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NATIONAL INSURANCE SCHEME
THINGS YOU SHOULD KNOW
REVISED 2003
The National Insurance Scheme Things You Should Know gives general guidance only and must not be treated as a complete and authoritative statement of law on any particular issue.
CONTENTS
Part I
Part II
Part III
Monthly Payment Turnaround Documents
Part IV
Certified Records of Employees Earnings
Part V
Information Relating to Payment of Contributions
Part VI
Part VII
Part VIII
Returns to be made at the end of Year
Part IX
INTRODUCTION
The purpose of this Guide is to assist employers in understanding their obligations under the National Insurance Act and Regulations and to instill in all employers that sense of responsibility which is essential if the National Insurance Scheme is to run smoothly.
The National Insurance legislation places a considerable amount of responsibility on employers because they are the ones most capable of handling that responsibility. The following rules, if closely followed by employers, will allow them to handle their responsibility with a lot more ease.
ii. Register as an employer;
iii. Ensure that all employees are registered at the National Insurance Office;
iv. Pay contributions for each employee according to the rates set out in the National Insurance Regulations;
v. Keep proper records of wages and salaries paid to employees and of the contributions deducted;
vi. Promptly return Form C5 to the National Insurance Office on a monthly basis;
vii. Apply promptly for documentation pertaining to registration;
viii. Keep all NIS documents in a safe place;
ix. All necessary documents must be promptly returned to the National Insurance Office on the cessation of employment of an employee;
x. Return all end of year documents to the National Insurance Office when requested, and exchange them at the end of the year, after the insured person has signed;
xi. Co-operate with officers of the National Insurance Scheme who are always willing to offer you assistance.
PART I
REGISTRATION OF EMPLOYERS
All employers - whether individuals, partnerships, companies or corporations are required to register with the National Insurance Office in order to obtain a registration number.
The employer must submit an Application For Registration as an Employer Form (Form R3). In stating the "Nature of Business" the employer should state the type of economic activity in which he/she is engaged. If there is more than one type of business activity, show only the major activity. On completion of the Registration Form (R3) Limited Liability companies/corporations are required to attach a certificate of Incorporation with Articles of Association and Registration certificate. In the case of an individual/sole trader or group of persons which do not fall under the above-mentioned categories, registration forms must be accompanied by a Traders License wherever applicable. The employer will be notified by the National Insurance Office of the registration number which was assigned to him/her.
PART II
REGISTRATION OF EMPLOYEES
Who is an employee?
In this guide an employee or employed person means:
· Anyone in receipt of wages not less than the minimum insurable earnings of $15.00 per week or $60.00 per month.
- Under a contract of service, even if the employment is casual, part time or temporary Who is between the ages of 16 and 60 years who are working for an employer. For the purpose of Employment Injury Benefit all workers (including those under 16 and those over 60) should be registered.
There are minor exceptions to these stipulations. These exceptions include:
i. Employment of a casual nature in which the person concerned is engaged only to an inconsiderable extent and the wages in any week from the employer amount to less than $15.00;
ii. Employment without pecuniary remuneration by the employee's father, mother, grand-father, grand-mother, step-father, step-mother, son, daughter, grand-son, granddaughter, sister, half-brother, or half-sister;
iii. Employment of any person who is not a citizen of Saint Vincent and the Grenadines who in his official capacity is accorded diplomatic or equivalent status;
iv. Employment or service of any person who is not a citizen of Saint Vincent and the Grenadines as a member of the armed forces of any country other than Saint Vincent and the Grenadines.
v. Employment otherwise than as a domestic worker of any person who is not a citizen of Saint Vincent and the Grenadines by an International Government organisation which is recognised by the Government of Saint Vincent and the Grenadines;
vi. Employment of a married woman whether or not under a contract of service, by or as partner of, or in similar association with, her husband (i.e. she must be engaged in the business for not less than 16 hours in a contribution week).
The National Insurance Board has the power to hand down decisions on questions concerning:
a. Whether a person is or was employed in insurable employment
b. The class or category of insured persons in which a person is to be included
c. Who is liable for payment of contributions as the employer of any insured person.
The decisions handed down by the Board on the above questions shall be final except on a point of law, in which case an appeal can be made to the High Court.
Employers are responsible for ensuring that an application for registration in respect of each of their employees is completed on the appropriate form (Form R1/R1B). The forms are supplied by the National Insurance Office.
Although employees already registered under the National Provident Fund Act (No 1. of 1970) shall be treated as registered under the National Insurance Act, employees are still to ensure that such persons employed with them complete the application for registration forms. Employees already registered under the National Provident Fund Act will continue to use the same registration numbers which were assigned to them under that Act.
PART III
MONTHLY PAYMENT TURNAROUND
DOCUMENTS - FORMS C5 AND FORMS C2
With effect from January 1995 a new turnaround document has been introduced as part of the payment procedure.
Payments should still be made on the monthly remittance forms (forms C2). However, the completed form C5 should be returned to the office at the time when a payment is made. Employers with weekly paid workers and monthly paid workers should submit two separate sets of form C5. The names and earnings of weekly paid workers should be recorded on one set of form C5 and the names and earnings of monthly paid workers should be recorded on the other set. Employers must ensure that all sections on the form C5 are completed. The payment should normally be made within one month after the end of the preceding month. Employers desirous of submitting a computerised listing should consult with the National Insurance Scheme Office for clearance on the format of the listing.
PART IV
CERTIFIED RECORDS OF EMPLOYEES EARNINGS
Documents to record employees’ earnings are issued from the National Insurance Office to employers in respect of each employed person. For each employed person who is duly registered, a document will be issued in respect of that person to his/her employer. Employers shall be held responsible for the safekeeping of these documents while they remain in their custody.
When a person, who is already in possession of a registration card and in respect of whom a record of employee's earnings has already been issued to a previous employer, becomes employed in another establishment, the new employer shall forthwith obtain a new record of employee's earnings in respect of that employed person, by making application on the appropriate form to the National Insurance Office for such a record.
When a person changes employment, his/her record of employee's earnings should be returned to the National Insurance Office within seven (7) days of his/her changing employment. The new employer should apply for a new record of employee's earnings. These records of employees’ earnings are not transferable from one employer to another.
Employers are required to maintain wages records of wages paid to their employees. This is in addition to maintaining the individual records of employees’ earnings. Each payday the employer shall enter on the appropriate line of the record of each employee in insurable earnings (i.e. earnings on which contributions are paid) and the total amount of National Insurance contributions payable. For employees who are paid monthly, only monthly payments should be entered on the line marked "Total", but the weeks that the employee worked should be indicated by a tick on the line next to the appropriate week. For employees paid fortnightly, their wages should be converted to a weekly basis by simple proportion, and then such converted wages and the contributions relating to those wages should be entered on the line for the appropriate week. At the end of the month the employer should total the earnings and the contributions for the weeks in the month.
A record of employees' earnings shall be current for a contribution year, provided that the person in respect of whom it was issued remains with the same employer for that entire year. A "Contribution Year" means the period of 52 or 53 weeks beginning with the first Monday in any calendar year and ending on the Sunday immediately before the first Monday of the succeeding calendar year.
All employers shall, before the 31st January of each year, return to the National Insurance Office, all records of employees earnings in respect of all employed persons for the preceding contribution year. However, within four (4) weeks before the end of December of the current year, employers shall ensure that their employees sign their records and insert their present addresses in the respective places provided for these purposes on the records. New records will be issued to employers in respect of their workers for the new contribution year.
In cases where employment is terminated by an employee without notice to his/her employer, his/her record should be returned to the National Insurance Office within fourteen (14) days of cessation of the employment. The record should show the date on which employment ended, the employee's last address and should be signed by the employee if possible.
Records of employees' earnings are valuable and employers should always keep them in a safe place. These records should not be defaced or in any way be tampered with. Loss or damage of records of employee’s earnings should be reported promptly to the National Insurance Office.
Every employer having custody of records of employees’ earnings in respect of employed persons shall permit such persons to inspect their records. This does not entitle employed persons to inspect their records more than once in any one month.
Whenever a record is requested by the National Insurance Office from an employer, that employer should return the record to the office promptly. This will facilitate the speedy processing of claims for benefits among other things.
Employers should remember that records of employees’ earnings remain the property of the National Insurance Board.
PART V
INFORMATION RELATING TO PAYMENT OF CONTRIBUTIONS
The employer will be responsible for the payment of the full contribution in respect of each of his employees. He/She is entitled, however, to recover the employee's part of the contribution by deductions from his/her wages. The employer is required to pay the total amount of both employer's and employee's contribution for all persons employed by him/her to the National Insurance Office. This payment is to be made at the end of the month in which wages are paid or within one month thereafter and must be accompanied by a remittance form (Form C2) and a monthly turnaround document (Form C5) which are obtainable from the National Insurance Office. Payment may be made by post or in person at the National Insurance Office.
It is illegal for any employer to recover or attempt to recover the employer's part of the contribution from the employee. Such action constitutes an offence under the Act.
Contributions made to the National Insurance Office by employers and employees shall be regarded as allowable deductions for tax purposes.
Where an employed person is employed successively or concurrently in a contribution week or part of a contribution week by more than one employer, each employer is liable to pay the National Insurance Office contributions with respect to the wages paid by him to that person.
Any contribution paid under the erroneous belief that it was payable, is refundable on an application to the National Insurance Office.
A contribution is payable for the full week in which the employee attains age 16 or 60. However, if the 60th birthday falls on Monday no contribution is payable for that week. The employer will still be held liable for the payment of contributions for any period during which an employee is on vacation and receiving wages.
A contribution is not payable for any week the whole of which the employed person receives sickness or maternity benefit. In cases where the employee is absent from work on account of illness or for maternity purposes and is not entitled under the Scheme to sickness or maternity benefit, but continues to receive salary, the employer should continue to pay contributions as usual.
If the employer fails to pay any contribution which he is liable to pay into the Scheme for any month, or he pays an amount which the Director has reasonable cause to believe is less than the employer should pay for any month, the Director shall request a written return from the employer showing the name of every employed person to whom he made any payment of wages in the period from the preceding first day of January, to the month previous to the one in question.
The return will also show particulars regarding the insurable earnings and contributions payable in respect of each employed person.
If an employer fails to pay contribution within the prescribed time, he shall be liable to pay into the Scheme a surcharge equivalent to 10% of the amount of contribution outstanding for the particular month, and for every month or part of a month that the contribution remains outstanding the employer shall be liable for paying compound interest of 1%.
Where an employee works under the general control and management of a person other than his immediate employer, that person (called the "Principal" employer) shall be regarded as the employer liable to pay contributions. The immediate employer will be expected to furnish the principal employer with particulars of the employee's wages to enable the principal employer to comply with the provisions of the Act and Regulations -
PART VI
RATES OF CONTRIBUTION
The total rate of contribution is 6% of insurable earnings. Of this total rate the employer pays 3.5% and the employee pays 2.5%. Insurable earnings will correspond to all earnings up to $45,240 per year or $3,770 per month or $870 per week.
The earnings of an employed person on which contributions are payable shall include salaries/wages, as well as:
(a) Overtime payment
(b) Payment for night or shift work
(c) Arrears on salary
(d) Holiday pay
PART VII
NATIONAL INSURANCE INSPECTOR
An inspector is an officer of the National Insurance Scheme designated and appointed by the National Insurance Board to carry out the task of ensuring that all persons comply with the National Insurance Act and Regulations.
The National Insurance Act gives an Inspector the power to enter at all reasonable times any premises or place where he has reasonable cause to believe that persons are employed, and to make any examination or inquiry which is necessary for him to ascertain whether the provisions of the National Insurance legislation are being or have been complied with.
An employer or his agent whenever called upon to do so by an Inspector, shall supply such information with respect to persons who are or have been employed by him and shall produce all wages sheets, contributions documents and any other records of wages as may be requested by the Inspector.
Every Inspector will be supplied with a certificate of his appointment and on applying for admission to any premises or place he is expected to produce the certificate. Employers should examine an Inspector's Certificate of Appointment before delivering up to him records of employees’ earnings or any other document of the NIS.
Anyone who:
a. Willfully delays or obstructs an Inspector in the exercise of any of his/her powers; or
b. Refuses or neglects to answer any question or to furnish any information or produce any documents when required to do so is liable on summary conviction to a fine not exceeding $750.00 or to imprisonment for a term not exceeding six months or to both fine and imprisonment.
NB
In the absence of the employer or his agent, occupier of the premises or place liable to inspection any person acting for the employer or his agent, shall furnish the inspector with such information and produce such documents as an inspector may reasonably require in order to carryout his functions.
PART VIII
RETURNS TO BE MADE AT END OF YEAR
Apart from the records of employee's earnings which employers must return to the National Insurance Office at the end of the year, they must also submit to the office, on the appropriate form prescribed, an End of Year Return (Form C4) for the recently concluded year, in respect of all employed persons.
All information requested on this return must be given as fully and correctly as possible. The prescribed form will be available at the National Insurance Office.
In addition to the End of Year Return a declaration and statement signed by the employer must also be returned. This declaration and statement will form part of the same document as the return. Where an employer is a body corporate, society or other body of persons, the declaration and statement shall be signed by a person duly authorised to do so.
PART IX
GENERAL
Employers will realise that the National Insurance Legislation places considerable responsibility on them. This responsibility will, however, be easily discharged if the simple rules outlined below are followed:
a. Pay contributions promptly (on a monthly basis).
b. Submit the fully completed turnaround document (Form C5), monthly remittance documents (Form C2) each month.
c. Submit certified records of employee's earnings promptly when an employee's service is terminated.
d. Co-operate with officials of the National Insurance Office, who are willing at all time to render you assistance.
e. Inform the office of any change in the name of the business, any change in address of the business preferably in writing.
f. Kindly inform the office in the event that the business is closed or wound up (preferably in writing).
g. In cases where an employee is injured on the job the employer is required to submit a written report within 10 days to the National Insurance Office explaining the nature of the injury.
h. Submit original documents only.