The employees’ compensation scheme under Employees
Compensation Act (ECA) provides insurance cover for employees that have
accident or are injured in the course of work. The cover extends to dependants
of an employee who dies as a result of injury, occupational disease or accident
during work. The injury, occupational disease or accident complained of must
have happened in the course of work which ordinarily means as a direct result
of the employment.
“Employees” covered by the scheme is extensive, it
therefore includes not just full time employees, but extends to temporary
workers, apprentices, part time workers, domestic servants, casual workers, etc.
The scheme is not a life insurance parse; rather, it is a
sort of social security which tends to provide sustenance for employees in the
event of occupational hazards which could deprive them of a constant
livelihood. The following are therefore broadly covered: disabling injury,
accident, occupational disease, mental stress associated to work and hearing
impairment.
The Employees Compensation Act makes social insurance
with Nigeria Social Insurance Trust Fund (NSITF) compulsory for all employees
and employers in the public and private sectors of the Federal Republic of
Nigeria. Unfortunately, the Act does not expressly forbid Group Life Insurance
operated by private insurance companies. As a matter of law, employers are under
compulsion to also obtain group life insurance for their employees. Section 4 (5) of the Pension Reforms Act 2014
states in part:
“Every employer shall
maintain a group life insurance policy in favour of each employee for a minimum
of three times the annual total emolument of the employee and premium shall be
paid not later than the date of commencement of the cover”.
Each private Insurance company has its procedure for
insuring persons. For insurance under ECA, the employer needs to register the
employee(s) with the NSITF (registration is free). Thereafter, the employer is
obliged to pay 1% of the salary of the registered employee(s) to NISTF Monthly
and also submit payment schedule to NSITF Monthly. Contribution by employees
for compensation under NSITF scheme is not allowed, employers are therefore not
to deduct from the remuneration of their employees to pay for their social
insurance.
Analysis
of Scale of Compensation
The benefit that may be claimed in case of work place
accident depends on the kind of accident/ disability. It includes: monetary
compensation, health care benefit, and disability support.
Death
situation: Usually, Group life pays a lump sum of equivalent of 52
Months’ salary to the family of a deceased person, but NSITF continues to make
Monthly payment of between 30-90% of the total monthly remuneration of the
employee as at the date of death the last earned salary. The exact amount
payable is contingent on the degree of dependency, the number of dependants, the
relationship and age(s) of the dependants.
Where an employee suffers an injury, in the course of his
employment, which results in permanent total disability, the Board is to pay
him monthly compensation of an amount equal to 90% of his remuneration.
Permanent
partial disability: Where an employee suffers a permanent
partial disability, compensation ranges from 100% for loss of limbs or both
hands and loss of leg or eye by one legged or one eyed employee; to 3% for loss
of one phalange. In other words, the percentage to be paid will depend on the
degree of the disability. The Payments are made periodically to represent 90% of
the difference between remuneration of the employee before and after the
injury, Which ever better represents the loss of the Earnings of the injured
employee.
Temporary
total/partial disability: Payment for temporary total/partial
disability is a one off payment. Provided the disability does not last more than
12months.
Additional
benefits: In addition to monetary compensation, NSITF may provide
for the injured employee any medical, surgical hospital, nursing and other care
or treatment, transport, medicines, crutches and apparatus, including
artificial members that the Board may consider reasonably necessary at the time
of injury and during the disability.
Conclusion:
In as much as the law mandates employers to obtain group
life insurance for their employees, the law appears to be flawed because it is
a duplication of what NSITF offers. Nevertheless, it remains the law and is
binding. So the situation we have at hand is that group life insurance for
employees is as compulsory as employees’ compensation scheme, which
makes it more expensive for employers to operate.
