TL;DR: (Too long, didn’t read)
Subcontractor site access requirements are set partly by law and partly by the main contractor. The two that stop firms at the gate most often are a lapsed COIDA Letter of Good Standing and proof of liability cover that does not match the limit in the subcontract. Check whether your COIDA cover sits with the Compensation Fund or with a licensed compensation insurer, because that decides who issues your letter. Add a health and safety file, medical certificates of fitness, plant and operator paperwork, and, on public sector work, CIDB registration and a SARS Tax Compliance Status PIN. Almost all of it has a lead time, and several items expire annually and can lapse while you are still on the job.
There is a particular kind of expensive morning in South African construction. Your crew is at the gate, the site agent has your name on the list, and someone in the site office is looking at a Letter of Good Standing that expired three weeks ago.
Nobody is being difficult. Site access is a compliance gate, and insurance and statutory paperwork are starting-gun items rather than afterthoughts. Here is the actual list, and the order it has to happen in.
Related reading: subcontractor insurance, what the cover looks like and who carries what.
The gate list
| What | Where it comes from | Applies to |
|---|---|---|
| COIDA Letter of Good Standing | The Compensation Fund, or the licensed compensation insurer your business is registered with | Every employer with employees, renewed on cycle |
| Proof of public liability cover | Your insurer or broker | Nearly every subcontract |
| Proof of works cover, or written confirmation you are on the project policy | Main contractor, or your own insurer | Where you carry works risk |
| Health and safety file | Compiled by you, to the principal contractor’s requirements | Every construction site |
| Medical certificates of fitness | An occupational health practitioner | Your workers on site |
| Signed subcontract | The main contractor | Always, and often the trigger for everything else |
| Plant and operator paperwork | Insurer, plus operator competency and lifting equipment certificates | If you bring machines |
| Your own guarantee lodged with the main contractor | A bank or guarantee insurer | Larger subcontract portions |
| CIDB registration at the right grade and class | Construction Industry Development Board | Public sector work |
| Tax Compliance Status PIN | SARS | Public sector work, and often requested on private work |
| B-BBEE certificate or sworn affidavit | Verification agency, or a commissioner of oaths | Public sector work, and scored private tenders |
| CSD registration | Central Supplier Database | Government work only |
Related reading: bidding for government work under the Public Procurement Act and the CIDB rating system.
The Letter of Good Standing is the one that catches people
Under the Compensation for Occupational Injuries and Diseases Act, every employer must be registered and paid up for cover for workers injured, killed or contracting an occupational disease on the job. The Letter of Good Standing is the proof. This is the old Workmen’s Compensation, legally required rather than negotiable.
Here is the part that catches construction firms specifically. That cover sits either with the Compensation Fund or with a licensed compensation insurer, and a large part of the building industry sits with a licensed compensation insurer rather than the Fund. Where it does, the Letter of Good Standing comes from that insurer, not from the Department of Employment and Labour. Establishing which one your business is registered with is the first step, because it decides where you apply.
Broadly, the process runs the same way on either side: register, declare the annual payroll, pay the assessed premium, then request the letter.
Two things go wrong repeatedly. The letter runs for a limited period tied to the assessment year and has to be renewed, so one that was valid when the subcontract was signed can lapse in the middle of a nine-month portion, and site offices check the date rather than the intention. And the payroll declaration has to be current, so a firm that has grown since its last declaration can find the assessment reopened at the worst possible moment.
Related reading: no good deed goes unpunished, COIDA and who pays when a subcontractor is not registered.
Proof of cover is not the same as knowing what you are covered for
The main contractor usually asks for a certificate of insurance. One page: policy number, insured name, cover type, limit, period. It satisfies the gate, and it tells you almost nothing, because a certificate does not carry the exclusions, the excess, or whether the cover runs past practical completion. The certificate is the document the site office needs. The schedule and wording are the documents you need.
The limit is the other trap. Subcontracts state a required public liability limit in the insurance clause, and that figure varies by employer and by project size. A policy that satisfied last year’s job may sit below this year’s clause. At the gate that is a document problem. After a loss it is a shortfall problem, because the policy responds to its own limit and anything above that limit sits with you.
Related reading: what is not covered by a Contractors All Risk policy and contractors public liability.
The health and safety file
The principal contractor carries the duty for the site and passes a good deal of it down. A subcontractor’s file is typically expected to hold the safety plan for your scope, a risk assessment for your activities, your legal appointments, proof of induction and toolbox talks, incident reporting procedures, and medical certificates of fitness for the people you are bringing on.
This is the item most often underestimated. It is compiled work rather than a form, and a site that rejects the file sends you away as surely as an expired letter does.
Plant, if you bring machines
Your own plant adds a second stack: proof of cover for owned and hired-in plant, operator competency certificates for the specific machine class, and load test or inspection certificates for anything that lifts. Hired plant sits on the hire terms, and those terms decide who carries damage and theft. They are easier to negotiate before delivery than to argue after. See plant all risk cover.
Sequence is the real problem
None of this is difficult. All of it takes time, and the order matters, because several items depend on others.
- The subcontract sets the cover limits, so the insurance follows the contract rather than preceding it
- The Letter of Good Standing depends on a current payroll declaration and a paid assessment
- The safety file depends on your appointments and inductions being done
- Medical certificates depend on getting people to a practitioner
A firm that starts this on award has time. A firm that starts it the week before it is due on site does not.
Sort the insurance side before the gate, not at it
CivilSure is an insurance broker working with subcontractors across South Africa. Send us the subcontract, or just its insurance clause, and we will go through what cover it requires, at what limit and for how long it has to run, and set out the options available to you. Any cover placed is subject to insurer terms, policy wording and underwriting.
Common questions
What documents does a subcontractor need before being allowed on a construction site?
Commonly a current COIDA Letter of Good Standing from the Compensation Fund or your licensed compensation insurer, proof of public liability cover at the limit the subcontract requires, a health and safety file for your scope, medical certificates of fitness for your workers, a signed subcontract, and plant and operator certificates if you bring machines. Public sector work adds CIDB registration, a SARS Tax Compliance Status PIN, B-BBEE documentation and CSD registration.
What is a Letter of Good Standing and who issues it?
It is proof that an employer is registered and paid up for COIDA cover, which covers workers injured, killed or contracting an occupational disease on the job. It is issued either by the Compensation Fund, through the Department of Employment and Labour, or by the licensed compensation insurer the business is registered with. Much of the building industry sits with a licensed compensation insurer. The letter runs for a limited period and has to be renewed.
Do subcontractors need CIDB registration?
For public sector work, registration at the required grade and class of works is a filter applied before price is considered. On private work it is not required in the same way, though private clients frequently still ask for it.
Is a certificate of insurance the same as a policy schedule?
No. A certificate confirms that cover exists and satisfies a site office. The schedule and wording carry the limits, excesses, exclusions and period, which is what determines whether a claim responds.
What happens if my Letter of Good Standing expires while I am on site?
Site access is commonly suspended until a current letter is produced, regardless of how far into the works you are. The letter runs for a limited period, so a long portion can straddle an expiry date.
Do I still need my own public liability cover if the main contractor says I am on the project policy?
Subcontracts routinely require it anyway. A project policy is arranged to cover the works, and it does not typically extend to your own plant, your workmanship or your employees, though the position depends on the policy wording and any extensions in place. Insurers also commonly retain rights of recovery, meaning they can pursue a negligent party for what they have paid out.
Sources
- Compensation for Occupational Injuries and Diseases Act (COIDA), registration with the Compensation Fund or a licensed compensation insurer, and the Letter of Good Standing
- Construction Regulations under the Occupational Health and Safety Act, health and safety file and appointment requirements
- Construction Industry Development Board registration, grading and classes of works
- CivilSure construction industry reference material on tender readiness and site establishment
Requirements differ between sites, employers and contracts. The list that applies to any specific job is the one in that subcontract and that site’s access procedure, and nothing here is legal advice on either.
