Rwanda: Insurers Petition Supreme Court Over Minimum Wage

Local insurance companies have filed a public litigation case at Supreme Court in which they contest the lack of minimum wage, arguing that such a situation is against public interests as well as threatens the profitability of the insurers.

The petitioners filed the case through Rwanda Insurers' Association (ASSAR) - which brings together 14 locally registered insurance firms - and the government, through the Ministry of Public Service and Labour is the respondent.

The case came up for mention on Tuesday, May 19 and the insurance companies fault government for failure to set a minimum wage as prescribed by the law, for which it should be held answerable.

In addition, they say that the legal vacuum can result in employee exploitation by their employers.

The 2018 law regulating labour in Rwanda 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.

Minimum wage is the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or individual contract, according to the International Labour Organization (ILO).

Two lawyers representing ASSAR in the case, Emmanuel Butare and Claudine Umugwaneza, argue that lack of minimum wage has existed for years and that the absence of the ministerial order has created a legal vacuum whereby compensations for accident damages have no legal basis.

They cited a 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, which had no rationale.

The Supreme Court ruling involved a case in which an accident victim was seeking compensation from an insurance firm.

Senior State Attorney Speciose Kabibi representing the government said that she does not see a problem that was caused by absence of the minimum wage, or how it was adversely affecting the interest of the public.

"And there is no legal vacuum. The Supreme Court moved to determine the minimum amount to compensate a victim, and that is used pending the minimum wage determined by the Ministerial order," she said.

Judges asked the ASSAR lawyers what they critisise about the minimum amount set by the Supreme Court, or if they find it unfavourable to the public's interest.

The lawyers replied that the ruling was not effectively responding to the issue of lack of minimum wage.

"In the verdict, the judge set an amount that is not the minimum wage set by the law. We need a minimum wage based on categories of occupations and determined by an institution with requisite expertise in labour matter, which is MIFOTRA," said Umugwaneza.

Marc Rugenera, the Managing Director of Radiant Insurance Company and member of ASSAR who was present in court, said that such amount is high for a person who is [formally] unemployed.

"The Supreme Court tried a case in 2016 and decided that for a person who does not have a formal employment, when they die from an accident, they are allocated Rwf3,000 as daily indemnities. That is Rwf90,000 per month, Rwf1.8 million a year," he said, stressing that this was unrealistic.

"When a victim dies aged 20, indemnities are calculated with view that they would go into retirement at 65, then the Rwf1.8 million is multiplied by the estimated 45 years of work, making it Rwf81 million that has to be covered by the insurer," he indicated.

"That means that a teacher who gets Rwf30,000 per month, will get compensation based on such pay, while a person with no job, will get Rwf90,000 per month, which is unfairly higher," he said.

'Friend of court'

Meanwhile, University of Rwanda's School of Law, which appeared in the case as an amicus curiae - a 'friend of the court' was represented by two of its faculty staff, lecturers Leonard Sebucensha, and Jean-Baptiste Serugo.

The dons said that government should not be pressured by insurers to set minimum wage which they said is an important thing that concerns all Rwandans.

"The modern best way to set a minimum wage is through a balanced approach whereby the government has to have consultations with all concerned players in the labour sector including the employees and employers," Sebucensha said.

He said that he does not see how ASSAR as the association of insurers is advocating for the interest of the public.

"Insurance company protects its own interests and those of its affiliates. It is not worried about the interests of all Rwandans," he said.

"The court decision of 2016 put Rwf3,000 as a minimum amount to be given to a victim of an [insured automobile] accident. Unless ASSAR is arguing that such money is little and it wants it raised, we see no need for their case," he expressed.

The Supreme Court judges said that the ruling on the admissibility of the petition will be rendered on June 19, 2020, at 9 am.

The ruling by the judges will determine whether or not the case can proceed in substance.

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