Employers ask government to suspend NSSF, PAYE

Grounded. People walk to work on Hoima Road after government banned public transport on March 26. Photo by Abubaker Lubowa 

In Summary

• Plea. Workers say they are struggling to keep their businesses afloat during the lockdown and want the payments halted until the situation stabilises.
• However, she warned that companies which need the relief must notify NSSF indicating that the lockdown has affected their businesses and are unable to make their contributions.

By PATIENCE AHIMBISIBWE

Employers and workers through their associations have asked government to differ collection of Pay As You Earn (PAYE), National Social Security Fund (NSSF) and Value Added Tax (VAT) to enable them go through the lockdown that has seen most businesses temporarily close.

Mr Douglas Opio, the Federation of Uganda Employers (FUE) executive secretary, yesterday said most employers were struggling to keep their businesses afloat during the lockdown and want government to intervene by suspending PAYE, NSSF and VAT payments until the situation stabilises.

“Some employers have started telling their employees to temporarily stay at home because there is no work. The situation is not looking good. Unless we take some strong measures, especially from the side of government, employers will not be able to continue,” Mr Opio said yesterday.

He added: “NSSF has already agreed with employers to differ payment for three months so that they don’t pay immediately. That will reduce the wage bill cost. But if government could delay to recover PAYE and VAT as well, it would allow employers to continue employing people. But if those things are not possible, we will reach a limit where you can’t continue to employ when you are not making any money.”

His concerns were echoed by the workers represented by Mr Usher Wilson Owere, the chairman general National Organisation of Trade Unions (Notu). The NSSF communications officer, Ms Barbra Arimi, yesterday said starting March 31, they allowed companies not to remit their contributions for three months without attracting penalties to enable them stabilise.

However, she warned that companies which need the relief must notify NSSF indicating that the lockdown has affected their businesses and are unable to make their contributions.

In a notice to employers, Mr Richard Byarugaba, the NSSF managing director, said seven sectors have so far been affected by the lockdown and the immediate aftermath of Covid-19 has seen 33 per cent of them failing to pay their contributions which is likely to worsen if the crisis continues.

NSSF estimates that about 6,800 employers will be affected by this pandemic.

The affected companies mainly fall in seven sectors of education, recreation, accommodation, food, trade, transport, storage, real estate and construction; human health and social work, manufacturing and mining; agriculture, forestry and fishing.

“The decision is informed by the fact that some employers are already grappling with cash flows stemming from limited consumer demand and disruption in the supply chain. Employers in the category mentioned are expected to agree with the Fund on the payment schedule after which they will sign a deed of settlement. This is because employers will still have an obligation to pay their contributions for their employees,” Mr Byarugaba wrote.

By law, employers contribute 10 per cent of the employee’s salary monthly towards NSSF in addition to the worker’s contribution of five per cent as their mandatory future savings.

In addition, government collects 30 per cent per month from every employee’s salary as PAYE to support it’s programmes.

Although employers welcomed the NSSF relief measure, Mr Opio said it should be extended for at least six months since it’s still unclear when the pandemic will end to allow businesses operate normally.

Efforts to reach the Minister of Finance, Mr Matia Kasaija, were futile as he was chairing a meeting.
The Finance ministry spokesperson, Mr Jim Mugunga said: “We are aware of various commentary and opinions expressed by various, stakeholders and Covid-19 impacted persons and organisations. The Ministry of Finance initially announced interim interventions which are continuously being reevaluated.”

“I am aware that the minister has been engaging some of the stakeholders and interest groups and is working with partners and the executive to finalise an exhaustive detailed paper which may address the current challenges and avail relief measures where possible.”

He added: “No government worldwide has been able to deal with all impacts resulting from this emergency but incrementally (just like others have done) we assess and address critical ones within available means as may be prioritised.”

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