Now that we have “Tier I and Tier II” in National Social Security Fund (NSSF) contributions, I need clarity on an issue. Does this mean an employee in the formal industry is not entitled to a 15-day Employment Service Award?
Please remember that every organisation has policies originating from national laws to take care of its operations and employees. It is, therefore, important to underscore why laws are formulated. The intention is to create order by providing opportunities to people and for institutions to enhance harmony in the workplace.
The National Social Security Fund Act has several objects that contextualise this assertion. First, it provides basic social security for its members and dependants for various contingencies. To achieve this goal, it seeks to increase membership coverage of the Social Security Scheme while improving the adequacy of benefits paid by the fund.
Further, it provides full opt-out at the Tier II level of contributions for employers who have or are contributing to pension schemes approved and registered by the Retirement Benefits Authority. This also brings self-employed persons within the NSSF Act to access social security for themselves and their dependants.
According to Section 2 of the Employment Act (2007), this law expects anyone with a contract of service, often in what you refer to as formal industry, to the equivalence stating an agreement. Such an agreement can either be oral or written. It can also be expressed unequivocally or implied, indicating to employ or to serve as an employee for a period of time, which may also include a contract of apprenticeship and indentured learnership but does not include a foreign contract of service to which Part XI of the Act applies.
With regard to the employment service award, it is given and can be inferred to apply for any form of termination of work, except summary dismissal, including retirement, in Section 40 (1-g) of the Employment Act. The law says no termination or redundancy can be affected by an employer, not unless they can pay the affected employee severance pay of not less than 15 days for each completed year of service.
This Section of the Employment Act must be read together with Section 35 (5), which provides that an employee whose contract of service has been terminated under subsection (1)(c) shall be entitled to service pay for every year worked, the terms of which shall be fixed however, as paragraph 6 of this Section indicates the aforementioned provisions not to apply to employees who are members of the following. One, a registered pension or provident fund scheme under the Retirement Benefits Act, a gratuity or service pay scheme established under a collective agreement, any other scheme established and operated by an employer whose terms are more favourable than those of the service pay scheme established under the NSSF Act. This is in addition to the national social security fund if the terms are inferior to what the scheme provides. Retirement Benefits Authority defines a Retirement Benefits Scheme as any scheme or arrangement (other than a contract for life assurance) whether established by a written law for the time being in force or by any other instrument under which persons are entitled to benefits in the form of payments or post-retirement medical cover.
This is determined by age, length of service, amount of earnings or otherwise and payable primarily upon retirement, or death, termination of service, or occurrence of such other event as may be specified in such written law or other instrument.
Under Tier I, a percentage of the employee’s salary is mandatory and within the terms set in a contract of service and their employers. This tier has rates fixed by the government, which the employers match employees’ contributions, and focuses on basic retirement benefits.
Tier II, on the other hand, is voluntary. The purpose of tier II is to enable individuals to enhance their social security coverage through the extra funds. Note that Tier II does not replace Tier I; it only complements.
Maurice, it is upon you to review the terms of your contract and relate it with the organisational policy, mainly to find out whether there are provisions that align with the sections mentioned in this text that are found in the Employment Act, the NSSF Act, and Retirement Benefits Act.
