EMPLOYERS play a crucial role in ensuring that their employee’s welfare is assured, especially in regards to retirement savings. As such, it is important that all employers understand their responsibility towards those that work for them.
This article, provides employers (and members alike) a general information of employers’ obligations including the importance of submitting contribution schedule forms and payment on time. This article will also outline penalties for non-compliance.
The fund continues to create awareness and to roll out initiatives to assist employers with their duties and obligations. FNPF has conducted employer workshops throughout Fiji and will continue to engage them to bridge information gaps related to the use of the employer online portal.
FNPF has also implemented a series of penalty waivers to encourage employers to update their payment schedules and submit pending contribution schedule forms.
However, it is the employer’s duty to be vigilant and to realise the critical role it plays in the betterment of our members future.
The two most common setbacks we face from employers are:
Contribution schedule and
payment
* Late submission, inaccurate and incomplete, unreconciled or the lack of communication of payroll changes which leads to an increase in unidentified contributions.
* Lack of understanding of employer responsibility — resulting in incomplete members’ (employees) demographic details (name, date of birth, etc) being submitted to FNPF, the definition of wages and the due date of the contribution schedule (remittance statement).
Below is a scenario we face with employers who are non-compliant and are assumingly, unaware of their FNPF responsibilities as an employer.
Scenario
The FNPF legal team have prosecuted a number of employers because of non-payment of contributions for their employees.
Complaints received through the FNPF employers compliance team against these employers, initiated the investigative process. Recovery of non-payment of contributions from these employers were unsuccessful.
The matter was then referred to the FNPF legal team to recover the contributions, which was done through the issuance of bench warrants and court orders.
If found guilty, these company directors will either have to pay what’s owed or face jail time.
The fund has legal powers to prosecute employers and directors for non-payment of FNPF contributions.
Higher penalties and imprisonment terms are prescribed for fraudulent conversion of workers’ wages by the employers, which happens when contributions are deducted from employees’ wages without being paid to FNPF.
Who is an employer?
As stipulated in the FNPF Act, an employer is:
a) a person(s) with whom the employee entered into a contract or arrangement with and has a place of business in Fiji
b) the owner of the vessel or aircraft
c) the Government
d) his or her master
e) a person with whom the employee enters into a contract or arrangement with
f) principal and contractor (FNPF Act Section 33 (1)) this refers to a person (the principal) who employs another person (the contractor) to carry out work under an agreement (the contract). Even though the contractor may not be a registered employer under the FNPF Act but, seeing as FNPF contributions will need to be paid on behalf of the employees who carried out the work the principal and contractor will be recognised as the employer and held liable to pay.
What are wages?
The Act defines wages as all amounts payable in money to the employee by his or her employer in respect of the period under the relevant contract of employment ignoring deductions and withholdings.
Wages do not include amounts payable to the employee by way of reimbursement for amounts that the employee has paid or is liable to pay, in connection with the employment.
Effective on January 1, 2006 contribution is calculated from the first day of employment. Calculation of FNPF mandatory contributions is based on employees “gross wages” inclusive of:
a) Allowances (excluding meal and subsistence);
b) Bonuses;
c) Commission; and
d) Overtime.
Core responsibilities
The following are basic responsibilities that employers must abide by:
1. Register all employees within one month from commencement of employment;
2. Remit all employees monthly contribution;
3. Submit contribution schedule forms (last working day of the month);
4. Make and maintain FNPF record of all employees information, wages record, remittance statement for seven years; and
5. To notify FNPF on any changes to the information details of a registered employer within three months after the change (Section 17 (1) FNPF Regulation).
Failure to comply with these laws, will incur penalties, not exceeding 50 penalty units or imprisonment for a term not exceeding six months or both. Note: 1: Penalty Unit is $100
Submission of contribution schedule (CS) and payment employers must pay FNPF on employees
The employer’s share of contribution is calculated and deducted on the time of payments of wages which may be weekly, fortnightly and monthly. The amount must be rounded to the nearest cent and if cash payments, amount paid to be rounded up to the nearest 5 cents.
If an employer fails to pay, in full, the contributions for a particular month required by law, the employer is liable to:
i) pay $100 for each employee;
ii) be issued a Departure Prohibition Order restricting the person from travelling outside Fiji;
iii) Criminal or Civil Legal Proceedings against the Person under the Crimes Decree 2009;
iv) be prosecuted under the Act or former Law; and
v) be issued a garnishee order.
Offences & penalties
Through amendments to the FNPF Act in 2011, the fund has implemented harsher penalties as a form of deterrent for employers. Effective November 1, 2014, these penalties came into force.
Liability of directors
Directors of companies shall be responsible and personally liable for any unpaid compulsory or additional contribution.
If a company that becomes insolvent or is liquidated owes an amount as mandated or additional contribution or surcharge under the former law, each person who was a director of the company at the time it became insolvent or was liquidated shall be personally liable for such amount.
For clarification on any information in this article please email Emp_TL@fnpf.com.fj.
