Nigerian Employment Law Review

Procedure for Terminating Contractual Employment on Grounds of Redundancy in Nigeria

In order to survive in business in the current economic downturn in Nigeria, Employers may have to terminate the employment of their redundant staff. To avoid trade union disputes, industrial actions and damages for breach of contract employment, it is important for Employers to know the proper legal procedure in terminating the employment of their Employees on grounds of redundancy.

What are the basic legislations regulating employment matters in Nigeria

The Trade Union Act, CAP T14, Laws of the Federation, 2004 (“the Trade Union Act”), the Labor Act, CAP L1, Laws of the Federation of Nigeria, 2004 (“the Labor Act”), Trade Disputes Act, CAP T8, Laws of the Federation of Nigeria, 2004 (“the Trade Disputes Act”), National Industrial Court Act, No 38. Vol. 93, 2006, Laws of the Federation of Nigeria and the National Industrial Court Rules, 2007.

What is the status of Collective Agreement under Nigerian Law?

Nigerian courts adopt the common law principle that Collective Agreements of Trade Unions are generally unenforceable. This is because there is no privity of contract between the Trade Union who agreed to the Collective Agreement and the Employer. In essence, the Collective Agreement is not a Contract between the Employer and its Employees. This is because the Employer did not participate in the negotiation meeting which resulted in the Collective Agreement.

Nevertheless, where the Minister of Employment, Labor and Productivity promulgates an order for a Collective Agreement to be incorporated into Employees’ Contract of Employment; or a Collective Agreement is incorporated by reference into the individual Contract of Employment of Employees; or the Employer makes reference to it in its relationship with the Employees; or adopts the provisions of the Collective Agreement in arguing its case, the Employee may validly claim rights under the Collective Agreement.

Moreover, Section 23 (1) and 23 (2) (d) of the Trade Union Act, provides that;

23 (1)”…….nothing in this subsection shall enable any court to entertain any legal proceedings instituted for the purpose of directly enforcing any agreement mentioned in subsection (2) of this section, or of recovering damages for any breach of any agreement so mentioned

23 (2) (d) “any agreement such that every party thereto is one or other of the following, that is to say, a trade union or the Federation of Trade Unions”  

The import of the above provisions is that the Courts would not enforce the provisions of a Collective Agreement on the Employers if the parties to the Agreement are Trade Unions or Federation of Trade Unions only. The Employer would have to adopt the Agreement for it to be binding on it.

What is the status of the Employee’s Union’s membership of a Federation of Trade Union?  

Section 3 of the Trade Union Act provides that at least 50 members of the Union shall apply to register a trade union. Some labor law scholars contend that the right to organize Union activities in Nigeria does not extend to workers of companies of less than 50 persons.

Therefore the legality of Employees’ Union activities and resolutions reached in their meetings is in serious doubt if its members are currently less than 50 members

What is the notice period for termination of employment on grounds of redundancy?

The Employer would rely on the period of notice stated in the Contract of Employment, Collection Agreement or other rules and regulations incorporated to the Contract of Employment or the Internal Conditions of Service of the Company or pay the salary of the Employees in lieu of notice.

If none of the above documents provides for termination notice, the Employer would have to rely on the provisions of Section 11 (2) of the Labor Act which provides that the Employee will be entitled to;

  • (i) 1 day notice, where the contract has continued for a period of 3 months or less;
  • (ii) 1 week notice, where the contract has continued for more than 3 months but less than 2 years;
  • (iii) 2 weeks’ notice, where the contract has continued for a period of 2 years but less than 5 years; and
  • (iv) 1 month notice, where the contract has continued for 5 years or more.

What are the reasons for termination of the employment of the Employees to be stated on the Termination Notice?

The Nigerian labor law acknowledges that an Employer reserves the right to pay off any Employee whether on the basis of redundancy, idleness etc. or at the end of a project where the Employee is engaged.

Section 20 (1) of the Labor Act provides that the Employer shall inform the trade union or workers’ representative concerned reasons for and the extent of the anticipated redundancy. Section 20 (3) of the Labor Act defines “redundancy as an involuntary and permanent loss of employment caused by an excess of manpower

Though the definition of excess of manpower is not stated in the Labor Act, the Courts have considered the acquisition of a company, restructuring, reduction of production line, shortage of raw materials, economic and technological reasons as valid grounds for declaring redundancy. An Employee has no right not to be declared redundant in line with the terms of his employment or Collective Agreement which is applicable to him.

What are the criteria for computing the severance package upon termination of employment on grounds of redundancy?

Section 20 (1) (c) of the Labor Act provides that the Employer shall use its best endeavors to negotiate redundancy payments to workers who are not covered by the Minister’s regulations on the subject matter. Since the Minister has not promulgated these regulations, the Employer would be bound to compute the benefits of the Employees based on the provisions of the individual Contract of Employment of the Employees, the rules and regulations or any Collective Agreement and the provisions of its Internal Conditions of Service (“the relevant documents”).

Nevertheless, to show its good faith and best endeavor, the Company may at its sole discretion, meet with representative of the Employees to agree on other customary heads of claims and allowances not mentioned in the relevant documents. The Termination notice must clearly list the severance benefits of the individual Employee. Since each Contract of Employment constitutes a distinct course of action, the Company must give each Employee his Termination notice.

BufeteDíazMirón

Being more Human, and Work.

Labor and the worth thereof has been historically tied with the intrinsic value of man and the social, moral, philosophical and economic evolution of society itself.

When debating about the betterment of man, political and economic systems, psychology or social behavior, all through the eyes of labor and its meaning to humanity, we come across deep and rooted implications that shed light on the importance of employment law, prevention and labor legislation around the world.

Theodore Roosevelt believed that no man needed sympathy because he had to work. In fact, he stated that the best price life had to offer was a chance to work hard at something worth doing.  Roosevelt also believed that it was only through labor and effort that man may move on to better things.

In the XXIst Century much has been said, written and speculated about workaholics, overachievers and an unhealthy attachment to the workplace. Many are concerned about work becoming an addiction, though these believers would have to argue with the great Voltaire who coined the phrase “Our labor preserves us from the three great evils: weariness, vice and want.”

On the political aspect, the arguments and conflicts around labor have had a long and challenging history regarding wealth and work; William Howard Taft argued that socialism proposed no adequate substitute for the enlightened feeling of enterprise and creation for all mankind. Another great capitalist, John D. Rockefeller was known for saying “I believe in the dignity of labor, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living.”

These great men have been historically rivaled by other great men and minds like Karl Marx who believed that the production of too many useful things could result in too many useless people, and who in many ways spoke against private property.

As specialized labor and employment attorneys, the importance of labor, productivity and healthy labor and employment relations is the key to our existence and the cornerstone of our efforts. In many ways, literally and not theoretically we get a front row seat to personally attest to what and how important a healthy labor environment can be for an individual, for a family, a company and for society. Finding meaning and reciprocity in labor and employment relations is in many ways a foundation for all people and thereafter businesses and civilizations. In the era of information, technology, and advancement, robots have not taken over the workforce, in fact some may argue that they have given more meaning and value to the human aspect of work and production. Now more than ever, with employees having the ability to be informed in real time, the value of human ability and anthropological interaction is key to success. More than a political, historical or social discourse, now, in the era of technology is the time to be more human at work and to call for more interaction, more meaning and better and more stable labor relations.

Juan José Díaz Mirón

For more information:

jjdiazmiron@diazmiron.com

www.diazmiron.com.mx

 

BufeteDíazMirón

Employment Law – Physcological Approach

The Psychological Approach to Employment Consulting and Business Success.

In most cases, workplace interactions resemble perfect laboratory type conditions to asses, determine or witness psychological experiments, or to see all kinds of behaviors occur right before our eyes. The physical conditions, stress, interactions, and over all ambiance of any company that is shared collectively by people that spend more time at the job than at home, create interesting trends and reactions that must be understood and appreciated by every human resource and legal specialist with substantial exposure to employment issues.

The breadth and depth of psychological and psychosocial behaviors and patterns in the workplace is as diverse and profound as the unique makeup and extent of each individual. Nevertheless, seldom have we psychologically seen and studied the workplace as a separate entity with identifiable existence, behaviors, patterns and thereafter foreseeable and predictable reactions.

As a brief introductory note, legally this separation between entity and individual has had a clear dichotomy since roman Law. Ultimately, the beholder of legal personality (needed to enter into agreements) is called a person, and there are two kinds of persons in the legal world which are studied and treated separately: 1) Natural which are individuals who acquire personhood upon birth and 2) judicial persons such as corporations which acquire personhood upon incorporation and which are referred too, studied, claimed against and seen as different from all of the individuals that conform it. This ancient and clear distinction allows everyone to understand and navigate the legal world whilst dealing with persons and entities separately (it’s a distinction that we are so accustomed too, that one might never even stop to think about).

Nonetheless, psychologically it might be overlooked with more regularity that all entities (apart from the individuals that create them) likewise have a psychological buildup and baggage that determine a lot in terms of success or failure in relation with business, productivity, managerial and human relations, accolades or over all social recognition. Similar to individuals, all entities are made up of cultural, behavioral and natural traits that create the end product that will allow a company to thrive or fail in an economic model and capitalistic environment that in most cases implies a never ending go go go devotion that could be considered maddening at best. Industrial or occupational psychology as an accepted field of practice has increasingly grown to accept and understand workplace issues not only from the level of the individual but more importantly from understanding the behavioral phenomena that derives from the organizations.

As labor and employment advisors and business consultants this multi-level approach to law and behavior in the workplace is the raw material with which we should operate.  Each organization functions, behaves and shows different patterns that if identified and analyzed will ultimately serve in legal preventive strategies, risk management and the avoidance of

costly litigation. What marks the difference between attorneys and business consultants is not only a concern for the behavioral patterns of any company, but moreover the capacity to discern and uncover them, accompanied by a talent to analyze, learn and use these patterns in favor of each client.

Unlike the U.S.A or the U.K., Mexican Labor law sets forth minimal rules of engagement that must be met in every employee-employer relationship and which can be expanded contingent upon employer policies and possibilities. This approach sets the tone for all labor relations nationwide in terms of minimum requirements and statutory benefits. As a consequence, Federal Labor Law creates a perfect scenario and level playing field for consultants to analyze each organization, for example: If 5 different companies in the same sector operate with the exact same labor benefit packages, same working hours and are located in a range of 20 kms all from each other… what makes one company stand apart in terms of productivity and success? Why is it that under the same circumstances one organization may thrive whilst the other disappear?

Labor and business consulting is not only about compliance, and lawfulness but more over about specific behavioral and operational knowledge of each client to be able to make the best of HR, to get more out of production and to avoid complications in a non-stop otherwise emotionless economy.  Legal knowledge is only the first requirement for a labor consultant due to the fact that success in Human Resource management and productivity is most of the time contingent upon certain psychological and cultural rules that constitute unwritten social and behavioral norms.

Every organization must always be viewed and identified thereafter as an entity with separate behavioral characteristics that should be clear to director’s owners and executives to be able to obtain success in a system where respect, fairness and management are as important to success as legality is to compliance. Legal consultants thereafter must realize the trust that each business places upon them and shall be conscientious and responsible as to guarantee that all legal, cultural, social and behavioral leads are in place as to guarantee as much success as possible… Conscious legal consulting.

Juan José Díaz Mirón

For more information: jjdiazmiron@diazmiron.com