Nigerian employers to pay more into employee compensation fund in 2017


The Fund's operators are now playing by the letter of the law following a five-year transition period.

Nigeria’s Employee Compensation Fund is expected to receive a financial boost next year as a result of changes in how payroll is defined in the country.
 
Since the Employee Compensation Fund (ECF) was first introduced in 2011, employers have been expected to pay 1% of workers’ basic salary, transport and
housing allowance into it. The aim is to finance treatment and rehabilitation for employees who sustain work-related injuries and to pay death benefits to their family if they are killed in the course of their work.
 
But the Nigeria Social Insurance Trust Fund (NSITF), which operates the ECF, has now signed a Memorandum of Understanding with the Nigeria Employers’ Consultative Association (NECA) that its members will pay 1% of employees’ total renumeration, minus only irregular payments such as bonuses and overtime.
 
NTSIF’s acting managing director Ismail Agaka told the Nigerian Daily Trust: “We have not redefined the compensation. What we are simply doing now is that we are implementing the provisions of the [Employees Compensation] Act as it is – and the Act says the remittances must be based on total emoluments of employees.”
 
The changes are expected to come into force in January 2017, but NECA’s director general Olusegun Oshinowo hinted that the document would be sent to all employers before the end of the year to enable them to plan more effectively.