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Workplace Compensation in South Africa

December 1999
Lee Furter, Editor Safety Management, National Occupational Safety Association (NOSA), South Africa
www.nosa.co.za

Compensation legislation in South Africa is long overdue for reform. It does not need piecemeal reform, but requires a total re-think. The state must stop acting as Big Brother for everyone and stop undertaking to do what it can't do. Lee Furter, Editor of Safety Management , National Occupational Safety Association, spoke to compensation lawyer Richard Spoor, who is one of the front-line combatants in equalising legislation with practical realities.

The single most important issue currently before the South African courts relates to the compensation of employers who have contracted dust-related occupational diseases and who have been compensated in terms of the Occupational Diseases in Mines and Works Act.

To date the courts have declined to rule on the question of whether such workers have a right to recover damages from their employers or if they are limited to the compensation awarded in terms of the Act.

COID Act

New claims are being filed on a regular basis and it is only a question of time before a ruling is made. Compensation Lawyer Richard Spoor is confident that the courts will rule in the employee's favour. The constitutionality of the immunity provisions in the Compensation for Occupational Injuries and Diseases Act (COID Act) is also open to question, he says. The COID Act and its predecessor, the Workmen's Compensation Act, were ostensibly enacted in the interest of workers.

Despite the full bench decision of the High Court in the matter of Jooste vs Score Supermarkets, this issue has not been resolved. Judge Jooste's judgement, Spoor believes, is flawed in that the court accepted that workers have an effective remedy in terms of Section 56 of the Act to recover their full damages - which, he says, is not the case at all.

The full ambit of the legal constitutional and social arguments against immunity were also not placed before the courts. "We have not heard the end of this issue, he says, and it would be a mistake for employers to become complacent."

Polluter Pays

The principle "the polluter pays" is slowly being extended to the conduct of health and safety issues in the workplace. This move toward greater accountability has significant implications for employers. Spoor says the main feature of South Africa's compensation legislation is that the cost to employers of poor health and safety systems is heavily subsidised. At present an employer pays a modest levy that bears little or no relation to the harm that his/her unsatisfactory health and safety practices cause. In turn he/she is granted immunity against any claim that an injured employee might otherwise bring.

Employers in any industry pay virtually the same levies, and the subsidisation of the cost of harmful health and safety practices is a strong disincentive to them to address these matters seriously.

The subsidies take two forms. The first is a subsidy paid to the State and the families and communities of sick, deceased and injured workmen. It is they who must carry the major costs of disease, death and disability: the State, through the provision of health and welfare services, and the families and communities through the extra burden of support.

The low and inadequate levels of compensation, which are fixed by statute, mean that this subsidy is very substantial. The second subsidy is the cross-subsidisation of "bad" employers by "good" employers who take health and safety seriously. Good employers contribute more than their fair share of funds to the Compensation Commissioner, while employers with a bad safety record constitute an unfair drain on the Fund's resources. Good or bad, they all pay the same amount.

Spoor continues "In theory, existing health and safety legislation should guarantee that workplaces are healthy and safe, but this will only be the case if the legislation is effectively policed. The Departments of Labour and Minerals and Energy are simply unable to provide an effective policing mechanism and it is unrealistic to expect them to be able to do so."

Incentives needed

In consequence, and despite some of the best legislation in the world, South African industry kills and maims thousands of people each year. Spoor says dust-related lung disease, for instance, is probably the biggest killer and biggest cause of industrial disease in this country. "The Department of Minerals and Energy has a responsibility to monitor and control dust levels, but simply does not have the people or resources to do so." Employers need an incentive to maintain healthy work environment - policing is not the answer.

The simplest and best incentive is to hold employers liable for the full extent of the harm they inflict on their employees. If poor health and safety standards cost an employer money, he/she will take steps to remedy the situation. This is fundamental to the way the free market system works, he says.

The starting point of reform is to challenge the immunity that employers presently enjoy. There are legal, constitutional and social arguments to be made against immunity. The limits of the law have not been explored.

Protect the poor, aged, inform and disabled

"We need welfare legislation to protect the poor, aged, infirm and disabled. Workmen's Compensation should compensate workers for the harm they have suffered as a result of the employer's negligence".

"At present these two issues are confused. The confusion arises from a faulty premise, namely that work-related injuries and diseases are inevitable like old age and poverty. The State also needs to recognise its limitations. It has a fundamental responsibility to provide welfare services. Its responsibility in the field of health and safety should be limited to the determination of norms and standards, law enforcement (policing) and the creation of an environment where people who make themselves guilty of inflicting harm on others, can be held accountable and obliged to make redress."

"It is wrong to assume that policing is the only way to enforce rights and obligations. It is the principle of accountability, enshrined in our common law, which ensures that people respect each other's rights, health and property".

Zero-tolerance

Although the COID Act provides for levies to be adjusted to take into account higher or lower levels of risk, in practice the Compensation Commissioner is unable to do this with any acceptable degree of discrimination. The levies imposed within an industry are largely uniform. Whether an employer has adopted a "zero-tolerance" approach to unsafe health and safety practices, or whether he conducts his operations with reckless abandon, he makes the same contribution to the Compensation Fund.

"To discriminate fairly between employers requires a very accurate and responsive risk rating system - something that is quite beyond the capacity of the Compensation Commissioner." The major argument against reform of the compensation system, and in particular against an ending of employers' immunity, is that if employers are held wholly accountable, industry will find itself crippled by punitive legal claims that will cause many to close and lead to reduced employment levels. Spoor says the solution is to require employers to take out liability insurance with private insurers. "Private insurers are in a far better position to assess the risk of the insured and adjust premiums accordingly. In this way employers who take pains to improve levels of health and safety will be rewarded with low premiums, and those who do not will be punished with high premiums. Employees will be in a position to recover the full extent of their loss from the employers' insurers".

"Inasmuch as the Compensation Commission already performs the functions of an insurer, it does so badly. It surprises me that good employers are not more vociferous in their condemnation of these unjust laws and the inefficient bureaucracy that applies," he says. "The only possible reason can be that despite the low compensation levels and inefficiencies, employers prefer the lower premiums to that of a private insurer who would offer unlimited cover".

Just and equitable compensation

"If the principle of just and equitable compensation is accepted, the rationale for the existence of the Compensation Commissioner is no more.... notwithstanding the criticisms of the current compensation system, there is substantial scope for improvement within the existing parameters. Section 56 of the COID Act provides a valuable, if under-used, remedy for injured and diseased workers. This section allows a worker, who can prove that his/her disease is attributable to the negligence of the employer, to recover increased compensation from the Commissioner, even to the full extent of his financial loss".

"The Act excludes all meaningful participation on the part of the workers in the claim process and appears to operate for the benefit of employers alone. Workers play no role in the compilation of the claim, they have no control over the processing, they don't know their rights and are unable to enforce them. "Workers are routinely denied compensation to which they are entitled and are invariably under-compensated, even in terns of the criteria set by the Act." Spoor says perhaps the biggest obstacles to reform of the South African compensation system are the low level of understanding on the part of workers as to how the system discriminates against them, and apathy on the part of those with influence.

Fair compensation

"The movement to secure fair compensation for workers is in its infancy. The principles that underlie the current compensation system are not yet widely critiqued and at best the SHE establishment lobbies for minor adjustments rather than for real change. SHE role players need to think more critically about these matters", says Spoor. In some circles there are encouraging signs. Researchers are trying to calculate the actual cost of ineffective SHE-related management. Role-players' criticism is unfortunately still on the level of lobbying for increased levels of compensation and for more transparent, friendly claim procedures. Few are yet arguing for a fundamental re-think of the compensation system.

Spoor states "Education is critical but the essence of the message is that workers and unions must start taking control of the compensation process. This will compel them also to start taking a more critical position on the need to reform. Obstacles to reform include a lack of openness in the system as it currently operates. Doctor-patient confidentiality is being massively abused in industry. "Workers, the unions and their representatives are being denied access to their medical records in the name of confidentiality. This confidentiality, however, does not extend to the employer, who has full and free access to employees' records. One of the few positive developments is the new openness in the part of the Departments of Labour and Minerals and Energy, and a willingness to disclose important information regarding the health and safety to workers and representatives."

Contact: Lee Furter, Editor, Safety Management which is NOSA's official, international mouthpiece.
Tel: +27 12 321-7736 | Fax +27 12 325-6056 | E-mail: safeman@nosa.co.za