The deadline to pay your 2022 training contributions and file your training policy with the office of the Industrial Training Fund (ITF or “the fund”) is fast approaching. Many businesses are exposed to penalties for non-compliance due to the lack of information on the functionality and operations of the ITF. This article provides detailed information on how the fund operates and functions to ensure that your business is fully compliant and, at the same time, reaps the benefits that are available.
Whose duty is it to remit the ITF?
Every employer having 25 or more employees is required to remit 1 percent (1%) of its total annual payroll not later than the 31st of March every year. “Employees” in the Industrial Training Fund Act are defined as Nigerians or non-Nigerians who work for more than 30 days in a single calendar year on a full-time or part-time basis in return for a salary, wages, or other consideration, as the case may be. Furthermore, the definition of “payroll” in the Industrial Training Fund Acts means the sum total of all basic pay allowances and other entitlements payable within and outside Nigeria to any employee in an establishment, public or private. Businesses with fewer than 25 employees are not mandated to contribute training funds to the ITF.
Contribution to the Fund
Every employer having 25 or more employees in its establishment shall, in respect of each calendar year, contribute 1 percent (1%) of its total annual payroll.
Any supplier, contractor, or consultant bidding on soliciting contracts, businesses, goods, and services from any Federal Government Ministry, Department, Agency, Commercial, Industrial and Private entity shall fulfill the statutory obligation of its employees for payment of training contribution to the Fund. Companies that are registered in any of the free trade zones in Nigeria are now exempt from contributing to the ITF.
Penalties for Non-Compliance
Failure to Provide Adequate (Documented) Training: An employer that fails to provide adequate training for their indigenous employees or fails to accept students for industrial attachment purposes is liable on conviction to a fine of N500,000 for the first breach and N1,000,000 for each subsequent breach for a body corporate. While for the principal officers (e.g., chief executive, secretary) of the company that are found guilty, such officers are liable to a fine of N50,000 or two years imprisonment for a first breach and two years imprisonment without an option of fine for each subsequent year. This also applies to the provision of false/incorrect returns or information.
Failure to Contribute to the Fund;
Penalties for Non-Compliance with the Industrial Training Fund Act
| Penalty | ||
| Reason | Body Corporate | Princial Officers (Individuals) |
| Failure to train indigenous employees, accept students for industrial attachment purposes or provision of false/incorrect returns or information. | N500,000 for the first breach and N1,000,000 for each subsequent breach | N50,000 or two years imprisonment for a first breach and two years imprisonment without an option of fine for each subsequent year. |
| Failure to contribute to the fund | Outstanding contribution plus a 5% monthly fine on the unpaid amount |
An employer who fails to contribute to the fund within the stipulated period is liable to pay the outstanding contribution plus a penalty of 5% of the unpaid amount for each month of default. Below is a table summarizing the penalties that apply to defaulters:
Did you know that you can be reimbursed for up to 50% of your ITF contributions? Attached to this document is a detailed article that highlights the steps for obtaining your ITF contribution refunds.
Conclusion
We encourage any employer who is mandated under the law to make contributions to the ITF to strictly adhere to the provisions of the Industrial Training Fund Act and remit such contributions to the appropriate authority on or before the 1st of April 2022 to avoid being penalized. Employers who have complied with the ITF Act by making their contributions can process and obtain their compliance certificate. We at Taxaide are available to assist you with your registration with the ITF, remittance of training contributions, processing of a compliance certificate, and ITF contribution reimbursements.
