adminargued that by forcing businesses to pay outstanding debts, the two authorities were accelerating the rate at which businesses were closing shop.
Where NSSA is concerned, the money owed would be for national pension fund contributions and Workers’ Compensation Insurance Fund premiums.
Monthly contributions to both are modest. The Workers’ Compensation Insurance Fund premium varies from 1,26 percent to 2,4 percent of an employee’s salary, depending on the industrial sector.
An employer’s contribution to the pension fund is 3 percent of each employee’s basic income up to a maximum insurable income of US$200 per month.
That means that the maximum pension fund contribution from the employer is only US$6 per employee. It would be less than that for employees earning below US$200 per month.
That’s not a huge amount of money if paid each month. The employer is also expected to deduct from each employee’s wage or salary three percent of the employee’s basic income up to a maximum insurable income level of US$200 per month.
Again this means the highest deduction at present is US$6 per month. Altogether every employer is expected to remit to NSSA each month a maximum combined employer and employee contribution of US$12 per employee, half of which will have been deducted from the employee’s pay.
Again that is not a huge amount of money, if paid each month. The problem comes when employers, either for cash flow reasons or through negligence, fail to remit the contributions each month to NSSA.
As with any bills left unpaid, with time the amount owed increases each month until it reaches levels that are considerable and difficult to pay.
It is then that payment of arrears might threaten an organisation’s viability. When contributions are not remitted at the correct time, which is by the 10th day of the month following the month in which employees’ pension contributions are deducted from their wages, then the employer may be tempted to utilise the employees’ contributions for some other purpose.
This amount to misappropriation since the money belongs to the employees, who accepted its being deducted from their wages in the belief that it would be paid to NSSA and contribute to their well-being when they come to retire.
If employers have allowed their own contributions arrears to the pension fund to accumulate they would be in breach of the law and their legal responsibilities.
They could perhaps argue that they have not been making enough money to be able to contribute, however small the amounts involved each month may be.
However, there surely can be little excuse for being unable to pay to NSSA the money they have deducted from their employees’ wages.
Those deductions would constitute half of the pension fund money that they owed, excluding any penalties.
It is inadequate for an employer to say that the money was only deducted on paper.
The deduction was an amount that the employee would have been entitled to had it not been deducted as a national pension fund contribution.
If the employer has accumulated substantial arrears to the pension fund over a lengthy period and is unable to pay at least half of those arrears, then that would suggest that the employees’ contributions have been used for some other purpose.
In other words, they have been misappropriated or, to use a somewhat harsher term, stolen. That money belonged to the employee, who allowed it to be deducted in the belief that it was being paid to NSSA.
By failing to make the monthly payments to NSSA as required, employers are acting illegally, possibly jeopardising their employees’ retirement benefits and leaving their employees without the Workers’ Compensation insurance cover necessary to compensate them in the event that they are injured at work or contract a work-related illness.
The Workers’ Compensation Insurance has benefits for the employer as well, since the employer could be held directly liable for compensation to an injured worker if there is no statutory insurance cover due to non-payment of premiums.
The best way to avoid garnishing orders from NSSA is for employers to make their payments each month for the benefit of their employees.
In that way they can avoid these modest monthly payments building up into substantial arrears that then become difficult to clear.
l Talking Social Security is published weekly by the National Social Security Authority as a public service. There is also now a weekly radio programme, PaMhepo neNSSA/Emoyeni le NSSA, discussing social security issues every Thursday at 6.50 pm on Radio Zimbabwe. Readers can e-mail issues they would like dealt with in this column to [email protected] or text them to 0735 041 278. Those with individual queries should contact their local NSSA office or telephone NSSA on (04)-706517-8 or 706523-5.
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