{"id":39206,"date":"2018-09-04T14:14:53","date_gmt":"2018-09-04T14:14:53","guid":{"rendered":"http:\/\/localhost:8888\/cregital\/disha\/2018\/09\/04\/how-to-calculate-deductions-for-the-employee-compensation-scheme\/"},"modified":"2018-09-04T14:14:53","modified_gmt":"2018-09-04T14:14:53","slug":"how-to-calculate-deductions-for-the-employee-compensation-scheme","status":"publish","type":"post","link":"https:\/\/msmehub.org\/staging\/6671\/how-to-calculate-deductions-for-the-employee-compensation-scheme\/","title":{"rendered":"How to Calculate Deductions for the Employee Compensation Scheme"},"content":{"rendered":"

In 2011, the National Assembly replaced the Workmen’s Compensation
\nAct with the Employee Compensation Act (ECA). The ECA is an act that
\ndirects employers to contribute 1% of their total emoluments<\/strong> to
\nthe NSITF (Nigeria Social Insurance Trust Fund). The amount is set aside
\n as insurance to employees with compensation for injuries in workplaces,
\n mental stress, occupational hazards, and even death.<\/p>\n

How do employers contribute?<\/strong><\/h4>\n

This is where there have been controversies. The NSITF, in their
\nnewspaper advertorial, requested that employers contribute an amount
\nequal to 1% of total salary. This has wide implications for companies,
\nand even small businesses where payroll may include salaries,
\nallowances, benefits, health cost, etc. 1% of that is certainly a lot
\nmore than 1% on specific parts of what constitutes payroll.<\/p>\n

Fortunately, the Nigerian Employers Consultative Association (NECA)
\nreleased guidelines based on a clarification meeting with NSITF on what
\nconstitutes total emoluments which the 1% will be applied to.<\/p>\n

Total emolument was hereby defined as the summation of basic salary, transport and housing allowances<\/strong>. For example, let’s assume that in your organisation, your payroll breakdown is made up of the following:<\/p>\n

Total Payroll<\/strong><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Basic<\/td>\nN5,000,000<\/td>\n<\/tr>\n
Housing<\/td>\nN2,000,000<\/td>\n<\/tr>\n
Transport<\/td>\nN1,000,000<\/td>\n<\/tr>\n
Leave Allowances<\/td>\nN2,500,000<\/td>\n<\/tr>\n
Medicals<\/td>\nN2,000,000<\/td>\n<\/tr>\n
Training<\/td>\nN3,500,000<\/td>\n<\/tr>\n
Utilities<\/td>\nN500,000<\/td>\n<\/tr>\n
Travel & Holiday<\/td>\nN2,000,000<\/td>\n<\/tr>\n
Meal Allowance<\/td>\nN3,000,000<\/td>\n<\/tr>\n
Vehicles to Senior Staffs<\/td>\nN5,000,000<\/td>\n<\/tr>\n
Total<\/strong><\/td>\nN26,500,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Based on the above, your company will only contribute:<\/p>\n

Basic (N5,000,000) + Housing (N2,000,000) + Transport (N1,000,000) x 1% = N80,000. <\/strong><\/p>\n

Compare the above to 1% of N26.5m (N265k) which the NSITF erroneously requested that employers should pay.<\/p>\n

Employers were also expected to begin implementation from July 2011<\/strong>,
\n as against January, 2011, which was advertised by NSITF. So for small
\nbusinesses and startups, it is important that you note the above as it
\napplies to all employers, whether private or public and irrespective of
\nsize of employees.<\/p>\n

Also, note that by setting up the ECA Act, Workmen’s Compensation Act is no longer required.<\/p>\n

This article first appeared on Nairametrics on July 13, 2012.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

How to Calculate Deductions fo…<\/p>\n","protected":false},"author":1095,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[343,346],"tags":[390,681,750,415,749],"class_list":["post-39206","post","type-post","status-publish","format-standard","hentry","category-human-resources","category-payroll","tag-business","tag-employee","tag-employee-compensation-scheme","tag-msmes","tag-staff-compensation"],"yoast_head":"\nHow to Calculate Deductions for the Employee Compensation Scheme - 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