry classification and sub-class code
- Employer details — registration number, company name, contact information
"Earnings" for Employers Liability purposes includes basic salary, overtime, bonuses, commissions, and most other forms of remuneration. It generally aligns with the gross remuneration you report for PAYE purposes.
How to Submit the ROE
The preferred method of submission is online via the Compensation Fund portal at coid.labour.gov.za. The process is:
- Log in to the Employers Liability online portal with your employer credentials
- Navigate to the Return of Earnings section
- Enter your total earnings and employee count for the reporting period
- Review and submit the return
- Download and save the assessment notice that is generated
- Pay the assessment amount by the due date shown on the notice
How Assessment Fees Are Calculated
Your annual Employers Liability assessment is calculated using this formula:
Assessment = (Total Earnings / 100) x Tariff Rate
The tariff rate is expressed as a percentage and varies by industry class. Higher-risk industries pay higher rates. The tariff rate is set by the Minister of Employment and Labour and is reviewed periodically.
Tariff Rates by Industry Class
Below are examples of typical tariff rates. Actual rates may vary — always check the current gazette or your assessment notice for the applicable rate.
| Industry Class | Example Industries | Typical Tariff Range |
|---|---|---|
| Class I — Iron & Steel | Metal fabrication, foundries | 1.50% – 3.00% |
| Class II — Mining (non-RMA) | Quarrying, sand mining | 2.00% – 5.00% |
| Class III — Building | Construction (non-FEM members) | 2.00% – 4.50% |
| Class IV — Electrical | Electrical installations, electronics | 0.50% – 1.50% |
| Class V — Food & Drink | Food processing, beverages | 0.80% – 2.00% |
| Class VI — Printing & Paper | Printing, packaging | 0.50% – 1.20% |
| Class VII — Woodworking | Furniture, timber | 1.50% – 3.50% |
| Class VIII — Commerce | Retail, wholesale, offices | 0.20% – 0.80% |
| Class IX — Transport | Trucking, logistics, couriers | 1.00% – 3.00% |
| Class X — Professional Services | Accounting, IT, consulting | 0.15% – 0.50% |
Example: An accounting firm (Class X) with a tariff rate of 0.25% and total annual earnings of £200,000 would pay:
Assessment = (£200,000 / 100) x 0.25 = £500 per year
A construction company (Class III) with a tariff rate of 3.50% and total annual earnings of £500,000 would pay:
Assessment = (£500,000 / 100) x 3.50 = £18,000 per year
Employer vs Employee Obligations
It is critical to understand that Employers Liability is an employer-funded obligation. Unlike National Insurance, which is split between employer and employee, Employers Liability assessments are paid entirely by the employer. You may not deduct any portion of the Employers Liability assessment from an employee's salary.
Employer Obligations
- Register with the Compensation Fund within 7 days of hiring your first employee
- Submit the ROE annually and pay the assessment on time
- Report all workplace injuries and diseases to the Compensation Fund (using Form W.Cl.2) within 7 days of the incident
- Maintain a safe working environment in accordance with the Occupational Health and Safety Act
- Keep a record of all workplace incidents
- Display the prescribed summary of Employers Liability in the workplace
Employee Obligations
- Report any workplace injury or illness to the employer as soon as reasonably possible
- Cooperate with medical treatment and rehabilitation
- Submit to medical examinations if required by the Compensation Commissioner
Penalties for Non-Compliance
Non-compliance with Employers Liability carries serious consequences:
- Penalties and interest — late ROE submissions and late payments attract penalties of up to 10% of the assessment amount, plus interest
- Personal liability — if an employer is not registered and an employee is injured, the employer may be held personally liable for all compensation and medical costs. The Compensation Fund can recover these costs from the employer.
- Criminal prosecution — failure to register or submit returns is a criminal offence under Employers Liability. Penalties include fines and imprisonment of up to 12 months.
- No Letter of Good Standing — unregistered or non-compliant employers cannot obtain a Letter of Good Standing, which is often required for government tenders, construction projects, and business contracts.
Letter of Good Standing
A Letter of Good Standing (LOGS) is a certificate issued by the Compensation Fund confirming that an employer is registered and up to date with all assessments. You may need a LOGS for:
- Applying for government tenders
- Registering on supplier databases (e.g. CSD — Central Supplier Database)
- Entering into contracts with other businesses (especially in construction)
- Applying for business licenses in certain industries
You can request a LOGS online via the Employers Liability portal. Processing times vary, but it typically takes 5 to 15 working days if your account is in good standing.
Employers Liability vs Private Insurance
Some employers wonder whether they can use private insurance instead of registering with the Compensation Fund. The answer is no — Employers Liability registration is a statutory requirement and cannot be replaced by private insurance. However, many employers do take out additional group personal accident or employer's liability insurance as a supplement.
Private insurance may cover:
- The gap between actual earnings and Employers Liability benefits during temporary disability
- Employer liability for claims that fall outside Employers Liability (e.g. negligence claims)
- Top-up benefits for key employees
How Employers Liability Relates to Your Payroll
While Employers Liability assessments are not deducted from employees' salaries and do not appear on payslips, your payroll data is the foundation for calculating your ROE submission. Accurate payroll records are essential for:
- Calculating total earnings for the ROE
- Ensuring the correct number of employees is reported
- Substantiating your submission in the event of an audit
If you use our free payslip generator, you'll have clear records of gross earnings for each employee, making your ROE submission straightforward.
Common Employers Liability Mistakes
- Not registering at all: Many small businesses and employers of domestic workers are unaware of the obligation to register.
- Under-reporting earnings: Reporting lower earnings reduces your assessment, but exposes you to penalties and can reduce the benefits your employees receive if they are injured.
- Missing the ROE deadline: Late submissions attract penalties. Set a calendar reminder for March each year.
- Not reporting workplace injuries: Even minor injuries should be reported. A seemingly small injury can develop into a serious claim later.
- Confusing Employers Liability with National Insurance: These are separate obligations. National Insurance contributions are paid to HMRC via P32; Employers Liability assessments are paid directly to the Compensation Fund.
Staying compliant with Employers Liability is not optional — it protects both your employees and your business. Keep your payroll records accurate with our free payslip generator, and use our PAYE calculator and National Insurance calculator to ensure all your statutory obligations are met. For more compliance guidance, read our guides on National Insurance contributions and HMRC PAYE Online.