Malawi set to establish Workers’ Compensation Fund, trains Board of Trustees

The Minister of Labour and Manpower Development, Agnes NyaLonje, has said the preparations are at an advanced stage to establish the long-awaited Workers’ Compensation Fund.

NyaLonje made the sentiments in Lilongwe on Monday when she officially opened an orientation workshop for the first cohort of the Trustees of the Board of the Workers’ Compensation Fund.

The European Union (EU) facilitated technical and financial support to the workshop through its Zantchito Skills for Jobs Programme.

NyaLonje disclosed that the Workers’ Compensation Fund had delayed to roll out because of lack of political will by the previous administrations.

“The reason this workshop has become necessary is that 24 years after the Workers’ Compensation Act was enacted, the Workers’ Compensation Fund has still not been established. Over the years, various reasons have been advanced to explain this failure to establish the Fund. However, when all is said and done, the 24 years of waiting for this Fund signify lack of political will. However, under the leadership of His Excellency Dr Lazarus McCarthy Chakwera, the Tonse Alliance Government is committed to establishing the Fund,” she said.

NyaLonje stated that Malawi is now the only country in the SADC region that is yet to set up an employment injury fund, a development she said advantages workers.

She also said the delay in setting up the fund has increased individual-employer liability system whereby each employer individually bears the burden of paying compensation in the form of a lump sum.

“The challenges that have been observed with individual-employer liability include failure or delays by employers to settle compensation claims, rising cases of fraudulent claims and related lawsuits against employers which are negatively impacting business and inadequate compensation for serious cases of permanent incapacity due to the provision of one-off lump sum payment that are inadequate for sustainable long-term support,” she narrated.

Among others, the Workers’ Compensation Fund is designed to address the foregoing challenges of individual-employer liability.

The Fund would require monthly contributions from employers to cover the cost of claims.

This will allow for the pooling of risks thereby moderating the impact of the risks on individual employers.

The Fund would make periodical payments to the injured for life in the case of permanent incapacity.

Employees would be assured of compensation even after the closure or winding up of a business as long as the employer had been contributing to the Fund.

The Fund would also have a prevention component to reduce the risk of accidents and contraction of occupational diseases. In this regard, studies have shown a positive correlation between investment in the health and safety of workers and productivity.

The Fund will be controlled largely by employers and workers and other stakeholders through you as Trustees of the Board.

Meanwhile, NyaLonje has emphasized the need for the Board to secure the buy-in of all stakeholders towards the establishment of the Fund, especially from employers who have to pay into the Fund.