Saturday, 27 May 2017

Between Group Life Insurance Operated by Private Companies and the Employees Compensation Scheme under the Employees Compensation Act 2010

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.


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.

Things You Must Know About Tax Identification Number (TIN) In Nigeria

Registering a business name, company or a Non - Governmental Organisation (NGO) is not an end in itself. Yes you heard me right… it is not the end to the entire process of registration. Over months of registering various kinds of businesses for clients, I have often discovered that once certificates of registration are presented to clients, they often back out thinking that they have done all that is needed to be done. This however is not the true position of the law as there is always the need to process tax identification number (TIN) thereafter.

What is TIN

It is an identification number given to all businesses and individuals in other to be able to pay their tax to the government. This number is generated electronically and usually assigned to the particular business name or individual that applied for it. It helps you keep all records of payments made to the government as taxation fees through government tax offices spread across the country.

What You Need To Know About TIN

You must know that without tin you cannot adequately carry out any business activity either by yourself or with another business organisation whatsoever. This will only bring about a dent of illegality as there will be no means of record or history of tax payment on the business or individual.

Furthermore, without TIN your business will not be able to have any account in its registered name, which will limit you from striking some deals. This is because most organised businesses would not want to ordinarily transact with any business that does not have its corporate account.  

Tax Offences

There are several offences but the two notable tax offences that are seen every day are:
  • Non Registration for Taxes; and
  • Refusal to file tax returns.

It is an offence to commence business without obtaining TIN. Where you commence business without obtaining your TIN, you will be in default for the period of time you operated your business without registration and will also be liable to prosecution under the law.  Penalty varies and may include being liable to pay the sum of #20,000 (Twenty Thousand Naira Only) as default fees and a further sum of #2,000 (Two Thousand Naira Only) for each day the default continues and imprisonment for six months.

How Do I Process My TIN

In other to process your TIN, you will need to have the following documents:
If it’s a business name, you need your certificate of registration, the form attached to the certificate and others…

For companies, you would need certificate of incorporation and other documents including FIRS Forms and application letter… The same also applies for NGOs. You may contact us at for more information on the processes involved in obtaining your TIN.

Tuesday, 16 May 2017

6 Legal Ways to Operate an Unregistered Business Name in Nigeria

Quoted as we understand it, section 573 of the Companies and Allied Matters Act says that:

You do not have to register your business name if:

(a) As a firm, your firm’s name is the combination of the surname of all partners, or the surnames and their other names.

(b) Your individual business is operated in your real names

(c)  Your Company (i.e. LTD, PLC, GTE, and ULTD) decides to operate a business name that does not consist of any addition to its corporate name
The following instances are additionally allowed:

(a) Situation where the word added is merely to show that the business operates in succession to a former owner. This is common in family businesses.

(b) Situations where the partners have the same surname and “s” is added at the end of the last surname. For instance Akinyele & Akinyele’s Firm

(c) The business is carried on by a receiver or manager appointed by any court.

In summary, you do not have to register your business name if you are using your actual names- your surname with or without your other true names or initials of those names to run your business.

Furthermore, if there is an addition that merely indicates that the business is carried on in succession to a former owner of the business; or where two or more partner have the same surname and decided to add an “s” at the end of that surname; or where the business is carried on by a receiver or manager appointed by any court, registration will not be necessary.

It is understandable that you can do business in your natural names because you are a legal person by reason of your natural names (particularly if you are 18 years or above). So, I as EYITAYO OGUNYEMI could decide to have a legal retainership with your company in my natural names. If I however operate as “Law Accent”, I need to register it because it is not my natural name.
It is not surprising that a person that does business in a name other than a natural name must register because there is a need for the public to put a face to anybody behind transactions done in unnatural names.

Here are however some reasons that may necessitate that you register your business name either ways:

Ø  Banks usually request for certificate of business registration before opening a corporate account for corporate clients. By implication, you may not be able to open a corporate account.

Ø  Foreign investors prefer to deal with entities that are registered with government agencies, and that begins with the Corporate Affairs Commission.

Ø  It is almost impracticable to have your name alone (without any addition) for a business name. For example “Eyitayo Ogunyemi”- looks quite absurd without any addition like “Law Office of Eyitayo Ogunyemi” “Eyitayo Ogunyemi & Co” etc.  It is however assumed under this heading that the law will be reviewed to capture this situation because the law ought not to be construed in such a way as to demand the impossible.

You may therefore conclude on registering your business name notwithstanding the leverage allowed by the law as this puts your business in a prime position for opportunities.