Federal Government approves Employee Compensation Scheme

The Federal Government has called on the National Assembly to quickly pass into law the newly approved Employees Compensation Scheme for the benefit of all Nigerian workers, employers and the Government. The call was made by the Honourable Minister of Labour, Employment and Productivity, Prince Adetokunbo Kayode SAN, after the Federal Executive Council unanimously approved the long-awaited Employees Compensation Bill on Wednesday. The Minister described the Bill as revolutionary and a demonstration that the Government of President Umaru Musa Yar’Ádua cares so much about the Nigerian worker.

According to the Bill, employees will get free monthly compensation when injured at work including rehabilitation and career guidance until they are able to return to work; unlike the existing law where they are paid a one-off lump-sum compensation if they are lucky. These benefits will be funded by one percent of payroll contribution by the employers including the Federal, State and local Governments.

The employers will benefit from huge profits achieved from higher productivity by well motivated and loyal employees; while the government will benefit from industrial peace and harmony and general economic growth.

Similarly, the MD/CEO of the Nigeria Social Insurance Trust Fund, Dr Enukora Joe Okoli described the bill as a Win! Win! for all! He explained that the Employees Compensation Act when passed will repeal and replace the obsolete Workmen’s Compensation Act of 1942 passed by colonial masters for themselves and later amended in 1957 to include Nigerian workers.

Dr Okoli explained that the old Workmen’s Compensation Act (WCA) is provided through commercial insurance on a “No Premium No Cover basis” while the Employees Compensation Scheme (ECS) is provided through pooling of risks with employers contribution. This means that every employee is automatically covered through employer contributions already in the pool, while defaulting employees are vigorously pursued to remit their own contribution. Claimants working with employers who might be having liquidity {cash flow} problems will not suffer because their claims will be settled by the Nigeria Social Insurance Trust Fund who will be managing the scheme.

Other benefits of the new ECS include a “no-fault provision” as opposed to the WCA which requires you to prove that you were not negligent. Furthermore, the WCA defines compensable injuries as injuries that occurred by accident, leaving out other injuries that can be caused by exposure and contamination. Under the WCA disputes are settled by courts which can be costly while the ECS provides for settlement by arbitration in a worker friendly environment. The ECS also provides for re-insurance with reputable Insurance Companies as further safeguard for the funds.

In approving the scheme, Nigeria has joined the ranks of several member-countries of the International Labour Organisation (ILO) some of which replaced the Workmen Compensation Act with the Employees’ Compensation Scheme more than thirty years ago, Dr Okoli said.