The Industrial Training Fund (Amendment) Act 2011 was signed by the president on 3 June 2011 and recently gazetted but dated 22 June 2011. The amendment has a commencement date of 3 June 2011.
The key changes are:
- Minimum threshold for an employer to become liable under scheme has been reduced from 25 employees to a minimum of 5 or annual turnover of N50 million.
- Required contribution is 1% of payroll to be paid by the prescribed date defined in respect of year 2011 to mean a date not later than 3 months from the date of commencement of the amendment, that is, 3 September 2011; and in respect of every subsequent year, means a date not later than 1 April of the following year. “Payroll” has now been defined to mean the sum total of all basic pay allowances and other entitlements payable within and outside Nigeria to any employee in an establishment, public or private. “Employees” means all persons whether or not they are Nigerians employed in any establishment in return for salary, wages or other consideration, and whether employed full-time or part-time and includes temporary employees who work for periods of not less than thirty days (previously 3 months in a year).
- Maximum refund now 50% (previously 60%) of the amount paid by an employer subject to the training programme of the employer being in accordance with the Fund’s reimbursement schemes.
- Action for recovery of contributions under the Act may now be instituted by agents of the Fund on behalf of the Director-General. Contributions include underpayment and any interest or penalty payable for late payment.
The changes introduced appear to focus on generating more revenue for the Fund rather than ensuring that the objectives for which the Fund was established are met. The reduction of refund to 50% is discouraging, one would have expected that with growing number of employers now required to contribute, the total fund available to the ITF should increase and therefore no justification for a reduction in percentage refund. Also, making employers with 5 employees or N50 million turnover liable under the Act is putting unnecessary burden on micro businesses. The punitive section which imposes a penalty of 5% for each month or part of a month on outstanding contribution should have been amended to be moderate and in line with best practice.
The Guidelines for refund claim under the ITF are cumbersome making it difficult for most employers to derive any benefit from the scheme. The new changes effectively mean that employers will have to pay more and get less.