COIDA earnings are not your payroll total, and they are not your SARS figure either. They are a specific number, calculated per employee, capped at a ceiling, and including some people you may not think of as employees at all. Getting it wrong in either direction costs you — and the mistake surfaces at audit, not at submission.
The definition is wider than most employers assume
COIDA defines an employee as any person who has entered into, or works under, a contract of service, apprenticeship or learnership — written or verbal, express or implied, and whether the remuneration is calculated by time, by work done, or otherwise.
Read that clause slowly, because almost every under-declaration lives inside it. “Verbal or implied” catches the casual worker nobody put on a contract. “By work done” catches the person paid per job rather than per month. Neither feels like payroll, and both are declarable.
Working directors count
A director who draws a salary is an employee for COIDA purposes, and that remuneration belongs in the return. This is the single most common omission, and it is an easy one to make honestly: directors are usually processed separately from staff payroll, so they simply do not appear in the number that gets typed into the ROE.
Allowances are the other half of the same problem. Where an allowance forms part of remuneration, leaving it out understates the figure. If your payroll and your declared earnings have never been reconciled against each other, that gap is worth finding before the Fund does.
The subcontractor rule that transfers liability to you
This is the one worth reading even if you skip the rest. Where a subcontractor is not registered and covered in their own right, their employees are deemed to be your employees for the purposes of the Act. You carry the liability if one of them is injured on your site, and their earnings belong in your Return of Earnings.
The practical consequence is simple and unforgiving: an uncovered subcontractor is not a saving, it is an exposure sitting on your balance sheet that you will only discover when someone gets hurt. The protection is equally simple — ask every subcontractor for a current Letter of Good Standing before they start, and keep it on file. You can check any Letter of Good Standing against the Compensation Fund record free, which is faster than taking a PDF at face value.
This is also why principal contractors on construction sites are asked for their subcontractors’ letters, not just their own — see our guide on COIDA for principal contractors.
Earnings are capped per employee, not in total
You do not declare a high earner’s full package. Earnings are declared per employee up to a ceiling:
- R633 168 per employee for the 2025/2026 actual-earnings year
- R668 000 per employee from 1 March 2026
The cap is per person. Applying it to the payroll total instead of employee by employee is a real and expensive error — it understates a business with several high earners and does nothing at all for a business with none. The COIDA calculator applies the ceiling the right way round if you want to sanity-check your own figure.
Both directions cost you
Under-declare and the gap between your declared earnings and your payroll is precisely what an audit is built to find. A finding produces a revised, higher assessment, and while the query is open your Letter of Good Standing is generally withheld — which is how a paperwork problem becomes a lost tender. If you are already in that position, start with our guide to closing out a COIDA audit.
Over-declare and nothing dramatic happens at all. You simply pay more than you owe, every year, quietly. Nobody from the Fund will point it out. If you suspect the assessment itself is wrong — whether from overstated earnings or the wrong industry tariff — there is a revision route with its own window, and if the tariff is the problem the fix is a change of nature of business.
Check a Letter of Good Standing
Yours, or a subcontractor’s. See whether the Fund holds a valid letter against the certificate number and when it expires. Free, no signup.
Check a Letter of Good StandingA reconciliation worth doing once a year
Put three columns next to each other: your payroll for the assessment year, the figure you declared, and a list of everyone who did work for you including directors, casuals and any uncovered subcontractors. Most employers have never done this, and most who do it find something.
It takes an afternoon, it is the exact exercise an auditor would perform, and doing it before the Fund does is the difference between a correction and a finding.
Questions we get asked
Is COIDA earnings the same as my SARS payroll figure? No, and you should not assume the two reconcile. COIDA applies its own definition and its own per-employee ceiling. Your tax position is a separate matter for SARS eFiling or a registered tax practitioner — ClearComply does not check or file anything with SARS.
What about someone who worked for two months? Actual earnings for the period they worked. The obligation follows the work done, not a minimum term.
Do I declare a labour broker’s staff? The test is the same as for any subcontractor: whether they are registered and covered in their own right. Ask for the letter, verify it, keep it.
ClearComply is a private commercial software provider and is not affiliated with, authorized by, or an official agency of CIPC or any government entity. We are not the Compensation Fund or the Department of Employment and Labour. Letters of Good Standing are issued by the Compensation Fund, not by us.