Criminal Case

The National Assembly of The Federal republic of Nigeria is considering a bill for the amendment of the Labour Act.  The said bill follows:

A BILL FOR AN ACT TO AMEND THE LABOUR ACT TO PROHIBIT AND CRIMINALISE CASUALIZATION OF WORKERS AFTER SIX MONTHS OF ENGAGEMENT BY EMPLOYERS IN NIGERIA, OUTSOURCING EMPLOYMENT IN CORE AREAS OF OPERATION AND FOR RELATED MATTERS

Sponsored by Hon. Tasir Olawale Raji

ENACTED by the National Assembly of the Federal Republic of Nigeria as follows:

• The Labour Act (herein referred to as “The Principal Act”) is hereby amended as set out hereunder.

• The Principal Act is hereby amended by creating new Section 8 as follows:

  S.8-(1) Every worker in Nigeria engaged or employed by and has remained in

  such employment for a period of not less than six months shall have his

  employment or engagement regularized by the Employer as a full and permanent

  staff of such employer with all its accompanying entitlements.

  (2) Any Employer who disengages a worker after a period of six months from the

  date of first engagement without regularizing the worker’s employment as in sub

  section 1 of this section shall at the date of disengagement pay to the worker full

  salary and all allowances and entitlements due to a permanent staff for six

  months as if the worker has been a permanent staff in the employment of the

  Employee for six months immediately preceding the date of disengagement

  provided the worker has not been found liable of any criminal act involving fraud

  resulting to financial loss to the company.

  (3) Notwithstanding Section 23 of this Act, failure to comply with the provisions

  of subsections (1) and (2) above is an offence and the employer:

  (a) in the case of a natural person, shall be liable on conviction to a fine not

  exceeding two million naira or to imprisonment for a period of two years or to both such fine and imprisonment as the Court may deem fit without prejudice to

  the right of the worker to his full entitlements as provided under this section.

  (b) in the case of a Corporate body, shall be liable on conviction to a fine not

  exceeding two million naira or to imprisonment for a period of two years for

  each director of the Company or to both such fine and imprisonment as the Court

  may deem fit without prejudice to the right of the worker to his full entitlements

  as provided under this section

  3. The Principal Act is hereby amended by creating new Section 9 as follows:

  9 (1) notwithstanding Section 25 of this Act, an employer, who has obtained the

  Minister’s license, employment outsourcing by such employers within its core

  aims and objectives of operation is hereby prohibited. It is an offence for an

  employer to pay another person, whether corporate or natural person for

  services rendered to it by its worker.

  (2) Failure to comply with the provisions of subsection (1) above, the employer

  shall be guilty of an offence and liable on conviction to:

  (a) in the case of a natural person, shall be liable on conviction to a fine not

  exceeding two million naira or to imprisonment for a period of two years or to

  both such fine and imprisonment as the Court may deem fit without prejudice to

  the right of the worker to his full entitlements as provided under this section.

  (b) in the case of a Corporate body, shall be liable on conviction to a fine not

  exceeding two million naira or to imprisonment for a period of two years for

  each director of the Company or to both such fine and imprisonment as the Court

  may deem fit without prejudice to the right of the worker to his full entitlements

  as provided under this section.

  4. Section 91 (1) of the Principal Act is amended by inserting “regularized means

  to make regular a worker’s employment”5. The Principal Act is hereby amended by renumbering the existing sections 8 to 92

  of the Principal Act as sections 10 to 94 of the Labour (Amendment) Bill, 2019.

  Citation

  6. This Bill may be cited as the Labour Act (Amendment) Bill, 2019.

EXPLANATORY NOTES

A Bill seeks to amend the Labour Act to Prohibit and Criminalize Casualization of Employment more than Six Months by Employers in Nigeria, outsourcing employment in core areas of operation

OPINION

What or who a casual worker is, was defined in OWENA MASS TRANSPORTATION CO. LTD v. OKONOGBO (2018) LPELR-45221(CA) in the following terms:

“What then is a casual worker? It is one who has an explicit or implicit contract of employment which is not expected to continue for more than a short period, whose duration is to be determined by national circumstances. This ambiguous definition has led to varying definitions of casual and contract workers and their rights in different jurisdictions. Traditionally, casual labour refers to work conducted for defined periods and during peak business periods when individuals are called to supplement full-time workers in times of high business activity, particularly in retail, but the situation is different now. Legally, a casual employee is seen as a worker engaged for a period of less than 6 months and who is paid at the end of each day. The expectation is that this category of worker includes those engaged, for example, in piece work, short-term construction work, etc. This however, is not really the practice, casual jobs today are commonly understood as jobs that attract an hourly rate pay but very few of the other rights and benefits, such as the right to notice, the right to severance pay and most forms of paid leave. ?Losses suffered by casual employees include; abysmal low wages, absence of medical care allowances, no job security or promotion at work, no gratuity and other severance benefits, no leave or leave allowance, freedom of association which is often jeopardized, no death benefits or accident insurance at work, no negotiation or collective bargaining agreement. This treatment extends to job allowances, canteen services, person plans, health and life insurance schemes, transportation and leave entitlements etc. Sadly, the trend now is that casual workers work for many years without promotion and necessary entitlements, and sometimes they do what normal employee should do, but are not compensated for such. These are the pitfalls and disadvantages of casual labour and as such the employee must be informed of the type of employment he or she is getting into. The employee must be aware from the onset that he/she is being employed as casual employee to make an informed decision which type of employment he/she is getting into.”

The holding of the court of appeal in the suit cited above, gives clear insight to how the law defines a casual worker and the likely slant of the courts in addressing issues of casualization of workers.

Having stated the above, the proposed amendment to the Act is quite clear. The proposed amendment does not make employing casual workers a criminal offence. For an offence to be committed by an individual or body corporate employer, the employee must have been engaged for more than 6 months, without having the employment regularised. This simply means casual workers can still be engaged for periods less than 6 months.

In strict sense of the word, a casual worker is one who is engaged for services rendered from day to day. This is different from contract staff who have a written contract of service for a fixed period and with definite terms.

It seems that the Amendment to the Act seeks to limit even the period for which a contract of service can be active to 6 (six) months or less. To think otherwise will render the intention of legislators redundant as casualization of work could continue under the guise of a contract of service running from day to day.

However, without any specific provision restricting the length of contracts of service, contracts of service can be drafted to run for any period (or from day to day) the parties as agree to. Note that Sections 7-9 of the Labour Act which makes provision for contracts of service has been left intact without amendment.

It will appear that if a worker is engaged for repeated cycles of less than 6 months for instance, no offence will have been committed, as long as the employment is terminated before 6 months and a fresh employment created.

With regards to outsourcing, this is prohibited within areas of a company’s core aims and objectives. The core aims and objectives are determined by examining the memorandum and articles of association as filed with the Corporate Affairs Commission. This simply means any service or business outside the core aims and objectives can be outsourced. See CONTINENTAL CHEMISTS LTD v. IFEAKANDU (1966) LPELR-25293(SC):

“After a company is incorporated, the memorandum becomes the charter of its activities and at the same time defines its field of operation; Apart from statutory powers, anything done outside the stated objects is ultra vires the company; it is invalid and cannot be ratified by the members: Ashbury Railway Carriage and Iron Co. v. Riche (1875) L.R. 7 H.L. 653, in which Lord Cairns said (at 667) that the rule served the dual purpose of protecting both investors and creditors. But the rule is applied liberally so that whatever is fairly incidental to the objects stated in the memorandum (unless expressly prohibited) is regarded as intra vires: Attorney-General v. Great Eastern Railway Co. (1880) 5 App. Cas. 473.”

“The next important case is In Re German Date Coffee Co. (1882) 20 Ch.D. 169, in which (at p.188) Lindley L.J. said as follows: “In construing this memorandum of association, or any other memorandum of association in which there are general words, care must be taken to construe those general words so as not to make them a trap for unwary people. General words construed literally may mean anything; but they must be taken in connection with what are shown by the context to be the dominant or main objects. It will not do under general words to turn a company for manufacturing one thing into a company for importing something else, however general the words are…”

In the case cited above, a pharmaceutical company whose memorandum of association stated its objects and aims as the manufacture, dispensing and production of drugs and allied products, employed the respondent who was a medical doctor to run a hospital on their behalf and provide medical services to them. The company had paid for the doctor’s education in the United Kingdom as part of the consideration for obtaining his services.  The respondent worked for a while before abandoning the employment. Upon being sued for breach of a contract of employment, to provide medical services, the respondent contended that since providing medical services was not included in the memorandum of association, the contract of employment was ultra vires the appellant. The supreme Court agreed and dismissed the appeal. This means a core aim or objective is what is intra vires of the company to do. For instance a question any organisation or business could ask itself will be: with our current objectives in the memorandum of association can we set up an accounting firm; human resources agency; security company; logistics and haulage services; provide legal services etc. If the answer is No, then the area is not a core aim or objective within the intention of the proposed amendment and can be outsourced.

Impact on Directors and management Team

The proposed amendment makes the directors of the company liable on conviction to a term of imprisonment. The company and its directors are being held liable for breach of the terms of the proposed amended Act. The Directors of the company will be the persons stated in form CO7 filed with the Corporate Affairs Commission or the persons held out by the company to the general public as a Director.

 269. (2) There is a rebuttable presumption in favour of any person dealing with the company that all persons who are described by the company as directors, whether as executive or otherwise, is duly appointed.

NWANKWO v. KAY-KAY CONSTRUCTION LTD (2014) LPELR-24336(CA)”It is clear from exhibits B and F that, even though his name is not in the form C07 (particulars of directors) of the respondent filed at the Corporate Affairs Commission, Engineer Emeka Okeke occupied the office of Managing Director of the respondent, acted as such and was held out by the respondent as its Managing Director during the transaction leading to this suit. He is clearly, in fact (de facto) and law (de jure) the Managing Director of the respondent as exhibits B and F show. In law he is a director of the respondent by virtue of S. 650 of the Companies and Allied Matters Act 1990 which defines the director of a company registered under the Act like the respondent as including “any person occupying the position of director by whatever name called.” It is clear from this provision that what determines if a person is a director is not whether his or her name is listed in the particulars of directors (Form C07) in the Corporate Affairs Commission. If he occupies that position by any name called, he is a director of the company.

SUMMARY

• It is not an offence to engage casual workers, it only becomes an offence if they are so engaged for more than 6 months.
• Casual workers may be engaged for repeated cycles of less than 6 months.
• Outsourcing has not been prohibited entirely. Only outsourcing in core aims or objectives is sought to be prohibited. Core aims and objectives will be determined by what is contained in the company’s memorandum of association.
• Directors and/or the company become liable for breach of terms of the Act.

As in all opinions the above remains our viewpoint within our knowledge of the law as it stands. The proposed amendments have not been passed into law and are yet to be given judicial interpretation.

Adebisi Ilori

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