Tensions are building between the Federal Government and the Organised Private Sector over plans to increase the levy employers contribute to the Nigeria Social Insurance Trust Fund under the Employees’ Compensation Scheme, a move business leaders warn could trigger widespread job losses and factory closures across the country.
Under the current Employees’ Compensation Act of 2010, employers are required to remit one per cent of their total monthly payroll to the scheme, which provides compensation, death benefits, rehabilitation costs, and medical assistance to workers injured or killed in workplace accidents. The proposed new rate has not been disclosed, but employers have signalled strong opposition to any upward adjustment.
The Employees’ Compensation Fund, administered by the NSITF, was established to cushion the financial and social impact of occupational hazards. Since its inception, the scheme has served as a statutory safety net for Nigerian workers, particularly in high-risk sectors such as manufacturing, construction, oil and gas, and mining. However, debates over the adequacy of compensation and the sustainability of the fund have persisted, with labour advocates arguing that payouts remain insufficient, while employers cite mounting operational costs.
The issue came to the fore on Sunday during the Safe Workplace Intervention Project yearly stakeholders’ interactive enlightenment forum and awards ceremony, organised by the Ministry of Labour and Employment, the NSITF, and the Nigeria Employers’ Consultative Association in Abuja.
Minister of State for Labour and Employment, Nkeiruka Onyejeocha, called for a comprehensive review of the compensation framework, describing current payouts to families of deceased workers as inadequate.
“A safe workplace is not optional; it is a legal requirement. Going forward, there is also need to review our legal framework to ensure that it adequately reflects the value of workers’ lives when accidents result in fatalities,” Onyejeocha said.
“I strongly advocate a review of compensation because, as it stands, when workers die, their families are often given what can only be described as inadequate compensation. This narrative must change. Employers must comply with established standards, and this is what we should collectively uphold and celebrate,” she added.
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The minister described the Safe Workplace Intervention Project as both timely and strategic, saying it helps shift the perception of workplace safety from a cost burden to an investment in human capital. She urged employers to fully comply with the provisions of the Employees’ Compensation Act through prompt registration, regular remittance of contributions, and sustained investment in safety systems, while encouraging workers to remain safety-conscious and exercise their rights responsibly under the law.
However, speaking on behalf of employers, Director of Corporate Services at Seplat Energy Plc, Dr. Steve Ojeh, issued a stern warning about the economic implications of any levy increase. He cautioned that such a move could lead to job losses, hinder investment, expand payroll obligations, limit performance-based incentives, and force the closure of struggling factories.
Represented by Ken Okoroh, Senior Manager of Industrial Relations at Seplat Energy Plc, Ojeh outlined a series of challenges currently facing employers, including economic pressures, efficiency gaps, a multiplicity of levies, and limited utilisation of benefits under the scheme.
He lamented that the Organised Private Sector is already burdened by over 75 taxes and levies, stating: “We would have preferred that the rate be reduced, but it should be left where it is rather than increased.”
The warning reflects broader concerns within Nigeria’s business community about the cumulative impact of taxation and statutory contributions on profitability and competitiveness. Many employers argue that rising operational costs, coupled with the challenges of an unstable macroeconomic environment, leave little room for additional financial obligations.
The Minister of Labour and Employment, Muhammadu Dingyadi, called for better understanding among organised labour, NECA, and the NSITF to advance workplace safety for the benefit of workers, productivity, and the country at large. He assured stakeholders of the government’s commitment to workplace safety and urged employers and organisations to raise their standards in line with best practices, which he said would make Nigerian workers safer.
Speaking on behalf of organised labour, the National Treasurer of the Nigeria Labour Congress, Aliyu Haruna, described the Employees’ Compensation Act 2010 as “a landmark reform in Nigeria’s labour and social protection framework.”
“To ensure the Act fulfils its intended purpose, a coordinated and sustained approach is required—one that prioritises awareness creation, digitisation of claims processes, expansion of coverage, stronger enforcement, institutional capacity building, and firm political commitment at the federal, state, and local government levels,” Haruna said.
“Strengthening the ECA 2010 will not only reduce the socio-economic burden of workplace injuries and fatalities but also promote a national culture of safety, accountability, and social justice. Ultimately, the success of the Act depends on the collective commitment of government, employers, trade unions, and workers themselves,” he added.
The debate over the proposed levy increase comes at a time when Nigeria’s labour market is under significant strain. Inflation, currency devaluation, and rising energy costs have eroded purchasing power and squeezed profit margins across sectors. Many businesses, particularly small and medium-scale enterprises, have struggled to remain viable, with some scaling back operations or laying off staff.
Labour unions, on the other hand, have consistently argued that compensation levels under the Employees’ Compensation Act do not reflect the true cost of workplace fatalities and injuries. They point to cases where families of deceased workers receive settlements that are disproportionately low compared to the loss suffered, particularly when breadwinners are killed or permanently disabled.
The Employees’ Compensation Act, which replaced the outdated Workmen’s Compensation Act of 1987, was hailed as a progressive step toward modernising Nigeria’s social protection system. It introduced a no-fault liability principle, meaning workers are entitled to compensation regardless of who caused the accident, and established the Employees’ Compensation Fund to ensure timely and predictable payouts.
However, implementation challenges have persisted. Compliance remains patchy, particularly among private sector employers in the informal economy. Many workers, especially in unregistered or poorly regulated enterprises, remain outside the coverage of the scheme. There have also been complaints about delays in processing claims, inadequate awareness of the scheme among workers, and insufficient enforcement mechanisms.
The NSITF, which manages the fund, has faced scrutiny over its operational efficiency and accountability. Past investigations have raised questions about the management of contributions and the speed at which claims are settled. Efforts to digitalise the system and improve transparency are ongoing, but progress has been slow.
