Employment law in Nigeria is not founded on the provisions of a single statute. Rather, it is dispersed in different legislation that, together provide the framework. While there is an unsettled discussion as to whether the Labour Act (LA) extends beyond unskilled and manual workers, it nonetheless remains the governing law for labour matters.
Nigerian law allows freedom of contract in upholding and binding employers and employees to their agreements. There are also various statutory provisions of which parties must take cognisance when contracting. Laws regulating pensions and tax, for instance, are not within the scope of contractual freedom; their provisions are mandatory.
Section 20 of the Trade Dispute Act (TDA)2 establishes a specialised court, the National Industrial Court of Nigeria (NICN), with exclusive responsibility for handling employment-related disputes; the Constitution of the Federal Republic of Nigeria 1999, as amended (CFRN)3 further endorses the NICN’s authority and jurisdiction. The Industrial Arbitration Panel (IAP) also set up by the TDA is responsible for settling any dispute referred to it by the Minister of Labour and Productivity (the Minister). Any objection to an IAP award is taken before the NICN. Appeals from the NICN lie as of right to the Court of Appeal on questions of fundamental rights contained in Chapter IV of the CFRN, in relation to matters under its jurisdiction.4
II Year In Review
Sole proprietorship remains attractive to the Nigerian populace in view of the mismatch between the rate of unemployment and availability of paid employment. Statistics reveal that in terms of the age distribution of owners of such enterprises, 91.56 per cent are aged 36 and above, while the 15–35 age group accounts for 6.95 per cent.5 An analysis of 4,312 formal sector establishments in a Nigerian Social Statistics Report produced by the National Bureau of Statistics in the first quarter of 2015 shows the dominant business structures in Nigeria:6
Private limited liability
Public limited liabilities
The 2016 Report presents a rundown of industrial dispute cases that were decided on (i.e., a final judgment was made) in 2016. A plethora of cases fall under wrongful or unlawful termination matters, with few issues of trade union disputes.7 In 2004, there were 36 disputes; this increased to 189 in 2006, and almost 300 in 2008. In 2004, 26 of the disputes led to strike actions, compared with 93 in 2008. A total of 127,377 workers were involved in the disputes of 2004, whereas in 2008, a total of 868,907 workers went on strike. Overall, 2.63 million working days were lost in 2004, compared with 8.97 million in 2008. Community, social and personal services recorded the highest number of disputes at 231,067.8 A number of employment-related disputes relate to trade unions and collective bargaining agreements (CBAs), discussing whether they are mandatory and raising issues touching on their enforcement.
III SIGNIFICANT CASES
i Trade dispute
By its ruling on an ex parte application for injunctive orders filed by the federal government of Nigeria, the NICN intervened to avert an imminent planned nationwide industrial action that would have had a colossal impact on the nation’s economy. This is the substance of the decision rendered in The Federal Government of Nigeria & Anor v. Nigeria Labour Congress & Anor.9 In this case,10 Kanyip J recognised the rights of unionised workers to call out for a strike action, but added that these rights are ‘subject to the condition that public servants exercising authority in the name of the State and workers in essential services in the strict sense of the term, i.e., services whose interruption could endanger the life, personal safety or health of the whole or part of the population, are excluded.’
ii Enforceability of contractual restrictions on freedom to conduct business
In three recent cases, restraint of trade has been carefully examined by the NICN. In Studio Press (Nigeria) Plc v. Garnesh Kadoor & Anor,11 a restraint-of-trade clause restricting the activities of an employee for upward of two years after termination of employment was held enforceable. The former employee was held liable in damages and was consequently restrained from continuing in his employment with his new employer (sued as second defendant); the employer was similarly held liable for having induced the breach of the trade restriction covenant with the claimant until the end of the covenant period. Interestingly, in the case The La Casera Company v. Mr Prahlad Kottappurath Gangadharan,12 by reason of the peculiar fact-situation therein, offered a diametrically opposed conclusion. A trade-restraint clause restraining the employee ‘in perpetuity from accepting any job in the same or similar field for a period of 5 (five) years after termination of contract, and thereafter . . . from working for competing companies in Nigeria, i.e., companies in beverages, soft drinks, and table water industry’ was declared to be unenforceable, against public policy, and null and void. Finally, in what is a markedly different viewpoint from its 2015 decision of Overland v. Captain Jam,13 the NICN in Overland Airways Limited v. Captain Joseph Gamra & Anor14 held that contracts in restraint of trade are distinguishable from training bonds. On the enforceability of the latter, the court maintained that the practice of executing training bonds is generally enforceable, but becomes unenforceable when such bonds are proven to be penalty bonds (that is, excessive stipulated damages).
iii New dispensation in labour and employment matters
The compensatory damages regime for dealing with the complaint of an employee whom the court has found to have been unfairly relieved of his or her employment has been the subject of sustained analysis in some of the cases decided by the Industrial Court (the Court) in 2016. Olufemi Amodu v. Epesok Paper Mill Ltd 15 was a seminal judgment in which the Court pointed out that the old dispensation of cases, which insists on the measure of damages resulting from termination or dismissal being restricted to payment in lieu of notice, typifies the stance of common law on the matter, which is not necessarily the case today. Relying on the applicable provisions of its enabling law, and Section 254C of the Third Alteration to the 1999 Constitution, as amended, the court confirmed that the ‘Court may . . . where necessary make any appropriate order, including . . . an award of compensation or damages in any circumstances contemplated by this Act or any Act of the National Assembly dealing with any matter that the Court has jurisdiction to hear.’
The issue of jurisdiction to award substantial damages also came to the fore in Mr I N Orok v. Lagos University Teaching Hospital Management Board,16 where the Court awarded compensatory damages equivalent to two years’ salary to each of the claimants – the basis for compensation being that their salaries and entitlements, following the termination of their employments in 2000, had been withheld for a period of 16 years. Similarly, in Mrs Titilayo Akinsanya v. Coca-Cola Nigeria Limited & Anor 17 the Court, having found that the investigative process leading to the summary dismissal of the claimant was wrongful, awarded inter alia compensatory damages of one year’s gross salary to the claimant. The decision also emphasised a critical point, which is that for an employee to complain of the absence of a fair hearing during the disciplinary process leading to his or her termination or dismissal from work, the employee must have raised the absence of fair hearing during the disciplinary process, and not for the first time when an action is filed to challenge the termination of employment.
In Mrs Issey Celestina Akinlolu-Ojo v. United Bank for Africa,18 the court awarded damages in the region of seven figures to compensate harassment and humiliation in the workplace, while a wrongfully dismissed claimant was awarded a sum in damages of approximately six months’ salary in Mr Gabriel Ologun v. Benaiz Health Care Limited.19 In Mrs Jenny Edem & Ors v. The Nigerian Police Force & Ors,20 the defendants refused to pay to the claimants their late father’s death benefits, despite all the efforts the claimants made to claim their rightful payments. The court ordered the immediate payment (to the claimants) of the gratuity and other death benefits of the claimants’ late father, and also awarded general damages of 5 million naira to compensate for the untold hardship, trauma and financial hardship by the actions of the defendants. In Monday Udoh v. Reynolds Construction Company (Nig) Ltd,21 a poorly pleaded case on injury at the workplace, the Court nonetheless awarded reasonable compensatory damages to the injured worker.
It is, to give another example, equally relevant to note that the Court has also been exacting in its adherence to legal principles when deciding cases. Thus, in Hope Oluigbo v. George Best Auto Supply (Nig) Ltd,22 the injured claimant failed to give evidence to establish that the machine he was operating malfunctioned or that the defendant did not comply with the provisions of the Factories Act, thereby causing his injury. The Court thus held that the claimant, having failed to establish that he was injured by the wrongful act of the defendant, was not entitled to general damages. In what appears to be an obiter statement, the Court further noted that at any rate, the action was not instituted as an action in negligence or a statutory claim under the Employee Compensation Act 2010, with the result being that because of the way the action was founded, the claimant was denied any form of compensation for the injury he sustained in the workplace.
In Solomon Jude v. Nigeria Bottling Company Plc,23 the claimant lost a finger in an armed robbery attack in the course of attending to his duty out of station. He contended that the incident and the injury he sustained therefrom were a result of the defendant’s failure to keep to the terms of the condition of service, specifically, to provide him with accommodation in the new station to which he was transferred. The Court held that the injury resulted remotely from the defendant’s default. The claimant sought the sum of 90 million naira for the injury. The court held:
Only a finger was lost. Although he is entitled to compensation for the loss of his finger, this court considers the sum claimed as being rather unrealistic, considering that the missing finger does not prevent the claimant from using the hand as a whole. The effect of the lost finger to the productivity of the hand does not necessarily justify the sum of N90,000,000.00 claimed by the Claimant. From my assessment, the sum of N500,000.00 will be adequate compensation to the claimant.
There are other significant ways in which the NIC has continued to contribute to the development of a progressively evolving labour jurisprudence in 2016. The developments are recorded, variously, in the areas of workers’ protection and job security; workers’ participation with regard to the influence of labour on management decision making; courts’ reluctance to interfere with parties’ freedom of contract except, in accordance with the letters of the court’s enabling law, in deserving cases to protect a weaker party; increasing engagement with the employees as a pivotal factor of production; etc. A few of these will suffice to illustrate the foregoing.
In Nigeria Union of Railway Workers & Anor v. Nigeria Railway Corporation & Ors,24 the Court upheld the arguments of claimants regarding their right of first refusal to residential facilities they occupied (as part of their fringe benefits), to bid for and buy the affected properties before any such affected properties can be validly offered to the public to bid for and purchase. In Mrs Laeticia Ebhotemen v. Nigeria Social Insurance Trust Fund Management Board,25 the Court frowned at, and ruled as wrongful, the dismissal of a claimant who was dismissed for refusing to vacate a staff quarters legitimately allocated to and occupied by her. In Mr Adewale Aina v. Wema Bank Plc & Anor,26 the NICN again clarified the new position, finding that whether dismissal is earned or not, the new dispensation is that all earnings of an employee prior to the dismissal must be paid by the employer to such an employee. Still on the new dispensation of applying principles of fairness and equity to ameliorate the rigidity of old common law rules, collective agreements that are incorporated into contracts of service, the NICN reiterated in Mr Valentine Ikechukwu Chiazor v. Union Bank of Nigeria Plc,27 are, by the stated intent of the Third Alteration to the 1999 Constitution, enforceable and binding.
iv Drawing a convenient balance between two competing interests
The courts have shown reluctance to interfere unduly with workplace dynamics on the side of either party where it is inappropriate. Put simply, the business of the court is to protect the interests of both the employee and the employer, and in doing so, strike a balance to ensure that neither is met with harsh or otherwise unfair treatment at the hands of the other. This principle seems to have been well applied in the NICN’s case of James Adekunle Owulade v. Nigeria Agip Oil Company Limited,28 and its reverberations were felt in the area of employment law, specifically the regulation of employees’ retirement from service. The practice of retirement seems to have innocuously evolved its own set of principles, which are routinely adopted by the parties to an employment contract. Usually, upon the attainment of a particular age, or some other event that serves as a trigger, the employee is retired from the service of the employer, with whatever benefits are attendant upon the status and position held by said employee. It may appear slightly unusual to introduce a clause that gives an employer the option to invoke a mandatory ‘voluntary retirement’ in respect of a particular employee. However, whether the inclusion of such a clause or its subsequent invocation to determine the employment of an employee will amount to an unfair labour practice seems to be another question entirely. With reference to the foreign authorities, texts, etc., that were considered in the absence of local authority guidance on this point, it appears that ‘voluntary retirement’ is only exercisable at the choice of the employee. In the case at hand, both parties, by contract, reserved that right as one that was available to either of the parties. The company unilaterally exercised that right when the employee hit the ‘voluntary’ age of 55, even though the employee appeared insistent that he was capable of continuing to work until the mandatory retirement age of 60. The court held that the forced voluntary retirement by the employer (unilateral decision without consulting with or giving proper notice to the employee) was involuntary and, therefore, wrongful. Despite making the finding that this was indeed so, the court nonetheless found that, having taken full benefit of the salaries and retirement package, with attendant benefits, the claimant’s case could no longer be deemed deserving of the sought damages.
In Idono Omokenu & 60 Ors v. Unilever Nigeria Plc,29 the claimant, in the form of a representative action, sought relief against a common employer on various and varying terms of contract. The court had little trouble working through the pleadings and individual oaths submitted to find that the claimants had failed to establish any entitlement to the reliefs claimed. Ogbu Gabriel v. Enugu State University of Science and Technology 30 provides, inter alia, an unequivocal direction to employers and employees alike, that limitation law now applies to labour cases; and at that, even in cases relating to salary and other benefits, except ‘the test of continuance of damage or injury is won by the Claimant’. Similarly, in Mr Adegbola Simeon Ajose Energo Nigeria Limited 31 the court did not have any difficulty in coming to the conclusion that the claimant’s claim failed to ground a cause in the tort of negligence, and was premature as an action brought further to the provisions of the Employee’s Compensation Act 2010.
v Jurisdiction of the NICN
As in previous years, in 2016 the NICN has continued to expound on its strictly defined exclusive jurisdiction with regard to labour and employment disputes. In Zenith Bank Plc v. Mr Obaro Odeghe,32 the court restated that its jurisdiction is subject-matter based, and would accordingly not accommodate the claimant’s claims in respect of mortgage and personal loans that the claimant granted the defendant while he was still in its employment. Similarly, in Deborah Olubusayo Akinade v. Coretrust And Investment Limited 33 the NICN refused to adjudicate on the part of the claims said to be ‘within the realm of tax law and administration’. In Mr Ojeka John Ashibene v. Access Group of Schools,34 the NICN refused to accommodate a claim relating to tenancy issues, which, the judge rightly noted, had not been shown to be a condition of the claimant’s employment.
IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP
A bill amending the Labour Act (LA) is pending at the Nigerian National Assembly. If passed, it will limit the employment of workers on a casual or temporary basis to two years, requiring employers to convert casual workers to ‘permanent status’ after they have served two years as temporary staff,35 an issue that had been raised numerous times by unions.
i Employment relationship
An employer is required to provide an employee with a written employment contract within three months of the employee commencing his or her job. This must contain:
- a the employer’s name or group of employers;
- b the worker’s name, address, position and date of engagement;
- c the nature of the employment;
- d the date of expiry, if a fixed-term contract;
- e the notice period for termination;
- f wages, frequency of payment and method of calculation;
- g hours of work, holiday pay, and conditions for incapacity due to sickness and injury; and
- h special conditions of the contract.36
Signing of a contract is a general requirement to make it legally binding. The employee’s signature is relevant to signify acceptance of terms. Fixed-term contracts are permissible and must specify the above terms.
The LA allows parties to change or amend terms after execution, obliging the employer to inform the worker of the nature of the change by a written statement not more than one month after it is made.37 Where a copy of the statement is not left in the worker’s possession, he or she must be given reasonable access to it during the course of his or her employment.
ii Probationary periods
Probationary periods in employment contracts are permissible; the duration and length of notice to terminate during the period being subject to agreement between parties. Parties are free to waive the requirement of notice.38 Industry practice is usually for probation to last for three months.
iii Establishing a presence
For a foreign company to hire employees to carry on business in Nigeria, it must establish its presence39 by incorporation under the Companies and Allied Matters Act (CAMA)40. It cannot own a place of business before incorporation, except for receiving correspondence, notices and other documents preliminary to incorporation. CAMA41 empowers the National Council of Ministers, on application by a foreign company, to grant exemption from incorporation to a limited category.42
The Minister may license fit and proper persons to recruit citizens in Nigeria for employment outside Nigeria (for 12 months from the date of issue).43 An unincorporated company may engage an independent contractor strictly to carry out a specific task or contract and not to carry on any business in its favour. A joint venture agreement between a foreign company and an indigenous company would allow for employment of persons; with the local company (having legal status) hiring the employees.
The Personal Income Tax Act, as amended (PITA), obliges the employer to ensure monthly remittance of employees’ taxes. The Pension Reform Act 201444 (PRA) obliges the employer to make monthly deductions of a minimum of 8 per cent from its employees’ salaries and add an additional 10 per cent minimum contribution, and remit the same to the employees’ retirement savings accounts (RSA). The employer is also to maintain a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee and the premium shall be paid not later than the date of commencement of the cover.
V RESTRICTIVE COVENANTS
The position regarding restrictive covenants bears considerable resemblance to that in England. The courts apply a reasonableness test to determine whether or not to give effect to such clauses. The burden of proof for ‘reasonableness’ lies upon the party seeking to enforce it.
There is no express prohibition in Nigeria’s laws on incorporating restrictive covenants, which may have retrospective effect. An employer needs to be mindful of what proprietary interest it seeks to protect, as judicial trends appear to lean towards the employee. While the employers may have legitimate reasons for imposing restrictive covenants, they are often considered to inhibit competition and are liable to be struck down by the courts if held unreasonable.
The Nigerian legislature is considering an amendment to the CFRN which will, inter alia, divest the central government of its sole power to prescribe a national minimum wage. If passed, the central government and Nigeria’s 36 states will be at liberty to prescribe their own minimum wage.45
i Working time
Pursuant to the LA, normal working hours in any employment contract shall be fixed by agreement or any collective bargaining process within the organisation/industry; or by an industrial wages board (where there is no machinery for collective bargaining). The Act is silent on the duration of the actual working day which, in practice, is regulated by company policy. While determining the work hours, the statutory minimum for rest periods and leave46 need to be considered.
Aside from the LA’s provisions prohibiting employment of women for night work in a public or private industrial undertaking or any agricultural undertaking and young persons below the age of 16 (and over 16, with exceptions), there are no other such restrictions. The prohibition on the employment of women for night work47 does not extend to women employed as nurses or holding responsible positions, or management not ordinarily engaged in manual labour.
Overtime is defined under the LA as the hours an employee is required to work in excess of the normal fixed hours. While the LA does not categorise overtime work, it recognises work done in excess of agreed hours and contains time off (rest periods) or payment in lieu for worked hours. In practice, overtime wages are calculated on an hourly basis on par with the normal hourly rate of the worker and may differ per staff category.
While the Act is silent on a threshold for the actual amount of overtime hours an employee can undertake per month, the total number of working hours undertaken should fall within the permissive periods of leave and rest. The quantum of overtime wages falls within the purview of the contract and in practice the rate is determined by the employer’s internal policies.
VII FOREIGN WORKERS
A bill repealing all previous Immigration Acts was enacted into law in May 2015, revising the rules with respect to issuance of work permits and Expatriate Quotas,48 and imposing strict penalties on companies and foreign employees for non-compliance. The Act prohibits companies from employing a foreign national without the permission of the Director General of Immigration, unless the Minister of the Interior (the Minister) grants a waiver or exemption by notice.49 Persons entering Nigeria for business purposes must obtain the Minister’s consent.50
There is no mandatory requirement for an employer to maintain a register of foreign workers. However, by the Immigration Act (Control of Aliens) Regulations, all foreigners (having undergone legal formalities for residency) are to register their presence with the immigration offices closest to their place of residence within 21 days of arrival. Companies seeking to employ expatriates are to obtain a permit from the Nigerian Investment Promotion Commission. The expatriate quota (temporary or permanent until review), issued for two years and renewable thereafter, determines the number of foreign workers the employer may have. Further requirements include a disclosure of the provision to be made for repatriation of such expatriate and his or her dependants (if any).
The visa to be applied for is determined by the intended duration of employment. Experts invited to perform a specialised job for a short period would ordinarily apply for a temporary work permit. Those wishing to reside in Nigeria permanently would require a ‘subject to regularisation’ visa and subsequently, a combined expatriate residence permit and aliens card. Foreigners working in Nigeria are subject to immigration approvals, controls, permissions and permits.
The legislation regulating tax matters for individuals is the PITA.51 A company is to remit tax on behalf of its foreign employees where the employer is in Nigeria or has a fixed base in Nigeria; or where the duties of the employment are wholly or partly performed in Nigeria, unless:
- a the duties are performed on behalf of an employer in a country other than Nigeria and the remuneration of the employee is not borne by a fixed base of the employer in Nigeria;
- b the employee is not in Nigeria for a period or periods amounting to an aggregate of 183 days (inclusive of annual leave or temporary period of absence) or more in any 12-month period; and
- c the remuneration of the employee is liable to tax in that other country under the provisions of the avoidance of double taxation treaty with that other country.
Tax remitted in Nigeria may be available for relief, depending on the existence of a double taxation treaty between Nigeria and the employee’s home country.
Nigerian employment legislation does not discriminate between foreign and local workers. In practice, the employee’s contractual terms may elect for the home country pension arrangement to remain or subsequent transfer of his RSA content to his home country on retirement or exit.
VIII GLOBAL POLICIES
Employer–employee relationships in the private sector are formalised by parties entering an employment contract. It is commonplace for organisations to have a handbook containing additional details on matters antecedent to the relationship. Although internal discipline rules are common, they are not mandated by law. In practice, they are found in the handbook and in some cases, completed by the contract or CBA. Public sector workers may be bound by rules specific to their establishments/industry.
It is common practice for a handbook to be provided to the employee at the commencement of employment or shortly thereafter, or to be included as part of the contract. Its terms do not have to be agreed through a representative body or approved or filed with a government authority. In some instances, however, they may be reviewed by representative bodies (e.g., where the employees are unionised). Acceptance of the employment offer is usually predicated on acceptance of internal rules. The employees, however, must be notified of the existence of such rules and any subsequent changes to them.
Nigerian laws deal with discrimination, sexual harassment, corruption and related matters. The CFRN enshrines the right to freedom from discrimination,52 which is forbidden in the workplace.53 Section 17(3) requires the state to direct its policy towards ensuring that ‘there is equal pay for equal work without discrimination on account of sex, or any other ground’.54
The Trade Union Act, as amended (TUA) stipulates that ‘if any person is refused admission into a union on discriminatory grounds, the union and all its officials shall be guilty of an offence’.55 The LA also states that contracts that cause the dismissal of or prejudice a worker on the grounds of belonging to or not being a member of a union or participating in union activities, is in contravention of the Act and shall be struck down.
In Nigeria, the official language is English and therefore, employment contracts are usually in English. The nature of the document and contract terms would determine whether the same is to be signed by the employee or a simple notification would suffice. There is no prescribed format for where such rules are to be posted. However, the LA requires the employee to have access to the contract and to be notified of any changes thereto. In practice, organisations provide employees with a hard copy and make them easily available (electronically or otherwise).
Ordinarily, Nigerian law presumes in favour of a person of full age and capacity, that such a person fully understands the meaning of any document that he or she signs; the exceptions being in cases of fraud, illegality, duress or coercion.
There is no statute or regulation requiring employment documents to be translated into local or an employee’s native language. The tendency is for employment and relevant documents to be in English.56
X Employee Representation
The CFRN grants all persons the fundamental right to peacefully assemble and associate. The LA and TUA permit employees to form and belong to a union. The membership of a union or representative body must be voluntary and no employee is to be forced to join or to be victimised for refusing to join or remain a member.
The ratio of representatives to employees differs per institution and is not the subject of statute. In accordance with the TUA, an application for the registration of a union must be supported by at least 50 members for a union of workers and two for a union of employers.
The election procedure, terms of office of representatives and the frequency of meetings are regulated by the union’s constitution or guiding document. The TUA requires registered unions to constitute an electoral college to elect members to represent them in negotiations.
The rights and protection of employees’ representatives are as guaranteed by the CFRN. The LA prohibits contracts from making it a condition of employment that a worker shall or shall not join a union, and prohibits employers from causing the dismissal or prejudice against a worker:
- a by reason of union membership;
- b because of union activities outside working hours or, with the consent of the employer, within working hours; or
- c by reason of the fact that he or she has lost or been deprived of membership of a union or has refused or been unable to become, or for any other reason is not, a member of a union.
Employers are required to recognise any registered union branch within its organisation once notified by employees that they are its members. The employer is to deduct labour dues from members’ wages for remission to the union’s registered office. It is required to do so within a reasonable period or such period prescribed by the Registrar of Trade Unions.
XI Data Protection
Nigeria does not currently have a single data protection statute that covers all data protection issues; exsiting data protection guidelines are sector-specific. Furthermore, the CFRN guarantees ‘privacy of citizens, their homes, correspondence, telephone conversations and telegraphic communications’ and English common law.
Other relevant laws include the Cybercrimes (Prohibition, Prevention, etc.) Act 2015 (promoting cyber security and protecting computer systems, programmes, e-communications, intellectual property, privacy rights and system data) and the Freedom of Information Act 2011 (applicable only to personal information in the custody of public agencies and institutions in Nigeria).57 The Personal Information and Data Protection Bill is pending before the National Assembly.58
In practice, employers provide for data protection in their handbooks or employee contracts.
i Requirements for registration
There is currently no data protection agency requiring registration59. Where data is used in the course of the company’s usual line of business, consent or notification to the employee may, arguably, not be necessary. Where it is assumed that the employee’s consent was obtained on executing his contract, a clause to this effect should be included in the handbook or contract.
In practice, companies tend to limit access to information about employees and company data, regulated by contractual terms. While the need to ensure adequate technical protection is not a statutory requirement it is, however, commercially prudent.
ii Cross-border data transfers
There is presently no registration requirement for cross-border data transfers. To the extent that there is no law directly on this, it may be right to imply a use pursuant to company business. There is no law that expressly requires the employee’s prior consent, especially where the transferred data is used in the course of the company’s usual line of business. The use of a joint-user agreement or safe harbour registration is discretionary.60
iii Sensitive data
Due to a paucity of legislation on this, there is no precise definition of what constitutes ‘sensitive data’. Nigeria does not operate a social security system; medical information, client–solicitor communications and bank–customer communications do enjoy conditional protection by law. In view of the absence of specific legislation restricting the processing of sensitive data, the lasting restrictions are the privacy guarantees of the CFRN and ethical requirements for particular relationships.61
iv Background checks
Background checks are not the subject of statutory regulation. However, evidence suggests that many employers conduct such checks as a matter of prudence. The employee’s approval may be required for certain checks. Credit and criminal records checks are allowed. There is no centralised credit registry in Nigeria, leaving an individual’s financial records in the custody of his or her bank, accessible only with clear authorisation and prior consent. Undertaking criminal checks is a fairly common practice, by discreet application to the Nigerian police.
XII Discontinuing Employment
Generally, Nigerian law used to permit parties to terminate an employment contract for reasons (good and bad), or for none; the terminating party must comply with the contract terms. However, this position has now been substantially altered by the recent decisions of the NIC. The NIC recently made a departure from the applicable principle of law in a master-and-servant relationship that the common law developed and the decisions from other courts (up to the apex court) before now had proceeded. By its recent decisions in the leading case of Aloysius v. Diamond Bank,62 an employee can no longer be terminated without a reason. The employer is required not only to give a reason, but to give a reason that can be justified and connected with the work performance of the employee.
The law distinguishes between termination and dismissal; dismissal being a severe sanction available only to the employer, connoting some grave infraction by the employee (e.g., theft, fraud or gross insubordination). It is often exercised without notice or pay. An employee should only be dismissed for a stated cause. Before a decision is reached on account of an infraction, the law requires the employer to afford the employee an opportunity to defend such allegations. A failure to do so may lead a court to declare the dismissal wrongful, entitling the employee to damages.
Notification to the authorities of the dismissal is generalwly not required. However, certain industries require prior notification to the industry regulator.63 Except where expressly stated in any CBA, notification to a works council or union is not required.
The closest to a social plan for dismissed employees is the RSA contributory scheme; the employer’s obligations should be up to date as at the time of dismissal. An employee has no legal right of rehire, although employers are not debarred from extending this privilege.
A terminating party may be the employer or employee. The LA (and most contracts) state the required termination notice period. It is widespread practice for contracts to contain a clause permitting payment in lieu of notice.
The LA protects a woman who is absent from work for a longer period resulting from a certified illness arising out of her pregnancy or confinement from receiving a notice of dismissal during her absence or one expiring during her absence. An employer is not to dismiss or show prejudice against a worker because he or she is a union member or for related reasons.64
Severance pay payable in a dismissal is as set out in the contract. Employers may also make (discretionary) ex gratia payments. The parties may also enter a settlement agreement.
The NICN, in its judgment in Mrs Winifred Omage v. NAIRDA Nig Ltd & Anor,65 gives a succinct exposition on the law of redundancy. Peters J makes a categorical summary of the situation that will not constitute redundancy,66 confirming that Section 20 of the LA provides the procedure by which a redundancy might be embarked upon and declared. The principle of ‘last in, first out’ is to be adopted, subject to relative merit, skill and ability.
The law does not differentiate multiple redundancies nor require government notification. Employers are to inform the union/worker’s representative of the reasons for and extent of the anticipated redundancy. In certain industries, this requirement may extend to the regulator.67
There is no redundancy notice period; the applicable contract, handbook or CBA may stipulate this.68 The employer is to ensure fulfilment of its severance, statutory and contractual obligations. Nigerian legislation does not confer rehire rights. It does, however, require that the principle of last in, first out is adopted in executing a redundancy. Offers of suitable alternative employment may be exercised.
XIII TRANSFER OF BUSINESS
Nigerian law imposes no obligation to protect employees in an employer’s successor company in the event of a business transfer. An employee’s position before and after transfer is a matter of contract between the employee and the transferor employer. The transferee assumes no obligation to existing employees, save as intended at the contracting stage.
It is important, however, to understand this in the light of the LA, which places a notification obligation on an employer where its intention is to transfer an employee’s contract. Such a transfer is subject to the worker’s consent and endorsement of the transfer upon the contract by an authorised labour officer.69 Redundancy provisions may be relevant (depending on the transfer base structure).
The LA is limited in the security it provides. The existence of a CBA may afford a degree of protection to the extent of organised labour’s ability to influence policy direction. The relevant business transfer laws are the Investment and Securities Act 2007 (ISA), CAMA and the Company Regulations of 2012.70
In summary, companies proposing a merger or acquisition shall, in compliance with the ISA, file with the Securities and Exchange Commission (SEC) a pre-merger notice and a formal application for approval of the proposed merger. It shall comply with post-approval requirements, including obtaining a court order sanctioning the arrangement and subsequently, within five days of the order, file a notice with SEC. The obligatory filings with the Corporate Affairs Commission and associated costs are matters for CAMA and accompanying regulations.
The CFRN will remain topical. Having designated the NICN as a superior court in the hierarchy of courts, raising the question of whether it has unwittingly been designated the final arbiter in employment-related matters.71 Under the provisions of the CFRN72 appeals seem not to lie from its decisions, save on limited grounds (an issue which has been contested in the last year). Employers and investors need to know this, for existing employee relationships and from an investment perspective. The evident willingness of employees to access the courts is a positive development; the concern, however, is with a process that seemingly constrains appellate review. A proposed amendment to the law is therefore still awaited.
As a further development, the NICN established the NICN Alternative Dispute Resolution Centre, in a bid to create alternative or faster approaches to amicable settlement of labour, employment and industrial disputes.
International (labour) treaties will also continue to be in focus; one side of the argument being that on account of the 2010 constitutional amendment, ratification (of a labour treaty) equates to domestication of such treaties; and that the constitutional provision mandating domestication of all treaties no longer applies to labour treaties.73 It is expected that a pronouncement of the country’s appellate courts will put the matter beyond doubt.
The NICN’s approach to ex gratia payments is also of interest:
‘[A]nything accorded as a favour, as distinguished from that which may be demanded ex debitio, as a matter of right’ is the trite and legal position as far as such payments are concerned.74
An emerging philosophy, however, is that facts of a case taken as a whole may lead to a conclusion that the circumstances attending an ex gratia payment have created legal rights and obligations in relation to the same. In other words, as the court has recently held, something may change the nature of a payment notwithstanding that it is dubbed ex gratia.75 The NICN being de facto a final court, employers must be very clear when agreeing such terms or payments.
It is expected that international best practice pronouncements will continue to feature prominently in employment adjudications in the coming period; with anything negating or undermining those principles frowned upon. It is in this wise that we note CBAs. These are likely to remain topical. Given recent pronouncements of Nigeria’s apex court on what constitutes such an agreement,76 both employers and unions will want to exercise extra caution when negotiating pursuant to a CBA.
1 Olawale Adebambo and Folabi Kuti are partners and Ifedayo Iroche is a senior associate at Perchstone & Graeys.
2 Chapter T8, LFN 2004.
3 Section 254C (2). The establishment of the NICN by Section 20 of the Trade Dispute Act, Chapter T8, LFN, 2004, and its further empowerment by the amendment to the 1999 Constitution to the Federal Republic of Nigeria has changed the resolution of employment disputes significantly, expanding also the outdated provisions of the Nigerian Labour Act. In many cases, the NICN has taken into consideration International Labour Practices as well as International Best Practices in reaching decisions, on a case-by-case basis, with an air of finality.
4 Section 243 (2) of the CFRN.
5 National Bureau of Statistics website: Job Creation Survey Report (www.nigerianstat.gov.ng/pages/download/303).
7 The 2015 Report also presents a rundown of industrial disputes between 2004 and 2008.
8 National Bureau of Statistics website: Social Statistics Report in 2012 (www.nigerianstat.gov.
35 A Bill for an Act to Amend the Labour Act, Cap LI, Laws of the Federation of Nigeria, 2004, to provide a Time frame for the Regulation of Casual or Temporary Employment to Permanent Status by all Employers of Labour in Nigeria and for other Matters Related thereto.
36 Section 7 (1) (a)–(f), Labour Act.
37 Section 7 (2) (a) and (b) Labour Act.
38 Section 11 (6) of the Labour Act.
39 Sections 54 and 55 of CAMA.
40 Chapter C20 LFN 2004.
41 Section 56 of CAMA.
42 A foreign company may apply to the National Council of Ministers for exemption from incorporation if it belongs to one of the following categories:
(1) foreign companies (other than those specified in paragraph (d) of Section 56 (1)) invited to Nigeria by or with the approval of the Federal Military Government to execute any specified individual project;
(2) foreign companies that are in Nigeria for the execution of sa pecific individual loan project on behalf of a donor country or international organisation;
(3) foreign government-owned companies engaged solely in export promotion activities; and
(4) engineering consultants and technical experts engaged on any individual specialist project under contract with any of the governments in the Federation or any of their agencies or with any other body or person, where such contract has been approved by the Federal Military Government.
43 Section 25 (1) of the Labour Act.
44 The PRA 2014 was signed into Law on 1 July 2014, repealing the Pension Reform Act 2004.
45 The National Assembly recently concluded work on the fourth proposed alteration and transmitted the same to the 36 state houses of assembly for consideration. Earlier, 71 issues were formulated by the two chambers of the National Assembly for consideration; only 23 were passed by both chambers.
46 The Act provides that where an employee is at work for six hours or more a day, his work shall be interrupted (to the extent that is necessary, having regard to its character and duration and to the working conditions in general) by allowing one or more suitably spaced rest intervals (the rest intervals being not less than one hour in aggregate. Furthermore, in every seven days, an employee is entitled to one day of rest, which shall not be less than 24 consecutive hours.
47 The word ‘night’ is defined to mean:
(1) with respect to industrial undertakings, a period of at least 11 consecutive hours, including the interval between 10pm and 5am; and
(2) with respect to agricultural undertakings, a period of at least nine consecutive hours including the interval between 9pm and 4am.
48 Following an announcement from the Nigerian Immigrations Services, with effect from 6 April 2015, a re-entry visa ceased to be a requirement for the purpose of re-admitting any foreigner who is legally resident in Nigeria. The possession of a valid Combined Expatriate Residence Permit and Aliens Card (CERPAC), in addition to other travel documents, now suffices for re-entry into Nigeria.
49 Section 34. Section 18(1).
50 Section 8(1). Section 14(1).
51 See Section IV.iii, supra.
52 Section 42 of the CFRN.
53 Section 17 of the CFRN. As regards corruption, there are a number of Nigerian laws in this respect.
54 While admirable in its intent, being under Chapter II of the CFRN, Section 17 is not justiciable. Thus, unless a law is passed embodying the provision, it is not possible to rely on it as a basis for challenging any discriminatory practice in a court of law.
55 Section 12(2).
56 The LA defines foreign contracts as contracts for the employment of citizens outside Nigeria. Section 38 provides requirements specific to such contracts, including that the contracts are read to or translated into a language understood by such persons.
57 One of the 46 bills passed by the 7th National Assembly (in 2015) is the Electronic Transactions Bill, which is used to ‘eliminate legal barriers to the effective use of electronic communications to the transaction’. It covers electronic transactions carried out in both public and private sectors, and although yet to be assented to by the President, seeks to promote the harmonisation of legal rules on electronic transactions across national boundaries. It also promotes business and community confidence in electronic transactions and provides a legal framework for e-commerce in Nigeria, protecting consumer and third-party rights.
58 The Bill, if passed, will provide a legal framework for privacy and data protection.
59 The Cybercrimes Act does, however, require cybercafe operators to register as a business concern with the Computer Professionals Registration Council and as a business name with the Corporate Affairs Commission (CAC).
60 Nigeria recently passed a Cybercrime Bill into law, providing a legal framework for the prohibition and punishment of electronic fraud and cybercrime while promoting e-government services, electronic communications and transactions between public and private bodies as well as institutions and individuals. It also regulates certain acts and omissions in line with regional and international best practices and provides procedural guidelines for the investigation of such offences.
61 The President of Nigeria, by the provisions of the Cybercrimes Act, is however empowered to designate computer systems and networks as constituting Critical National Information Infrastructure (CNII) systems, preventing the destruction of such information, which is viewed as a threat to national security.
62 (2015) 58 N.L.L.R (Pt.199) 92; the NIC stated: ‘“that the Court can now move away from the harsh and rigid common law posture of allowing an employer to terminate its employee for bad or no reason at all” . . . “it is now contrary to international labour standard and international best practice and, therefore, unfair for an employer to terminate the employment of its employee without any reason or justifiable reason that is connected with the performance of the employee’s work”. I further hold that the reason given by the defendant for determining the claimant’s employment in the instant case, which is that his “service was no longer required” is not a valid one connected with the capacity or conduct of the claimant’s duties in the defendant bank. In addition, I hold that it is no longer conventional in this twenty 1st century labour law practice and in industrial relations for an employer to terminate the employment of its employee without any reason even in private employment.’ [Emphasis ours].
63 In the oil and gas industry, a notification of a termination or dismissal must be submitted to the Department of Petroleum Resources.
64 See Section X, supra.
65 Delivered on 30 September 2014; suit No.: NICN/LA/63/2013 (http://judgment.nicn.gov.ng/cont-dtl.php?contC=704).
66 The Nigerian labour jurisprudence recognises situations of redundancy which the Labour Act explains to mean an involuntary and permanent loss of employment caused by an excess of manpower. See section 20(3), Labour Act. Subsection 1 of section 20 of the same legislation makes elaborate provisions relating to redundancy. … The state of the law is trite and it is on the authority of National Electricity Power Authority v. Friday Edokpayi Eboigbe (2008) LPELR-8576, that when an employer relies on redundancy to disengage the services of an employee, the burden is on the employer to satisfy the Court on the reason and furnish facts or law in support of his action … . Now to the instant case, Exh. C5 is a letter dated 11/11/11, addressed to the Claimant and simply titled ‘Redundancy’. It is a document of 4 short paragraphs. I deem it imperative to reproduce the content of that document as follows:
This is to inform you that your services are no longer required with effect from today 11th November, 2011.
Your final entitlement will be paid to you after deducting all loans/IOU’s that may be outstanding against you. You are to handover all company’s property that may be in your possession including your ID card before your departure. Wishing you success in your future endeavour.’
[…] I have no evidence before me attesting to compliance with the provision of section 20 (1) of the Labour Act and indeed paragraph (a) of same. An irresistible conclusion l can reach from the preceding discussions is that Exh. C5 does not amount to a letter of redundancy in the real sense of the word, the requisite condition precedent to declaring redundancy not having been met by the 1st Defendant. It is also instructive to note that indeed the word “Redundancy” was not used anywhere in the body of Exh.C5 save just the title only.
67 In the oil and gas industry, employers are required to notify the Department of Petroleum Resource.
68 In practice, although this is not a legal requirement, notice periods are generally between three and six months.
69 Section 10(1) of the Labour Act.
70 Pursuant to Sections 16, 585 and 609 of the CAMA.
71 ‘National Industrial Court: Infallible because it is final’, The Guardian (Nigeria), 12 November 2013 by Folabi Kuti.
72 Section 9 (1) and (2).
73 Section 12 CFRN.
74 Pan Ltd v. Oje & others (1991) LPELR-6331 (CA).
75 Registered Trustees of Union Bank & Another v. Union Bank & Others; NIC/LA/555/2012 unreported.
76 Osoh v. Unity Bank PLC (2013) 9 NWLR Pt 1358 1.