The government is seeking to revise the way accident compensation is calculated especially for victims with no verifiable income through a new bill aimed at improving protections for informal workers. According to the draft law on accident compensation, it is calculated based on a tax-free income cap – which is Rwf60,000 a month or Rwf2,000 per day, under the current income tax law. It was tabled in Parliament on Wednesday, June 11 by Godfrey Kabera, the Minister of State for National Treasury at the Ministry of Finance and Economic Planning. In an explanatory note of the bill, the government stated that the proposal is addressing the rate of Rwf3,000 per day – or Rwf90,000 per month – which was set by the Supreme Court in 2016 as the minimum wage to be considered for the calculation of such compensation. It indicated that insurers considered the Supreme Court rate a very high amount and argued that it was negatively affecting the sustainability of their business. ALSO READ: Insurers petition Supreme Court over minimum wage While explaining the relevance of the bill to lawmakers, Kabera pointed out that the compensation covers the potential years of employment – between the age of 16 years and retirement. “The law proposes that compensation for an accident victim who cannot provide proof of income will be based on a reference amount equivalent to the tax-exempt income, which is Rwf60,000 per month. This amount will be used as the standard for calculating compensation for individuals aged 16 up to the retirement age of 65,” he said. Parliament approved the relevance of the bill, which will later be scrutinised by a responsible committee before being voted into law. ALSO READ: Over 165,000 set to get income tax relief Background to the debate In 2020, insurance companies petitioned the Supreme Court, contesting the lack of minimum wage and arguing that such the situation was against public interests as well as threatens the profitability of the insurers. The petitioners filed the case through Rwanda Insurers’ Association (ASSAR) and the government, through the Ministry of Public Service and Labour, was the respondent in the case. Insurance companies faulted the government for failure to set a minimum wage as provided for by the 2018 law regulating labour in Rwanda - which stipulates that a ministerial order by the minister in charge of labour should be published to determine the minimum wage based on categories of occupations. The minimum wage has not been set thus far. ALSO READ: Supreme Court dismisses insurers’ minimum wage petition In addition, insurers said that the legal vacuum can result in employee exploitation by their employers. Their lawyers argued that lack of the legally determined minimum wage created a legal vacuum whereby compensations for accident damages have no legal basis. They cited the 2016 decision by the Supreme Court in which a judge set Rwf3,000 as the amount of money to be generally considered the daily compensation for a victim of an accident. The Supreme Court ruling involved a case in which an accident victim was seeking compensation from an insurance firm.
