Letter of Good Standing
Also known as: LGS, COIDA Letter of Good Standing, Good Standing Certificate.
What is Letter of Good Standing?
A Letter of Good Standing (LGS) is a certificate issued by the Compensation Commissioner under COIDA confirming that an employer is registered, has submitted its annual return of earnings, and has paid all assessments due. It is typically required for tenders, procurement and site access in the construction and services industries.
Drafted and reviewed by
Attorney & Founder, My-Contracts.co.za · Legal Practice Council of South Africa (LPC F17333)
Definition and context
A Letter of Good Standing (LGS) is an administrative document issued by the Compensation Commissioner in terms of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA). It certifies that an employer is (i) registered with the Compensation Fund under section 80, (ii) up to date with its annual Return of Earnings (W.As.8) under section 82, and (iii) current on its annual assessment levies under section 83. The LGS is valid for the period stated on its face (usually one year from the date of the latest assessment) and is renewed automatically on payment of the succeeding assessment.
The LGS is the standard procurement artefact proving COIDA compliance. It is almost universally required by principal contractors on construction sites, by large corporations issuing RFPs, and by public-sector procurers under the Preferential Procurement Policy Framework Act 5 of 2000. In the construction industry, the Construction Regulations issued under the Occupational Health and Safety Act 85 of 1993 require a principal contractor to verify subcontractor LGS status before site access, and failure to do so exposes the principal contractor to joint and several liability for subcontractor injuries. Some jurisdictions also require the LGS for occupational licensing (for example, certain trade authorities and the health sector).
Operationally, employers obtain the LGS via the CF-Filing online portal. The Commissioner will refuse issuance if (i) the ROE is outstanding, (ii) assessments are in arrears, (iii) penalties or interest are unpaid, or (iv) the employer is on a payment plan in default. Best practice is to submit the ROE within the prescribed 30-day window after 1 March each year, pay the resulting assessment promptly, and download the LGS immediately on issuance. An expired or invalid LGS disqualifies the employer from most tenders and can lead to immediate site removal.
Where this term lives in law
Compensation for Occupational Injuries and Diseases Act 130 of 1993
Sections: 80, 82, 83
Provides for compensation of employees injured or contracting diseases in the course of employment.
Occupational Health and Safety Act 85 of 1993
Sections: 37
Governs employer and employee duties for workplace health and safety in South Africa.
Frequently asked questions
How do I get a Letter of Good Standing?
Register with the Compensation Fund (CF-1E form), submit the annual Return of Earnings (W.As.8), pay the resulting assessment, and download the LGS from the CF-Filing portal.
How long is an LGS valid?
Typically twelve months from issue, or until the next assessment due date, whichever is earlier. The exact expiry date appears on the face of the certificate.
Why do tenders require an LGS?
It is the standard evidence that the tenderer's workforce is insured against work-related injury under COIDA, relieving the procurer of joint and several liability exposure for uninsured subcontractors.
Can I get an LGS if I have employees but no earnings?
Yes, a nil-return ROE can be submitted and the Commissioner will issue an LGS subject to the minimum assessment (if applicable). The employer must still register.
What if my LGS expires mid-project?
You must renew before expiry. Most principal contractors require a valid LGS for continuing site access and will remove subcontractors whose LGS has lapsed.
Contract templates using this term
2 templates reference Letter of Good Standing.