Why Employees’ Compensation Scheme Is Undermined In Nigeria – Trust Fund

The Nigeria Social Insurance Trust Fund (NSITF) has identified persistent non-compliance, outsourcing of labour and weak enforcement mechanisms as major obstacles undermining effective implementation of the Employees’ Compensation Scheme (ECS) within Nigeria’s oil and gas industry.

Speaking on behalf of the NSITF managing-director, Oluwaseun Faleye, the general-manager for the Abuja region, Bridget Ashang, outlined these concerns while addressing participants at the LACAN Annual Labour Conference in Abuja.

She said enforcement of the Employees’ Compensation Act (ECA) 2010 remained one of the Fund’s toughest challenges, despite the law’s clear provisions on employer obligations to insure workers against occupational risks.

Ashang noted that some high-profit operators in the oil and gas sector continue to evade their statutory responsibility to register and remit ECS contributions, often hiding behind complex joint venture structures or offshore contracts.

She added that the growing trend of outsourcing and casualisation had further complicated accountability for workers’ safety and compensation, leaving many injured employees stranded between contractors and subcontractors.

“The oil and gas sector, which drives our economy, operates in some of the most hazardous environments, yet, enforcement reveals recurring lapses in safety protocols, poor hazard reporting, and limited awareness of the law among both employers and workers,” she said.

According to her, weak penalties for default and a prevailing low-compliance culture have discouraged adherence, while hard-to-reach offshore locations also hinder effective monitoring by inspectors.

The NSITF, she explained, has adopted several measures to strengthen compliance, including the digitalisation of registration and remittance processes, enhanced inspection of employer records, and closer collaboration with regulatory bodies such as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Ministry of Labour and Employment.

Other initiatives, she noted, include the establishment of a service delivery centre in Bonny, simplified claims processing, and increased stakeholder sensitisation in the oil and gas subsector.

She, however, stressed that greater institutional cooperation and stronger legal backing were essential to achieving full enforcement.

She said, “Despite the clarity of the law, enforcement within the oil and gas industry remains one of the most challenging frontiers for the NSITF. We confront, daily, the paradox of high-profit enterprises operating within low-compliance culture when it comes to social protection.

Many operators – particularly in the upstream and servicing sub-sectors, have yet to fully comply with the statutory obligation to remit ECS contributions. Some invoke complex joint venture structures or “offshore” contracting arrangements to evade registration.

“A troubling trend is the outsourcing of labour and casualisation, practices that fragment employment relationships and obscure employer liability.

“A worker may wear the logo of one multinational, draw wages from another, and have his contract held by a third. When injury occurs, responsibility becomes a hot potato passed between hands, while the injured languishes”.

Proposed reforms, she said, include stiffer penalties for defaulters, integration of labour data systems across agencies, and mandatory ECS clearance as a prerequisite for oil and gas contracts and renewals.