Statutory Obligations Of Every Employer You Need To Know

by Strategic Outsourcing Limited September 10, 2020, 1:14 pm

Statutory Obligations Of Every Employer You Need To Know

Statutory Obligations Of Every Employer You Need To Know

The dream of every employee is to work in a company that provides a healthy environment for him or her to express his or her skills, an open-door policy that fosters growth, communication, and learning, and a system that appreciates genuine efforts. For the government, the desire is for companies and organizations that operate as socially responsible entities and comply with tax regulations at all levels. But, for any employer, the ultimate dream would be for a set of loyal employees who would discharge their obligations at all times to help the organization achieve its goals and objectives.

Nonetheless, when it comes to the proper working of an organization, employees are certainly not the only ones with obligations; the employer is saddled with the onerous task of performing certain cardinal duties which are crucial to ensuring that the business is steered in the right direction and that it is free enough to operate equitably and profitably. In developed climes, employer obligations are well spelt out to serve as a guideline for labour laws. Although this varies from country to country, and some organizations improvise by adding their touch, generally, there are established watchdogs that provide some sort of monitoring to ensure conformity with the code.

While the trend in developing countries favours little or no enforcement of employer obligations to employees, though this tends to hurt the organization in the long run, government regulatory agencies do not take it kindly with organizations that default in meeting their statutory obligations to the government, and this in many cases sees business organizations being levied with criminal charges and substantial penalties. In Nigeria, this scenario is even buoyed by a recent concerted effort by the federal government to grow internally generated revenue to shore up its non-oil revenues, basically made up of the Companies Income Tax, Value Added Tax, Customs and Excise Duties, Tax Amnesty, Joint Ventures, Various Recoveries, etc.

Tax evasion, non-payment of pension, unfair wages, favouritism, and an unhealthy work environment top the list of malpractices engaged in by some employers in Nigeria. Usually, this anomaly is attributable to several reasons. But it must be noted that no responsible business establishment that knows its onions would want to be found wanting in any of these areas, as these do not make for good business in the long run.

Just as business enterprises and employers are obligated to government, chiefly in the area of taxes, in the spirit of fairness, they are also obligated to their employees in many ways, which serve to ensure that the employees are as comfortable as they can be while discharging their duties. It cannot be overstated that an employee who feels at ease and feels appreciated will do more to add to the profitability of the business.

Tax and Pension Obligations

An employer in Nigeria is obligated to pay its company tax, value-added taxes, and other accruable taxes. Since Nigeria adopts a Pay-As-You-Earn (PAYE) system in calculating the personal income tax of employees, the employer is also obligated to accurately remit all taxes on employees' incomes. This is called PAYE tax. This tax rate progresses from 7 percent to 24 percent of taxable income. Then, under the Pension Reform Act 2014 (PRA 2014), which repeals the Pension Reform Act 2004, and governs/regulates the administration of the contributory pension scheme in Nigeria, the employer is obligated to make a certain monthly contribution for all employees. 

Though this is wrong, some organizations often perceive taxes and pensions as an undue burden and do everything to evade this obligation. But the fact remains that if an employer sees the high risk of being audited and punished with a substantial penalty, they would be less likely to consider any form of tax evasion.

Other Obligations

Other obligations of employers as highlighted in the global labour practise guidelines include:

Duty to pay and compensate the employee for work done as agreed in the employment contract 

The employer must pay the worker the agreed salary or wage as and when due. In Africa, a lot of employees still suffer under tyrannical employers who owe them for months without remorse. They are forced to still come to work and if they refuse, they face the threat of losing their job, without hope of ever getting paid their owed salaries.

Suitable and Safe Work Environment

The employer should provide a suitable working environment that will be free from any form of hazard or risk.

Correct Information About Employee Rights and Duties 

The employer must provide the employee with the needed information about his role, duty, and rights. The United States and other developed countries list this as a core duty, which an employer must perform.

Giving Ear To Complaints and Allowing Freedom of Expression

An employer is expected to give his employees the freedom to express themselves without pressure or having to worry about losing their jobs. It is advised that complaint boxes be installed so employees who wish to remain anonymous can express themselves. This promotes unity and freedom of expression and creates an avenue to enhance the employee-employer relationship. 

Protection at Work/ Work Safety Training

Oil firms and tech companies spend huge on security to keep their staff safe, as they must protect their members of staff while at work or on official duty. Other businesses are also obligated to do so. An employer is also obligated to provide the employee with the necessary work safety training to prevent work-related accidents. 

Paid leave 

Whether it is maternity leave, annual leave, or stipulated casual leaves, an employee is entitled to it. It is the sole duty of the employer to ensure that his employee gets his leave as and when due. Currently, there is a debate in most business sectors around Africa as to whether male employees should be allowed to go on paternity leave. It is widely argued that men don't need the leave, since they are not the ones nursing the child. But proponents of the idea argue that men should also enjoy a break from work to spend time with their babies too.

Compensation In The Event Of Work-Related Accidents

Employers are expected to compensate workers who are involved in work-related accidents while at work or on work assignments. It is standard practice for employers to make such compensations to avoid sanctions from regulatory authorities and unnecessary lawsuits that could cost them heavily.

Fair Wages In Tune With The Standard Minimum Wage

An employer is mandated to pay the employee a fair wage for his efforts. The wage must be in line with the set labour regulations and must not be below the recommended minimum wage.

Abiding and Keeping to Contractual Terms

An employer is expected to keep his part of the employee's employment contract. All requirements and provisions made in the contract must be kept, as breaking any of such might warrant the employee to press charges against the company. 

Fair Termination Of Employment As Laid Down In Labour Laws 

An employer shouldn't fire an employee without probable cause. Doing this can have adverse implications. If an employer must disengage an employee from his service without probable cause, he must honour and keep to the contractual terms. 

Fair Treatment Irrespective Of Gender, Religion, Tribe, Race Or Political Beliefs

The employer must under no circumstances victimize an employee or allow such because of his beliefs, roots, or affiliations, as that will be classified as discrimination, which is an offense. The employer must ensure that employees feel comfortable in the work environment, without criticisms on things relating to their personal lives, as long as these do not affect the discharge of duties.


While compromising some of these obligations could, in the long run, have severe implications for a company’s bottom line, the effect of undermining a company’s tax obligations can be seen in the immediate.

Apart from fines and criminal charges that could result, such compromises exert sundry effects on economic growth. While tax evasion could seem to increase the number of resources accumulated by entrepreneurs, it certainly reduces the government’s capacity to render public services. As this portends negative consequences for economic growth, certainly, no responsible organization would want to toe that path.

However, due to the complexity of the structure of tax systems, some organizations tend to evade taxes, not knowing that it has graver implications for their outcomes. That is why outsourcing the handling of your taxes and pensions to professional payroll managers is highly recommended. 

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