A move by Nigerian lawmakers to open an investigation into organisations said to have flaunted the country’s Employees’ Compensation Act is raising issues on regulatory overlap and could hamper business operators in a country already lagging peers on ease of doing business, experts say.
The House of Representatives (HORS) Monday said it was inviting 1,124 organisations to an investigative hearing early October to enable an ad-hoc Committee ascertain the level of compliance with a mandatory law for employers to contribute a minimum of 1% of their total monthly payroll to the Employees’ Compensation Fund (ECF).
But experts question the decision of the House of Representatives to carry out the investigation which they say would result in an excessive regulation since a body and a ministry was already in charge of ensuring employers’ compliance with the law.
“Why is the HORS introducing another layer of enforcement of remittance of ECF contribution at the expense of employers, especially those who had passed through Nigeria Social Insurance Trust Fund audits?” KPMG Nigeria, the local outlet of one of the world’s biggest four professional services firms queried.
“Did it perceive laxity on the part of NSITF? If this is the case, why is the Minister of employment, Labour and Productivity, who has oversight of the NSITF under Section 61 of the Employees’ Compensation Act, not being directed by the HORS to ensure NSITF lives up to expectation? Should the HORS be conducting investigation such as this?”
According to Section 33 of the Employees’ Compensation Act (ECA), 2010, employers are mandated to contribute a minimum of 1% of their total monthly payroll to the Employees’ Compensation Fund (ECF) managed by the Nigeria Social Insurance Trust Fund (NSITF) Management Board.
Section 36 of the Act empowers the NSITF to institute relevant actions to recover any unpaid contribution from employers, a function the board was already dispensing through its compliance reviews on employers to ascertain the accuracy of their contributions and recover their unremitted contributions.
Moreso, the NSITF is already under the auspices of the Minister of Employment, Labour and Productivity which questions the approach by lawmakers as being the best, KPMG said, while it pointed out that a constitutional provision for HORS to open an investigation into matters in which they had powers to makes laws might be limited.
“Could the investigation not be done by limiting its scope to the operational review of the NSITF and proposing amendments to the ECA to deal with any perceived lapses in the NSITF operation?” the professional services firm said.
“Will the HORS not be turning itself to an agency for debt collection in the event that any employer is delinquent in its monthly remittance of its ECF contributions to the NSITF?”
Asides the issues of overlapping functions, KPMG faulted the 10-year period which the investigative committee said it would be looking into as businesses retain documents for an average of 6 years in line with Nigerian laws.
They also pointed out that the 2-week time-frame for the affected companies to prepare and submit their documents was tight and could affect their operations while another 5-day period set aside for the investigation would not be sufficient for a thorough hearing.
Affected organisations are required to submit a soft copy and 20 hard copies of their evidence of registration with, and remittance to NSITF, to the Committee Secretariat in Abuja, not later than 4 October 2019.
The 1,124 employers which are a minute fraction of total employers in the country was another concern, and questions on whether the investigation would be carried out in batches involving other organisations were critical issues KPMG raised.
