Compensation Fund backlog to be cleared soon

A turnaround of the moribund and dysfunctional Compensation Fund seems a possibility as it moves to wipe out a backlog of outstanding claims and institutes more efficient systems.

Newly appointed director-general at the Department of Labour, Thobile Lamati, is driving the changes and gave the assurance that the backlog of 231 000 outstanding claims valued at about R23bn, would be cleared by the end of June. About 100 interns were being employed and had processed 65 543 claims since last month, he told parliament's labour committee. A seamless process to handle a claim from adjudication, approval to payment would be introduced shortly.

This would overcome one of the main causes of delays in finalising claims - that there was no interface between the processing and payment systems, said Lamati, adding that this would not require a large capital investment in new systems. The fund, which is meant to compensate employees who are either injured or fall ill at work, has been a source of frustration for workers and medical service providers. The long delay in getting paid resulted in service providers, including doctors, hospitals and clinics, threatening to withhold services from injured workers.

In many cases, disgruntled stakeholders resorted to litigation to get relief, while others handed claim cases to third-party agencies. For many years, the financial malaise and lack of controls at the fund have been so dire that the auditor-general has been unable to pass an opinion on its financial statements because of inadequate records and has subsequently issued disclaimers. Last year, the auditor-general raised about 93 issues that needed to be addressed, and Labour Minister Mildred Oliphant appointed a task team to help the fund deal with the concerns raised.

A dearth of skills, failure to address complaints, and a lack of focus on its core function have also plagued the fund. Lamati mentioned a number of interventions made to address the fund's weaknesses, including that a skills audit team had been appointed and was expected to finalise its findings in about six months. The number of paper processes were reduced and a draft organisational redesign would be finalised by the end of the month. An anti-corruption and fraud strategy was adopted, which will require all staff to declare their financial interests. It is hoped this will assist in reducing collusion among staff, as well as between employers and medical practitioners.

The cumbersome assessment and classification model was also outdated and open to abuse and manipulation. A draft policy on employer classification and an amended rating model were developed and will be submitted to the Cabinet. The proposal - approved by the National Economic Development and Labour Council - is designed to reduce the different classes of employer, who each have their own rates, from about 10 to five to simplify the system. Lamati said the existing system had caused confusion for employers, who did not know into which category they fitted.

Business Day, 17 April 2015