Contextualising the recent COIDA amendment

Workers’ compensation has a long history, both in South Africa and abroad. Despite this long legislative history, the current Workers’ Compensation Act – governed in South Africa by the Compensation for Occupational Diseases Act (COIDA) of 1993 – has not often been amended, until now. In this article, our columnists take a look at the background of this amendment.

It is useful to first record the legislative history of the Workers’ Compensation Act. Various pieces of workers’ compensation legislation existed in what would become the provinces before they united to form the Union of South Africa in 1910.

We are interested in the post-Union workers’ compensation legislation. In chronological order, these are:

• The Workmen’s Compensation Act 25 of 1914;
• The Workmen’s Compensation (Industrial Diseases) Act 13 of 1917 and The Workmen’s Compensation (Amendment Act) 29 of 1931;
• The Workmen’s Compensation Act 59 of 1934 and The Workmen’s Compensation (Amendment Act) 38 of 1936;
• The Workmen’s Compensation Act 30 of 1941;
• The Compensation for Occupational Injuries and Diseases Act 130 of 1993, The Compensation for Occupational Injuries and Diseases (Amendment Act) 61 of 1997, and The Compensation for Occupational Injuries and Diseases (Amendment Act) 10 of 2022.

The president assented to the final Act in the list on 17 April 2023. The most important change in this amendment is the deletion of the words “a domestic employee employed as such in a private household” from the list of persons excluded from the definition of “employee”. This deletion, which removed the exclusion of domestic employees from the workers’ compensation scheme, was in response to the Constitutional Court judgement of Mahlangu and another v Minister of Labour and others, 2020, which ruled that the exclusion of domestic employees from the operation of the Act was unconstitutional.

The importance of the history of laws

Historically, two relevant related observations are important. The first was made by Douglass North: “History matters and institutions matter.” North, who was awarded the Nobel Prize for his work in the field of economic history and institutional economics, assigned a particular meaning to the notion of institutions: to him, an institution represented binding rules. These were not necessarily enforceable, which would be the case where the rule is law, so in the North context institutions included laws.

The second observation was made by the great American jurist Oliver Wendall Holmes, who pointed out that sometimes a law passed to deal with a specific problem is so effective that the problem is resolved. When this happens, the reason for the law being passed is forgotten. Holmes warned that creative minds then work out imaginary reasons for the existence of that law.

The message from all of this is that when dealing with existing laws it is useful to understand the historical reason for their passing. In the North sense, the history for passing the law (the institution) matters.

The need for workers’ compensation laws

Going back in history as far as we can trace specific circumstances where one person physically injured another, the person who caused the injury became liable to compensate the injured person. This branch of law is referred to as the law of torts in England and the United States, while in South Africa and Scotland it is referred to as the law of delict. The specific circumstance is very limited.

With the ushering in of the industrial revolution, accidents became a central feature, requiring a resolution to the question of what should be done about occupational injuries.

Let us take a typical case from the UK in the 1800s, where workers were cutting through rocks. Part of the process was to remove the rocks with the use of a crane. As the crane lifted the rocks, a rock fell out of the crane and injured a worker below. The question the court had to answer was, should he be compensated in terms of the common law of torts?

The common law of torts recognised two defences: firstly, the defence of the voluntary assumption of risk, and secondly, contributory negligence. In terms of the first defence, the worker knew that the work was risky but agreed to do it in any event. In terms of the second defence, he could see that rocks may fall and could have moved away. The judge in this case was quite frustrated because the injured employee should clearly be compensated but, equally clearly, compensation was not payable in terms of the common law.

A different reason for compensation outside of the common law existed. If the judge ruled that the employee was entitled to compensation in terms of the common law of torts, that would change the common law as it applied to employees.

The English parliament started to tweak the common law with respect to employees. That was not satisfactory, since the law should be of general application (there should not be one law for employees and another for other persons). It became increasingly clear a solution to this problem was needed.

Enterprise liability is born

Fortunately for everyone, in Germany Bismarck came up with a solution in the form of insurance: all employees should be covered by statutory personal accident insurance. Therefore, if they were injured, they would be compensated because they were insured. The common law concerns about negligence, contributory negligence, and assumption of risk no longer played a part.

In England, the position was clearly understood when it was said that the cost of injuries was included in the price of the sold good. Roscoe Pound (1914) began to understand the underlying development taking place: “Today there is a strong and growing tendency for … placing upon an enterprise the burden of repairing injuries without fault of him who conducts it, which are incident to the undertaking. The whole matter of workmen’s compensation and employer’s liability, as dealt with in modern legislation, illustrates this.”

Economists captured this idea in terms of the concept of externalities. An enterprise created the risk that it could impose costs on persons outside the enterprise and these costs could be internalised and passed on as a cost of production. This is what workers’ compensation does. The enterprise, by its activities, creates externalities which can be internalised, passing on the costs as part of the cost of production.

The Mahlangu case

In this case, two judgements were handed down as a majority judgement and a concurring minority judgement. From a conceptual point of view, the second is more convincing. The majority followed the now familiar social welfare argument, which the second judgement disagreed with.

It can be argued in light of the history of workers’ compensation that the social welfare argument has little support. The common point of departure is that workers’ compensation is part of the social welfare system. Of course, it is not. If Mr X is concerned about the welfare of his family, he takes out life insurance to protect his family. If he dies and his family is paid out, no one has argued that this is part of the social welfare system, because insurance is not. 

The approach of the minority judgement is interesting. The argument put forward is that laws passed by parliament should apply to everyone, unless there is a good reason. That is indeed a sound argument. In constitutional law it is usually said that parliament may not pass a bill of attainder.

Therefore, the question which needs to be answered is: Do good grounds exist for not including domestic servants within the purview of workers’ compensation? Given the history, the answer is yes. Workers’ compensation applies to enterprises that allow the costs to be internalised and passed on as part of the price of the goods or services of the enterprise.

The domestic home is no such enterprise. There may well be sound reasons for domestic workers to deserve compensation if they are injured at work. However, it is very doubtful if the workers’ compensation systems, as typically conceptualised, are the right forum for achieving that goal.