Updated: Nov 1, 2021
The perception that labour is cheap in Sierra Leone must be from people who are either not employers or not fully compliant with the requirements of the laws affecting labour. The national minimum wage was increased by 20% to Le600,000 last year, when most organisations were struggling with the effects of the COVID-19 pandemic. In addition, employers pay mandatory allowances such as transport, rent and leave allowance, medical expenses, end-of-service benefits, employer’s liability insurance and contribute towards social security (NASSIT).
In September 2020, the Services Trade Group published a gazette increasing allowances and benefits for employees, which would have adversely impacted organisations within the public, security, education and service sectors, (I)NGOs and domestic employers, with an estimated 5,000 job losses in the security sector alone. Implementation of the gazette was effective March 2020, six months prior. Several groups of employers held meetings with the Ministry of Labour and Social Security, Sierra Leone Labour Congress, and Sierra Leone Employers Federation, and the negotiating council has been advised to go back to the negotiating table.
A minimum wage employee in the public utilities trade group would cost an employer a minimum of Le1,372,917 monthly, broken down as follows:
Basic salary Le 650,000
Annual leave allowance Le 97,500
End-of-service benefits Le 135,417 (55 working days' pay for each year up to 5 years)
Non-accident bonus Le 5,000 (for Drivers who are accident-free throughout the year)
Rent allowance Le 200,000
Transport allowance Le 220,000
NASSIT contribution Le 65,000
In addition, the employee would be entitled to:
(i) annual leave of 28 working days + 2 days travelling time each way
(ii) bereavement support to the next of kin of a deceased staff of Le800,000
(iii) funeral expenses if a worker dies in active service
(iv) canteen services
(v) up to 10 working days of leave on urgent private affairs
(vi) dirty work allowance (if eligible)
(vii) 13 weeks’ maternity leave
(viii) full medical scheme (or the equivalent in Leones)
(ix) overtime at time and a half of basic pay
(x) protective clothing and safety devices (for employees who work in high-risk occupations)
(xi) workmen's compensation, for injuries resulting from accidents (employers are required to obtain employer's liability insurance annually to cover this payment)
In cases of redundancy, the employer is obligated to make the following payments:
(i) a minimum of 45 working days pay for each year of completed service
(ii) end-of-service benefits
(iii) proportionate leave pay and leave allowance
Employment in Sierra Leone is mainly governed by the Regulation of Wages and Industrial Relations Act 1971, Collective Bargaining Agreements for various Trade Groups, the Employers and Employed Act 1961 and its 1962 amendment, NASSIT Act 2001 and the Income Tax Act 2000 and its amendments in the annual Financial Acts.
Section 36 of the Finance Act 2016 imposed a national health insurance levy at a rate of 0.5% on the value of all contracts relating to the supply of goods and services in support of the “Free Health Care Programme”. Deductions are paid to National Revenue Authority. However, employers are still required to cover employees’ medical bills as they are not part of any “Free Health Care Programme”.
The long-awaited Sierra Leone Social Health Insurance Scheme (SLeSHI), launched in 2018, but yet to be implemented, will soon be upon us, and even though details of how the scheme will be operated have not yet been made public, my guess is that this scheme is likely going to be an additional burden on employers.
The Private Sector
The private sector in Sierra Leone consists of only a few large organisations, with the vast majority of businesses being small and, in many cases, informal, and focused on a handful of sectors: agriculture, tourism; mining, fishing, a small manufacturing sector; and services. Over 95 percent of workers in Sierra Leone are self-employed, and over 59 percent of these work in subsistence agriculture.
Sierra Leone has an emerging “corporate” sector, a cadre of small to medium, and growing companies that are positioned to accelerate growth. These are typically owner-managed, innovative, value-driven and usually in the service sector (including IT, import/export, logistics, fashion, human resources, travel). These legitimate private sector operators have found space to operate in areas not crowded out by vested interests or susceptible to patronage. However, the numerous challenges of doing business such as bribery and corruption, lengthy and tedious processes, lack of information, limited access to affordable finance, limited skilled employees and the high cost of employment make it difficult for these companies to grow.
Kill four birds with one stone
NASSIT has been managing the country’s national pension scheme since its enactment in 2001, and it’s not without its challenges. Employers contribute 10% of each employee’s basic salary to the scheme monthly with employees contributing 5% and employees who meet set criteria are subsequently able to claim pension and certain benefits from the scheme. From an employer’s perspective, NASSIT seems quite organised for the most part, but it would be good for NASSIT to embrace technology so there is a choice of an online self-service system in addition to their manual operations.
Section 22 of the Insurance Act 2016 states “An Employer who employs more than five persons shall take out Employer’s Liability Insurance in respect of the Employees”, to enable payment of medical expenses and compensation should there be an accident or incident.
Each Trade Group’s Collective Bargaining Agreement prescribes payment of end-of-service benefits to employees who have worked continuously for the employer for a period of one year of more. Depending on the Trade Group and length of service, employers can pay up to 80 days’ pay for each year worked, adding up to hundreds of millions for one employee. In some agreements, it states that it should only be paid in the absence of an existing pension scheme, and some agreements only cover employees who contribute union fees, but payment has become the norm in order to avoid long drawn out battles with the Ministry of Labour and Social Security.
Medical bills for employees and their dependants are the responsibility of the employer, and depending on the Trade Group, it could be a monthly payment, Medicare, insurance for outpatient, inpatient, surgery or a combination.
I wonder why NASSIT is not responsible for all these payments under the same contributory scheme they manage?
How would it work?
In my opinion, mandatory payment of leave allowance and end-of-service benefits is unfair to the employer and I do not see the justification for it. Employers can use funds for private pension schemes or provident funds as part of their employee retention strategies, or for reward and recognition schemes.
However, I believe that if citizens have been unemployed for a period and have no substantial income, they should be able to claim benefits if they meet set criteria.
With regards to Workmen’s compensation, medical insurance and pension, it does not have to be one size fits all. NASSIT should conduct assessments and come up with contributions for employers and employees based on income, risk, current health and/or other factors.
Ultimately, citizens/ employees want a better standard of living; employers want to reduce cost, increase profit, grow their companies’ assets and invest in recruiting and retaining the right talent, Government wants to reduce poverty, provide services for its citizens and grow its economy and NASSIT wants to grow its funds to enable it to pay fair benefits to citizens.
In this situation, with critical thinking and collective effort, I believe everyone can be a winner.
 Business Environment Reform Diagnostic – Sierra Leone, March 2017
[1st photo: Dulce Services painting JobSearch's office building; 2nd photo: Rehabilitation of Wilberforce Road/ King Street]