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Why special NSSF contributions cannot be claimed on exit
A man holds a bundle of cash. PHOTO /Edgar R. Batte
What you need to know:
This article highlights the key social security compliance concerns that the IOCs and their contractors should consider as they mobilise expatriates for Uganda’s oil development stage
Managing social security compliance for expatriates in the oil and gas sector is a common challenge. It is even more pronounced for the oilfield companies executing the actual project works on behalf of the International Oil Companies (“IOCs”).
These entities are many times several months or years behind compliance. It is usually costly streamlining compliance unless the underlying social security issues are treated correctly from the very beginning. This article therefore, highlights the key social security compliance concerns that the IOCs and their contractors should consider as they mobilise expatriates for Uganda’s oil development stage.
Expatriates in oil and gas
A significant portion of technical manpower in Uganda’s oil and gas industry especially at the construction stage will be rotators. These are also known as commuters. Rotators are employees who work in remote oilfield locations on a fixed rotational work schedule. These rotators who are internationally drawn are critical to the operational success of the oilfield service companies.
The working schedule of rotators is characterised by an equal number of days on work and off for rest. Rotators can be on a 28/28 days schedule or otherwise as determined by their employer. This means they are at their remote workplace site for 28 days and also take off an equal number of days to rest. Rotators normally return to their home countries in this period of rest but they continue to draw a salary during this duration.
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There will also be other expatriates working for the IOCs and contractors. Unlike rotators that largely concentrate on field service operations and return to their home countries during their off days, these expatriates will have a fixed regular schedule of deployment in Uganda.
Contributing employers must remit standard and special contributions to the Fund in respect of their employees. A standard contribution of 15 percent of the eligible employees’ wages must be made to the Fund within 15 days next following the last day of the month the relevant wages are paid.
Contributing employers must also make a special contribution equivalent to 10 percent of the ineligible employees’ wages to the Fund within 15 days following the last day of the month the relevant wages are paid. This contribution is wholly incurred by the employer.
Special contributions
But while special contributions are credited to the NSSF reserve account, standard contributions are reflected on the member’s account. This means that special contributions cannot be claimed as a benefit by an employee/member on exit from the fund while standard contributions can.
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Though the NSSF Act contains provisions for reciprocity of social security arrangements, we are not aware that these have been operationalised.
The transferability and portability of social security benefits to their home country schemes when expatriates are emigrating from Uganda is currently not possible though there are efforts benefits to their home country schemes when expatriates are emigrating from Uganda is currently not possible though there are efforts amongst East African Community countries to effect this. It would also be fair given that secondments are usually short term that expatriates unlock their entire contribution to the Fund at emigration regardless of the number of years they have contributed to the NSSF.
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Currently, expatriates can only claim 5 percent benefit representing their own contribution to the Fund unless they have been members to the Fund for four or more years in which case they would also be entitled to the employers 10% contribution.
Contributions
NSSF contributions for expatriates
All contributing employers must make special or standard contributions to the NSSF in respect of all expatriate workers unless specifically exempted.
The quantum of contribution and whether the expatriate can claim their social security contributions on emigration from Uganda depends on whether the expatriate in question is an eligible or ineligible employee for NSSF purposes.
An expatriate is an eligible employee and therefore registerable as a member of the Fund if he/she is resident in Uganda. The NSSF Act defines a non-resident person as an employee not ordinarily resident in Uganda who is to be employed in Uganda for a continuous period of not more than 3 years or such longer period as is allowed in any particular case. The Act does not define “not ordinarily resident in Uganda’. So we take this to imply someone who has come to Uganda for a limited period of time specifically for work and who will return to their home abroad at the end of this period.
A resident expatriate is eligible for membership to the NSSF while a non-resident is ineligible. The NSSF does not strictly enforce the above criteria and expatriates are actually registered as eligible members of the Fund even if they are to stay and work in Uganda for a period of less than three years.
The author is the managing partner at Cristal Advocates.
