The Employment Law Review: Nigeria

Introduction

Employment law in Nigeria was not founded on the provisions of a single statute. Rather, it is dispersed in different legislation that provides the framework and is greatly influenced by case law. Over the years, specific legislation has been enacted to address different issues in the Nigerian employment industry. However, the substantive law remains the Labour Act enacted in the 1970s, the Factories Act, the Employees Compensation Act, the Trade Disputes Act and the Trade Unions Act (TUA). Although there is an unsettled discussion as to whether the Labour Act extends beyond unskilled and manual workers, it nonetheless remains the governing law for labour matters, especially where international labour conventions make recourse to national laws on aspects already covered by the Labour Act.2 Nigerian law also allows freedom of contract in upholding and binding employers and employees to their agreements.

Since the 2010 Third Alteration to the Constitution of the Federal Republic of Nigeria 1999 (CFRN), there has been renewed interest in all things relating to labour and the world of work. It confers exclusive jurisdiction on the National Industrial Court of Nigeria (NICN) in matters relating to or connected with unfair labour practices or international best practices in labour, employment and industrial relations matters, and with judicial powers to apply the relevant international convention, treaty or protocol that Nigeria has ratified relating to labour, employment, workplace, industrial relations or matters connected therewith.

In terms of labour disputes, Section 1 of the National Industrial Court Act3 establishes a specialist court, the NICN, with exclusive responsibility for handling employment-related disputes. The CFRN, as amended,4 further endorses the NICN's authority and jurisdiction. The Industrial Arbitration Panel (IAP), which was established by the Trade Disputes Act, is responsible for settling any dispute referred to it by the Minister of Labour and Productivity. Any objection to an IAP award is taken before the NICN. The Court of Appeal hears appeals from the NICN regarding questions of fundamental rights contained in Chapter IV of the CFRN, in relation to matters under its jurisdiction.5 However, if an appeal from the NICN concerns other employment matters, it must be with the permission (leave) of the Court of Appeal.6

Year in review

In 2021, the consequences of the covid-19 pandemic continued to have far-reaching implications for the Nigerian economy, with several businesses still reeling from the aftershocks created by the pandemic. In the workplace, many employers and employees are coming to terms with the adoption of innovative and flexible approaches to work, including telecommuting, virtual meetings and the like.

Employers are now facing the unique challenge of maintaining a safe workspace for their employees and are finding it quite difficult to get their employees to have vaccinations. Although employees have a corresponding duty to cooperate with their employers to ensure their employers are able to fulfil their duty of occupational safety, this continues to be a mirage, as more and more employees are refusing to have the vaccine. Reacting to this, the Federal Government of Nigeria (FGN) mandated vaccination for federal workers and refused entry to any public office to any worker who failed to be vaccinated before the deadline given.

Although it was possible for the FGN to mandate vaccination, private employers, in the absence of any regulation mandating vaccination for Nigerians in general, were unable to do same with respect to their employees, since there is no law empowering employers to mandate vaccination.

Significant cases

Decisions by the Labour Court in 2021 suggest a steer towards a more equitable workplace for both employer and employee, notwithstanding the difficult balancing act between best practices or international labour standards (perceived by some as biased in favour of employees) against commercial interests.

In line with the general trend in recent years, case law during the period under review has been driven, largely, by the far-reaching adjudicatory work of the NICN.

i Pensions and related matters

The Labour Court made important clarifications to possible gaps in the Pension Reform Act (PRA) in Girei v. Sigma Pensions Limited.7 The Court reinforced the 25 per cent withdrawal threshold allowed by the PRA as relating only to those who voluntarily retire (at or before the age of 50) or disengage, or are disengaged from employment. There is no such bar (in the legislation or the CFRN) restricting those who reach the retirement age of 60 years from taking a lump sum withdrawal of 50 per cent (or more) from their retirement savings accounts (RSA).

In Traquini v. ASC,8 the recondite issue was compliance with the PRA requirement (for employees) to open an RSA. Here, parties were no longer in an employment relationship, and the employee, a foreigner, had relocated outside the country, post-employment. The Court, applying a purposive interpretation to the PRA, decided this was a rare instance when unremitted pension funds could be paid directly to the employee in retirement. In Okunkpolor v. Arik Air,9 non-remittance of pensions and the delay or non-payment of entitlements to a former employee was deprecated as reprehensible. Where this happens, the employer may be liable for damages in deserving circumstances.

ii Unfair labour practice and best global practices

The NICN, based on the primacy of the facts presented before it, continues overall to draw from the immensely important influence of applicable international best practices in labour, employment and industrial relations, as well as the appropriately pleaded interpretation of international labour standards. There is little doubt that this has assisted immeasurably in filling the small gaps in the present world of work. Take, for instance, in the year under review, what constituted 'unfair labour practice' continued to envelop an ever-widening array of factual matrix and legal issues.

In Amanze v. Union Bank Plc,10 the defendant bank, in response to the claimant's wrongful termination claim, contended, inter alia, that the claimant's appointment was contingent upon meeting 100 per cent of a set target. The claimant failed to meet this target, comprising principally of a minimum average monthly deposit from target customers. Noting the common law duty on the part of an employer to provide work – a duty from which the employer cannot abdicate – the Court declared the practice of setting deposit targets as a condition for an employee's continuing employment as wrongful, unlawful and an unfair labour practice. The only criticism of the otherwise profound holding of the Court here is the potentially extensive (or in rem) nature of the order ('outlawing' the practice) made against other financial institutions who were not parties in the matter, and thus did not have an opportunity of contributing to the arguments with respect thereto.

In similar vein, in Chukwunonso v. Ecobank Ltd,11 the Court deprecated as an unfair labour practice that banks hold staff responsible for debtors' loan repayment defaults, despite having only processed the loan documents. The claimant in this case was 19 days short of a 10-year unbroken service record, whereupon he would be entitled to a gratuity. The justice in the case therefore turned largely on availing him the equitable position of an inconsequential deviation from the standard rule that had been relied on for his peremptory termination, just 19 days before attaining his 10 years of unbroken service.

Affirming a pre-employment right in specie, the Court in Obienu v. AIDS Healthcare Foundation12 held as binding a contract offering employment, on which the employee acted by accepting, and further notifying her former employer of her resignation and exit. The defendant company was held liable for damages for a breach of contract in purportedly withdrawing the 'offer'.

Wage and benefit disparity between local employees and foreign staff was held to be discriminatory and an unfair labour practice on the factual pattern in Uzo Ejekwumadu v. Blue Arrow TSW Limited13 and Iseh Peter v. Sterling Global Oil Exploration.14

iii Disciplinary matters, cessation of employment and allied matters

Ogunleye v. Stanbic IBTC Bank15 is a compelling authority that an employer has a right to take disciplinary action against its employee notwithstanding that the employee is standing trial for a criminal offence emanating from the same factual pattern. A marked statement common to Omenogor v. UBA Plc,16 Ogunlowo v. Ventures and Trusts Limited17 and Nwabugwu v. Uzondu Microfinance Bank Ltd18 is that disciplinary process or dismissal cannot commence after or override an earlier act of resignation by the employee.

With statutory employments, the Court, construing applicable statutes, held in Peter v. Ambrose Alli University, Ekpoma19 that the Commissioner of Education in the state cannot unilaterally overrule the decision of the Governing Council of the University in relation to the employment and discipline of the state's university staff. Dr Ogunshe v. University of Ibadan20 and Dr Ekpe v. Registrar, University of Uyo21 are two of the cases (in the year under review) that considered nullification of disciplinary measures (including dismissal) for non-compliance with applicable rules. In Okeke v. Governor of Imo State,22 the Court frustrated the abuse of executive powers by noting that the applicants' appointments, being offices statutorily created and entrenched within the Imo State House of Assembly Law, and having not exhausted their tenures in office, cannot be removed 'at the pleasure of the Governor'.

iv Miscellany

The decision in PENGASSAN v. Chevron Nigeria Limited23 poignantly sums up to have 'supplemented the written word so as to give “force and life” to the intention of the legislature'.24 The Court concluded that there is nothing in the relevant laws (such as the Petroleum Act) that gives the Minister of Petroleum power to regulate private contracts of employment, or to introduce terms into the contracts of employment between parties.

The potential width of a reasonable restriction (on trade) imposed by a training bond again came to the fore in Overland v. Sekula25 and ATB v. Eniola Ake.26 In the former, the defendant was held liable to a training bond by which he was sponsored for an aircraft type rating course by the claimant. He was ordered to pay for failing to give requisite notice of cessation of employment, and to refund of the course fee paid by the claimant. On the facts before the Court in the latter case, it was held that there was nothing in the claimant's evidence justifying the restriction to bind the defendant to the employer's business for three years. Akinola v. Ocean Marine27 is a landmark judgment about workplace employment discrimination/harassment based on health disability (HIV/AIDS).

v Compensatory damages

Stimulating new insights based on the primacy of the facts presented before it, the Court made a few inroads in pushing the limits of compensable damages confirmed by the final court on labour and employment matters that can be awarded in deserving cases. In Dr Oyeyemi v. Covenant University,28 the defendant unilaterally reviewed the claimant's employment contract to Senior Lecturer (Contract), ostensibly to make the workplace intolerable to him. Coupled with the wrongful termination of his employment, the claimant was found to be entitled to an award of the equivalent of 24 months' salary as general damages.

In Davidson Iloh v. Alo Aluminium Manufacturing Co Ltd,29 the Court awarded the sum of 30 million naira to the claimant as compensation for 'the permanent disability and disfigurement, loss of amenities of life, bodily pain and suffering which the claimant has suffered and may suffer in future, loss of earning and a future that is fraught with uncertainties as a result of the injury he sustained, while working for the defendant'.

Basics of entering an employment relationship

i Employment relationship

An employer is required to provide an employee with a written employment contract within three months of the employee commencing work. The contract must contain:

  1. the name of the employer, or group of employers;
  2. the worker's name, address, position and date of engagement;
  3. the nature of the employment;
  4. the date of expiry, if a fixed-term contract;
  5. the notice period for termination;
  6. wages, including frequency of payment and method of calculation;
  7. hours of work, holiday pay and conditions for incapacity owing to sickness and injury; and
  8. any special conditions of the contract.30

Generally, the contract must be signed to make it legally binding, as the employee's signature indicates acceptance of terms. The NICN may ignore express contractual terms if they are inconsistent with the reality of the relationship between the parties.31

Fixed-term contracts are permissible and must specify the above-mentioned terms. If the contract is terminated before the agreed term has expired, the employer must pay the employee the full salary he or she would have earned for the period of the fixed term.32

The Labour Act allows parties to change or amend terms after execution, requiring 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.33 If 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 employment.

ii Probationary periods

Probationary periods in employment contracts are permissible, and the duration and length of notice to terminate is subject to agreement between the parties. The notice requirement may also be waived.34 Industry practice is usually for probation to last for three months. Failure to confirm or terminate the employment after probation could be deemed 'confirmation by conduct', where the employer continues to use the services of the employee at the end of the probationary period.35

iii Establishing a presence

For a foreign company to hire employees to carry on business in Nigeria, it must establish its presence36 by incorporation under the Companies and Allied Matters Act (CAMA). It cannot own a place of business before incorporation, except for receiving correspondence, notices and other documents preliminary to incorporation. The CAMA37 empowers the Minister of Industry, Trade and Investment, on application by a foreign company, to grant exemption from incorporation in limited circumstances.38

The Minister of Labour and Productivity may permit 'fit and proper persons' to recruit citizens in Nigeria for employment outside Nigeria (for 12 months from the date of issue).39 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 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, obliges the employer to ensure monthly remittance of employees' taxes. The Pension Reform Act 201440 requires the employer to make monthly deductions of a minimum of 8 per cent from its employees' salaries, plus a minimum contribution of its own of an additional 10 per cent, and remit the same to the employees' RSAs. The employer must also maintain a group life insurance policy for each employee for a minimum of three times the total annual salary of the employee and the premium must be paid not later than the date of commencement of the cover.

Restrictive covenants

Generally, all covenants in restraint of trade are unenforceable, unless they are reasonable with respect to the interests of the parties concerned and of the public. The courts apply a reasonableness test to determine whether or not to enforce such clauses. The burden of proof for 'reasonableness' lies with the enforcing party.

There is no express prohibition in Nigerian laws on entering into restrictive covenants, which may have retrospective effect. An employer needs to be mindful of what proprietary interest it seeks to protect, as judicial trends lean in favour of the employee, who is often considered the party with the weaker bargaining power. Although employers may have legitimate reasons for imposing restrictive covenants, they are often considered to inhibit competition and may be struck down by the courts if held to be unreasonable.

Wages

The government responded to calls for an increase in the national minimum wage by establishing, through the Federal Executive Council, a National Minimum Wage Committee. The minimum wage was subsequently increased and approved at 30,000 naira. There are plans to commence the implementation of a minimum wage as soon as practicable.

Furthermore, under the Labour Act, it is unlawful for an employer to determine or direct the place or manner in which an employee must spend his or her wages.41

i Working time

Pursuant to the Labour Act, normal working hours under any employment contract shall be fixed by agreement, by any collective bargaining process within the organisation or industry, or by an industrial wages board (where there is no mechanism for collective bargaining). The Act is silent on the duration of the working day, which in practice is regulated by company policy. The statutory minimum for rest periods and leave42 must be considered when determining working hours.

With the exception of the Labour Act'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, with exceptions, over 16), there are no other restrictions on working time. The prohibition on employment of women for night work43 does not extend to women employed as nurses or holding management positions, or those who are not ordinarily engaged in manual labour.

ii Overtime

Overtime is defined under the Labour Act as the hours an employee is required to work in excess of the normal fixed hours. Although the Act does not categorise overtime work, it recognises work done in excess of agreed hours and provides for time off (rest periods) or payment in lieu of worked hours. In practice, payment for overtime is calculated on an hourly basis on a par with the normal hourly rate of the worker and may differ depending on the staff category.

Although the Act is silent on a threshold for the number 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; in practice, the rate is determined by the employer's internal policies.

Foreign workers

Foreigners working in Nigeria are subject to immigration approvals, controls, permissions and permits.

A bill repealing all previous Immigration Acts was enacted into law in May 2015, revising the rules with respect to the issuance of work permits and expatriate quotas,44 and imposing strict penalties on companies and foreign employees for non-compliance. The Immigration Act prohibits companies from employing a foreign national without the permission of the Director General of Immigration, unless the Minister of the Interior grants a waiver or exemption by notice.45 Persons entering Nigeria for business purposes must obtain the Minister's consent.46

There is no mandatory requirement for an employer to maintain a register of foreign workers. However, according to 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 must 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 made for repatriation of the expatriate and his or her dependants (if any).

The types of visa and permit to be applied for are determined by the intended duration of employment. Experts invited for specialist employment for a short period ordinarily apply for a temporary work permit. Those wishing to reside in Nigeria permanently require a 'subject to regularisation' visa and, subsequently, a combined expatriate residence permit and aliens card.

The legislation regulating tax matters for individuals is the Personal Income Tax Act.47 A company must remit tax on behalf of its foreign employees if the employer is in Nigeria or has a fixed base in Nigeria, or if the duties of the employment are wholly or partly performed in Nigeria, unless:

  1. 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;
  2. the employee is not in Nigeria for a period or periods amounting to an aggregate of 183 days (inclusive of annual leave or temporary periods of absence) or more in any 12-month period; and
  3. the remuneration of the employee is liable to tax in the other country under the provisions of the avoidance of a double taxation treaty with that country.

Tax remissions may be available 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 a subsequent transfer of his or her RSA content to his or her home country on retirement or exit.

Global policies

Employer–employee relationships in the private sector are formalised by parties entering an employment contract. It is common for organisations to have a handbook containing additional details on matters pertaining to the relationship. Although internal disciplinary 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 a collective bargaining agreement (CBA). Public sector workers may be bound by rules specific to their establishment or industry.

It is common practice for a handbook to be provided to an 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; however, in some instances, they may be reviewed by representative bodies (e.g., when the employees are unionised). Acceptance of the employment offer is usually predicated on acceptance of internal rules. However, employees must be notified of the existence of internal rules and any subsequent changes to them. Although there is no prescribed format for where the rules are to be posted, organisations tend to provide employees with a hard copy and make them easily available (electronically or otherwise).

Nigerian laws address discrimination, sexual harassment, corruption and related matters. The CFRN enshrines the right to freedom from discrimination,48 which is forbidden in the workplace.49 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'.50 The TUA, as amended, 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'.51 The Labour Act also states that contracts that cause the dismissal of or prejudice a worker on the grounds of union membership, or participation in union activities, is in contravention of the Act and shall be illegal.

Parental leave

The right of women working in private and public organisations to maternity leave is guaranteed by the Labour Act.52 However, the Act is silent on paternity leave. Thus, entitlement thereto is subject to the contract of employment, company policy or handbook, or agreements between an employer and its employees. In September 2021, the federal government, through the Federal Executive Council, approved paternity leave of 14 days for male parents upon the birth or adoption of a child, provided that should parents choose to adopt a child, the male parent will only be entitled to leave if the adopted child is not more than four months old.

Under the Labour Act, pregnant women have the right to leave their work if they produce a medical certificate from a registered medical practitioner and stating that their confinement will probably take place within six weeks. Women shall also not be permitted or compelled to work during the six weeks after childbirth. Accordingly, maternity leave is 12 weeks (i.e., six weeks before and six weeks after childbirth). The 12 weeks of maternity leave guaranteed by Labour Act can be increased by contract; however, it cannot be reduced by an employer.

After the maternity leave has ended, a nursing mother is entitled to half an hour twice a day during her working hours to nurse her child. The Labour Act also provides that a woman who has been continuously employed by her employer for six months or more prior to her maternity leave will be entitled to not less than 50 per cent of her salary. This may be increased by contract, however, and may comprise either full pay or a mixture of full and partial pay. Since paternity leave is not governed by any Nigerian law, the entitlements accruing to the same are governed by contract.

No employer is liable, or can be compelled, under the Labour Act to pay any medical expenses incurred by a woman during, or on account of, her pregnancy or confinement, unless such an entitlement is contained in the employment contract.

With regard to dismissal, the Labour Act provides that when a woman is absent from her work on maternity leave, or remains absent from work for a longer period as a result of an illness certified by a registered medical practitioner to have arisen out of her pregnancy or confinement and to render her unfit for work, then, until her absence has exceeded a period (if any) as may be prescribed by the medical practitioner, her employer is prohibited from giving her notice of dismissal during her absence or a notice of dismissal that expires during her absence. The terms of dismissal of a person on paternity leave are subject to the terms of the employment contract.

Regarding federal civil servants in Nigeria, exceeding the 14 days of paternity leave may give rise to disciplinary considerations.

Translation

Ordinarily, Nigerian law presumes that a person is of full age and capacity, and that the person fully understands the meaning of any document that he or she signs, with the exceptions of fraud, illegality, duress or coercion.

There is no statute or regulation requiring employment documents to be translated into the local language or an employee's native language. In Nigeria, the official language is English and, therefore, employment contracts and relevant documents are usually in English, provided that they are interpreted for the employee and the employee has a clear understanding of the document before signing it. The interpreter is also required to sign the document and certify that it was duly interpreted and understood by the employee.53 The nature of the document and contract terms will determine whether they must be signed by the employee or whether a simple notification would suffice. However, the Labour Act requires the employee to have access to the contract and to be notified of any changes thereto.

Employee representation

The CFRN grants all persons the fundamental right to assemble and associate peacefully. The Labour Act 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 create an electoral college to elect members to represent them in negotiations.

The rights and protection of employees' representatives are guaranteed by the CFRN. The Labour Act prohibits contracts from making union membership (or lack thereof) a condition of employment, and prohibits employers from dismissing or being prejudiced against an employee:

  1. by reason of union membership;
  2. because of union activities outside working hours or, with the consent of the employer, within working hours; or
  3. 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 members of the branch. The employer must deduct labour dues from members' wages for remission to the union's registered office within a reasonable period or a period prescribed by the Registrar of Trade Unions.

Data protection

Nigeria does not currently have a strict data protection statute. The usual recourse is the CFRN, which guarantees 'privacy of citizens, their homes, correspondence, telephone conversations and telegraphic communications', and English common law.

Other relevant laws include the Nigeria Data Protection Regulation 2019 (NDPR) issued by the National Information Technology Development Agency, the Cybercrimes (Prohibition, Prevention, etc.) Act 2015 (promoting cybersecurity and protecting computer systems, programs, 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).54 The Personal Information and Data Protection Bill is pending before the National Assembly.55 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 registration.56 When data is used in the course of a company's usual line of business, consent or notification to an employee may, arguably, not be necessary. If it is assumed that an employee's consent was obtained when executing the employment contract, a clause to this effect should be included in the handbook or contract. Under the NDPR,57 the processing of personal data is considered lawful if, among other things, it is necessary for the performance of a contract to which the individual is a party, it is in compliance with a legal obligation, or consent has been given to the processing for one or more specific purposes.

In practice, companies tend to limit access to information about employees and company data by contractual terms. The need to ensure adequate data protection is commercially prudent. Also, the NDPR places a duty of care on any person entrusted with personal data and makes him or her accountable for acts or omissions arising from processing the data. The NDPR also requires any person or organisation involved in data processing or control of data to develop security measures to protect the data.58

ii Cross-border data transfers

Any transfer of personal data undergoing processing, or intended for processing after transfer to a foreign country or to an international organisation, shall take place subject to the NDPR and under the supervision of the Honourable Attorney General of the Federation. The NDPR permits the transfer of data to a foreign country provided, among other things, the consent of the individual has been obtained, the transfer is necessary for the performance of a contract, or the transfer is necessary for the conclusion or performance of a contract concluded in the interests of an employee between the employer and another entity. It is advisable for data being transferred to be used solely for company business. The use of a joint-use agreement or safe harbour registration is discretionary.59

iii Sensitive data

The NDPR defines sensitive personal data as that relating to religious or other beliefs, sexual orientation, health, race, ethnicity, political views, trade union membership, criminal records or any other sensitive personal information, and requires measures to be put in place to protect it.60 Nigeria does not operate a social security system; however, medical information, client–solicitor communications and bank–customer communications do enjoy conditional protection by law.61

iv Background checks

Background checks are not the subject of statutory regulation; however, evidence suggests that many employers conduct checks as a matter of prudence. The employee's approval may be required for certain checks. Credit and criminal records checks are allowed, however. There is no centralised credit registry in Nigeria, which means an individual's financial records are left in the custody of his or her bank, accessible only with clear authorisation and consent. Undertaking criminal checks, by discrete application to the Nigerian police, is a fairly common practice.

Discontinuing employment

i Dismissal

In the past, Nigerian law generally permitted parties to an employment contract to terminate for cause or for no reason, provided that the terminating party complied with the terms of the contract. However, this position has been substantially altered by the decisions of the NICN. The NICN departed from the applicable principle of law in a master and servant relationship, which the common law developed and the decisions from other courts (up to the Supreme Court) had followed. By the NICN decision in the leading case of Aloysius v. Diamond Bank,62 in certain circumstances, an employee cannot be dismissed without a reason. The employer is required not only to give a reason but that reason must be justified and connected with the performance of the employee's work.

The law distinguishes between termination and dismissal, with dismissal being a severe sanction available only to the employer and connoting some grave infraction by the employee, such as 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 the allegations. 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 generally not required. However, certain industries require prior notification to the appropriate industry regulator.63 Except where expressly stated in any CBA, notification to a works council or union is not required. The closest thing 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 prohibited from extending this privilege. Either an employer or an employee may terminate the employment relationship. The Labour Act (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 Labour Act protects a woman who is absent from work for a long period owing to a certified illness arising out of pregnancy against receiving a notice of dismissal during her absence, or one that expires during her absence. Additionally, an employer cannot cause the dismissal of, or prejudice, a worker by reason of a union membership and related reasons.64

Severance pay in a dismissal is dictated by the employment contract. Employers may also make (discretionary) ex gratia payments. However, the parties may enter into a settlement agreement.

ii Redundancies

The law does not recognise multiple redundancies nor require government notification for individual or collective redundancies. Employers are to inform the union or workers' representative of the reasons for and extent of the anticipated redundancy. In certain industries, this requirement may extend to the regulator.65

There is no statutory redundancy notice period, but the applicable contract, handbook or CBA may stipulate a period.66 The employer must fulfil 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.

Transfer of business

Nigerian law imposes no obligation on employers to protect employees in a 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. The transferee assumes no obligation to existing employees, except as intended at the contracting stage.

The Labour Act places a notification obligation on an employer when its intention is to transfer an employee's contract. The transfer is subject to the employee's consent and authorisation of the transfer by an authorised labour officer.67 Redundancy provisions and policies of the company may be relevant (depending on the base structure of the transfer).

The Labour Act 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, the Federal Competition and Consumer Protection Act (FCCPA) and CAMA.

Companies proposing a large merger or acquisition shall, in compliance with the FCCPA, file with the Federal Competition and Consumer Protection Commission a pre-merger notice and a formal application for approval of the proposed merger. Companies must comply with post-approval requirements. The obligatory filings with the Corporate Affairs Commission and associated costs are controlled by the CAMA and accompanying regulations.

Outlook

The year under review has mainly been about surviving the aftershocks of the past year and its attendant public health crisis. Many employers, in drafting their contracts of employment, did not contemplate the level of interruption and disruption to work occasioned by the pandemic. To date, the consequent challenges are yet to abate. Employers are caught in a web of competing rights and obligations, with employees insisting on perceived rights. In Nigeria, no employer has the right to mandate vaccination, despite carrying the heavy burden of providing a safe workspace for all employees. Many employees have continued to insist on continuing work without having any of the various vaccines now made available to them, in many cases at great expense to employers. There have been instances of employees contracting the virus on account of contact with other employees at work, and there was also a news report of an employee who died on account of having the vaccine. Employers, therefore, are left to continue to navigate the very narrow gaps between employee rights and maintaining a safe workspace for all employees.

The new reality also places employers in the precarious position of having their workplace at every employee's home. One can only imagine what the outcome of the telecommuting arrangement will be in the future and how the NICN will interpret workplace injuries.

Footnotes

1 Folabi Kuti, SAN is a partner and Emmanuel Abraye is an intermediate senior associate at Perchstone & Graeys.

2 Blessing Charles-Etim v. Marins Craighead & 2 Ors., Unreported Suit No. NICN/YEN/248/2016, judgment delivered on 31 May 2021, Hon Justice F I Kola-Olalere, FCIArb.

3 This used to be Section 20 of the Trade Dispute Act, Cap T8, LFN 2004.

4 CFRN, Section 254C(2). The establishment of the NICN by Section 1 of the National Industrial Court Act, and its further empowerment by the amendment to the Constitution of the Federal Republic of Nigeria 1999 has changed the resolution of employment disputes significantly, also expanding the outdated provisions of the Nigerian Labour Act. In many cases, the NICN has taken into consideration international labour practices and international best practices in reaching decisions, case by case and with an air of finality.

5 CFRN, as amended, Section 243(2).

6 Skye Bank Plc v. Victor Anaemem Iwu (2017) LPELR-42595(SC).

7 Unreported Suit No. NICN/ABJ/379/2020, judgment delivered 7 December 2021, per Hon Justice B B Kanyip Ph.D (PNICN).

8 Unreported Suit No. NICN/LA/580/2017, judgment delivered 10 March 2021, per Hon Justice NCS Ogbuanya.

9 Unreported Suit No. NICN/LA/45/2017, judgment delivered 4 June 2021, per Hon Justice Bassi.

10 Unreported Suit No. NICN/LA/424/2018, judgment delivered 29 June 2021, per Hon Justice (Dr) I J Essien.

11 Unreported Suit No. NICN/EN/17/2019, judgment delivered 18 November 2021, per Hon Justice O O Arowosegbe.

12 Unreported Suit No. ABJ/122/2020, judgment delivered 29 September 2021, per Hon Justice O O Oyewumi.

13 Unreported Suit No. NICN/LA/242/2016, judgment delivered 18 March 2021, per Hon Justice O A Obaseki-Osaghae.

14 Unreported Suit No. NICN/YEN/42/2018, judgment delivered 30 September 2021, per Hon Justice Bashar A Alkali.

15 Unreported Suit No. ABJ/120/2018, judgment delivered 25 November 2021, per Hon Justice S Kado.

16 Unreported Suit No. NICN/LA/142/2015, judgment delivered 30 June 2021, per Hon Justice O A Obaseki-Osaghae.

17 Unreported Suit No. NICN/LA/451/2016, judgment delivered 19 May 2021, per Hon Justice O A Obaseki-Osaghae.

18 Unreported Suit No. NICN/AWK/37/2018, judgment delivered on 2 December 2021, per Hon Justice Targema PhD.

19 Unreported Suit No. NICN/BEN/26/2020; judgment delivered 25 March 2021, per Hon Justice A A Adewemimo.

20 Unreported Suit No. NICN/IB/85/2016, judgment delivered 24 June 2021, per Hon Justice J D Peters.

21 Unreported Suit No. NICN/UY/11/2016, judgment delivered 20 May 2021, per Hon Justice M A Namtari.

22 Unreported Suit No. NICN/OW/44/2020, judgment delivered 24 June 2021, per Hon Justice I S Galadima.

23 Unreported Suit No. NICN/LA/411/2020, judgment delivered 26 February 2021, per Hon Justice E A Oji PhD.

24 per Lord Denning, Seaford Court Estates Ltd. v. Asher (1949) 2 K.B. 481.

25 Unreported Suit No. NICN/LA/599/2018, judgment delivered 12 April 2021, per Hon Justice I G Nweneka.

26 Unreported Suit No. NICN/LA/100/2020, judgment delivered 16 March 2021, per Hon Justice I G Nweneka.

27 Unreported Suit No. NICN/LA/410/2019, judgment delivered 25 October 2021, per Hon Justice I G Nweneka.

28 Unreported Suit No. NICN/LA/758/2016, judgment delivered 28 September 2021, per Hon Justice O A Obaseki-Osaghae.

29 Unreported Suit No. NICN/EN/61/2017, judgment delivered on 16 March 2021, per Hon Justice Arowosegbe.

30 Labour Act, Section 7(1), Paragraphs (a) to (f).

31 Oladapo Olatunji & Anor (Representing themselves and other Uber and Taxi Drivers in Nigeria in a Class Action) v. Uber Technologies System Nigeria Limited & 2 Ors. Suit No. NICN/LA/546/2017, judgment delivered on 4 December 2018, per Kanyip J.

32 Nigerian Society of Engineers v. Ozah (2016) 64 NLLR (Part 225) 1 CA.

33 Labour Act, Section 7(2), Paragraphs (a) and (b).

34 ibid., at Section 11(6).

35 Momoh Faruk Ikhuemeso v. Daar Communication Plc, at http://nicn.gov.ng/judgment/pdf.php?case_id=879.

36 Companies and Allied Matters Act, Section 78.

37 Section 80.

38 A foreign company may apply to the Minister 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 80(1)) invited to Nigeria by or with the approval of the federal government to execute any specified individual project; (2) foreign companies that are in Nigeria for the execution of a specific 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 government.

39 Labour Act, Section 25(1).

40 The Pension Reform Act 2014 was signed into Law on 1 July 2014, repealing Pension Reform Act 2004.

41 Labour Act, Sections 1 and 2.

42 The Labour Act provides that if an employee is at work for six hours or more a day, his or her 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 interval being not less than one hour in aggregate). Furthermore, an employee is entitled to one day of rest, which shall not be less than 24 consecutive hours, once every seven days.

43 The word 'night' is defined to mean (1) with respect to industrial undertakings, a period of at least 11 consecutive hours, including the hours between 10pm and 5am, and (2) with respect to agricultural undertakings, a period of at least nine consecutive hours, including the hours between 9pm and 4am.

44 Following an announcement by the Nigerian Immigrations Services, with effect from 6 April 2015, a re-entry visa ceased to be a requirement for the purpose of readmitting any foreigner who is legally resident in Nigeria. The possession of a valid Combined Expatriate Residence Permit and Aliens Card, in addition to other travel documents, now suffices for re-entry into Nigeria.

45 Immigration Act, Sections 34 and 18(1).

46 ibid., at Sections 8(1) and 14(1).

47 See Section IV.iii, above.

48 CFRN, Section 42; other laws, such as the Discrimination Against Persons with Disabilities (Prohibition) Act 2018 and the HIV and AIDS (Anti-Discrimination) Act 2014, reflect this.

49 ibid., at Section 17. As regards corruption, there are a number of Nigerian laws in this respect.

50 Although admirable in its intent, transgressions of Chapter II, Section 17 of the CFRN are 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.

51 Trade Union Act, Section 12(2).

52 Labour Act, Section 54.

53 The Labour Act defines 'foreign contracts' as contracts for the employment of citizens outside Nigeria. Section 38 provides requirements specific to these contracts, including that they are read in or translated into a language understood by such persons.

54 One of the 46 bills passed by the 7th National Assembly (in 2015) was 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.

55 The Bill, if passed, will provide a legal framework for privacy and data protection, which will further support the Nigeria Data Protection Regulation currently in force.

56 The Cybercrimes Act, however, does require cybercafé operators to register as a business concern with the Computer Professionals Registration Council and as a business name with the Corporate Affairs Commission.

57 Nigeria Data Protection Regulation 2019, Section 22.

58 ibid., at Sections 2.1(2) and (3), and 2.6.

59 ibid., at Sections 2.11 and 2.12.

60 ibid., at Section 1.3(xxv). These measures include protecting systems from hackers; setting up firewalls; storing data securely with access given to specific, authorised individuals; employing data encryption technologies; developing an organisational policy for handling personal data (and other sensitive or confidential data); protection of email systems; and continuously building capacity for staff.

61 The President of Nigeria, by the provisions of the Cybercrimes Act, is empowered to designate computer systems and networks as constituting Critical National Information Infrastructure systems, preventing the destruction of such information, which is viewed as a threat to national security.

62 (2015) 58 NLLR (Pt 199) 92; the NICN stated: 'The Court can now move away from the harsh and rigid common law posture of allowing an employer to terminate its employee for a bad or no reason at all . . . it is now contrary to international labour standards 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-first 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 added].

63 In the oil and gas industry, for instance, a notification of a termination or dismissal must be submitted to the Department of Petroleum Resources.

64 See Labour Act, Section 9(6).

65 In the oil and gas industry, for instance, employers are required to notify the Department of Petroleum Resources.

66 In practice, although this is not a legal requirement, notice periods are generally between three and six months.

67 Labour Act, Section 10(1).

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