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The Federal Government has pledged to reverse deductions from the Employees’ Compensation Scheme managed by the Nigeria Social Insurance Trust Fund, to ease tensions with the Nigeria Labour Congress, following the threat of a nationwide strike by the union.

Last week, the NLC accused the Federal Government of diverting 40 per cent of NSITF contributions to the government’s treasury. The NLC said the move undermined workers’ social protection and demanded both an immediate refund and the full reconstitution of the National Pension Commission board. It warned that non-compliance could trigger industrial action nationwide.

The Employees’ Compensation Scheme is a social insurance programme providing financial support to employees who suffer work-related injuries, illnesses, disabilities, or death. The scheme is funded entirely by employer contributions, typically around one per cent of monthly payroll, with no contributions required from employees.

In a letter to the NLC dated August 16, 2025, NSITF Managing Director Oluwaseun Faleye confirmed that deductions from workers’ compensation contributions had occurred but said they were not a diversion of funds. The letter, seen by The PUNCH, was also sent to the Ministers of Labour and Finance, the Director-General of the Budget Office, and the Accountant-General of the Federation.

Faleye said the deductions followed a federal policy introduced in December 2023 requiring all government-owned enterprises to remit half of their internally generated revenue to the treasury. The policy, issued by the Minister of Finance and Coordinating Minister of the Economy Wale Edun, was designed to boost government revenue and narrow a widening fiscal deficit, reflecting a fiscal strategy strongly championed by President Bola Tinubu.

Recall that the Federal Ministry of Finance circular (Ref: FMFCME/OTHERS/IGR/CFR/21/2021) dated December 28, 2023, introduced a policy of automatic deduction of 50 per cent from the internally generated revenue of all Federal Government-owned enterprises,” Faleye detailed in the letter.

NLC’s reaction

The labour union acknowledged receipt of NSITF’s letter but said its executive council will review the correspondence before deciding on the proposed strike, Assistant General Secretary Christopher Onyeka told The PUNCH.

Onyeka described NSITF as a tripartite agency jointly owned by workers, employers, and the government and argued that it should not be treated as a revenue-generating body.

“The contributions to NSITF are intended to compensate workers in the event of injury. They are not government revenue and should not be used for fiscal purposes,” he said.

“Depleting these funds would compromise the agency’s ability to support workers when required. It is anomalous for the Ministry of Finance to classify NSITF as a revenue-generating entity.”

The union noted that the deductions began under the current administration and said letters were sent to the Ministry of Finance and NSITF over a month ago. The union received a response on Saturday. “Protecting these funds is our responsibility,” Onyeka added.

Meanwhile, reacting to allegations that NSITF was seeking to amend the Employees’ Compensation Act in a way that could undermine workers’ rights, Faleye said the agency’s proposals were aimed at improving enforcement, not weakening protections.

As an organisation seeking to enhance its operational efficiency, we have engaged with the National Assembly through our annual retreats, attended by other tripartite stakeholders. At those retreats, we made suggestions and recommendations to members of the National Assembly, which we believe will further enhance compliance with the Employees’ Compensation Scheme,” the agency stated.

One of those recommendations, among others, is the need to give NSITF more powers to enforce compliance with the ECA on defaulting employers. This recommendation will better enhance and protect workers’ rights rather than undermine them.

The executive added that any further legislative action rests with the National Assembly. “As an organisation, it is not within our purview to make laws or stop the process of an amendment of any act by the National Assembly. That power resides solely with the legislature. On our part, we have resolved to engage the process at the appropriate time during stakeholders’ engagement exercises for such amendments, and we will advise all stakeholders to also engage appropriately so we can have an inclusive law when completed,” Faleye said.

PenCom Governing Board

The NLC had also raised concerns over the non-constitution of the PenCom, describing the situation as a serious breach of the law that could undermine oversight of workers’ retirement savings.

In a statement issued last week by its Central Working Committee, the NLC said the absence of a fully constituted board contravenes the PenCom Act and other relevant statutes. The union warned that the current vacuum allows the federal government to exercise unilateral control over pension funds contributed by workers and employers, weakening statutory tripartite oversight and increasing the risk of mismanagement and political interference.

“The NLC notes with grave concern the non-constitution of the Governing Board of PenCom, in contravention of the PenCom Act and other statutes. This unlawful vacuum has allowed the government to solely superintend over the pension funds contributed by workers and employers, stripping away the statutory tripartite oversight and increasing the risk of mismanagement and political interference,” the statement said.

The labour union stressed that pension funds represent deferred wages for workers, not government revenue, and called for immediate action to restore proper governance. “We demand the immediate constitution of the PenCom Board in full compliance with the law,” the NLC added.