Contracts of employment in Nigeria are used under the employment and labour relations to attribute rights and responsibilities between employers and employees. They are crucial because they emphasise the extent of the scope of power of the employer and bind both the employee to the employer. Thus, employers and employees are bound by the terms of the contracts of employment. Employers risk heavy losses if they do not have responsive contracts with their employees. Employees risk slave labour if they do not have a well-adjusted employment contract.
Business Dictionary, 2017 defined Job security is perceived as the presumption or confidence index of the employees concerning the protection of their employment within the workplace. Specific economic factors dictate job security. Those factors include individual employee skills and performance and the overall performance of the employer company. Legally, job security can be surmised as a guarantee assured by either by legislation, policy, terms of employment contracts or collective bargaining agreements. Job security protects against the involuntary loss of employment resulting primarily from the employers of labour. In Nigeria, the scourge of casualisation of employment A.K.A. contract staffing has gained grounds in an unprecedented proportion, intensity, and scale. The increase in the spread and steady acceptance of this abhorrent labour practice in the Nigerian labour market is an issue of great concern to stakeholders and thus necessitates consideration of contracts of employment. Furthermore, The Nigerian Bureau of Statistics estimates 23.1%, of the Nigerian adult population are unemployed while 52.6% of the Nigerian adult population experience underemployment. As such, once can surmise that there is not much job security in Nigeria.
The foremost legislation on employment issues in Nigeria is the Nigerian Labour Act of 1971, which describes a “worker” or an “employer” as a person who enters into a contract of employment with an employer. The Labour Act 1971, is inapplicable to “employees” exercising administrative, executive, technical or professional function as public servants who have specific laws regulating them. The contract could either be for service or personally execute any work or labour. Public servants, persons working in a ship or an aircraft are exempted from the definition of workers under the Act. Other legislations important to preparing Contracts of employment include but are not limited to:
- the Trade Unions Act (Chapter T14 LFN 2004, as amended), regulates the organisation of trade unions and their activities
- Trade Dispute Act CAP T8, Laws of the Federation 2004
- National Industrial Court Act, No 38. Vol. 93, 2006
- The Constitution of the Federal Republic of Nigeria 1999 (as amended)
- The Pension Reform Act 2014, which regulates the contributory pension scheme
- the Personal Income Tax Act (Chapter P8 LFN 2004, as amended by the Personal Income Tax (Amendment) Act 2011), which regulates the taxation of employees’ remuneration
- the Employees’ Compensation Act 2010, which regulates the payment of compensation to employees who suffer occupational diseases or sustain injuries arising from accidents in the workplace or during employment
- the Industrial Training Fund Act (Chapter I9 LFN 2004, as amended), which requires employers to contribute 1% of their annual payroll to the Industrial Training Fund created by the act
- the Immigration Act 2015, which regulates the employment of foreign nationals
- the National Health Insurance Scheme Act (Chapter N42 LFN 2004), which established the national health insurance scheme
Employers of labour are mandated under Section 7(1) of the Labour Act to provide their employees with a contract of employment within three months of commencement of the employment relationship. We shall now proceed to consider the key terms and conditions that are customarily included in a contract of employment.
The contract must have certain crucial terms – including the name of employer/employee, nature of employment, duration, and wages. The crucial thing to note is that employees are protected by all the relevant terms being reduced to writing. Reducing critical terms in writing ensures employees know all that is to be expected for the duration of the employment. It is crucial to note that employees ought to be informed in writing of any changes in their terms of employment, within one month.
The Labour Act also stipulates that contracts of employment should not provide for the payment of wages at any interval exceeding one calendar month. This provision can only be dispensed with if the written consent of the Governor of the State where the contract is being executed obtained. It is important to note that under Nigerian law minimum wage is adjudged as NGN 18,000.00 and as such contracts should not possess a remuneration below this amount.
Health insurance in Nigeria is regulated by the National Health Insurance Scheme which is a body established under the National Health Insurance Scheme Act (Chapter N42 LFN 2004). The extant legal regime in Nigeria does not mandate the provision of health insurance for workers. However, the 8th National Assembly in a bid to mandate health insurance proposed a bill titled; ‘A bill for an Act to repeal the National Health Insurance Scheme Act, Cap. N42, LFN 2004, and to enact the National Health Insurance Commission Bill, 2017. The bill was enacted by the National Assembly of Nigeria but was never signed into law. The bill sought to mandate health insurance for employees in the public sectors and the organised private sectors (OPS) with more than 5 (five) employees. This bill was a step in the right direction. One can only hope it will be re-introduced to the 9th Assembly and subsequently passed into law.
The American, Affordable Care Act, signed into law by President Barack Obama mandated Health Care/Insurance and levied tax penalties for failure fall under the minimum essential coverage. Although, President Donald Trump in 2018 eventually removed the aspect of the tax liabilities. In the UK, employee health insurance is not compulsory. Primary health care services are readily available in the UK; hence, the non-mandatory nature of health insurance in the UK. Thus, employers are not under any obligation to insure the health of their workers in the UK. In countries with mandatory health insurance like Dubai & Abu Dhabi, this has proven successful as it has assisted in a significant reduction of the financial burdens employees face. The Nigerian government especially the Nigerian Senate is advised to swiftly enact similar laws that aim at protecting and easing the stress of workers through workplace health insurance schemes.
Under Labour Act, employees, who have worked for a continuous period of 12 months maximum, are entitled to such period of time which may either be days, weeks or months, subject to agreement, known as annual leave. This leave will be observed in addition to the employees’ full basic salary for the same period of leave or vacation. Legally, annual leave may only be deferred once every 24 calendar months. The present practice in Nigeria of employers remunerating their employees not to go on vacation is therefore unlawful.
The Labour Act statutorily provides for a six weeks’ maternity leave before birth for pregnant women provided that a medical certificate is produced. Pregnant women are entitled to a minimum of 50% of their wages during the period of their maternity leave. After birth, a nursing mother is also entitled to another six weeks leave. On resumption for work, a nursing mother is entitled to half an hour recess twice in a day to nurse her infant. An employer is however liable for the medical expenses of an employee incurred during or on account of the employee’s pregnancy or confinement during such pregnancy and birth of a child. The ILO’s Maternity Protection Convention, 2000 (No. 183), mandates a minimum leave period of 14 weeks for women around childbirth. The Conventions accompanying recommendation promotes the optimal maternity leave to be at least 18 weeks.
Remarkably, the Nigerian labour regime does not provide for paternity leave. However, in practice Paternity leave is usually provided for in Contracts of employment. The time, however, is decided on a case to case basis. Cain Miller in “Being a Father Is Good for Your Career, but Don’t Get Carried Away” (2014), revealed that studies showed that fatherhood is often rewarded by higher remuneration in the workplace for fathers. However, researchers from the ILO have discovered that when men take time off work for childcare, they are penalised in the form of lower hourly pay or demotions. In 78 countries, a statutory right to paternity leave is available for the male workers.
Interestingly, 70% of the observed countries mandate that paternity leave is paid leave. It is recommended that Nigerian employers also consider the option of inserting the option of paternity leave in the contracts of employment. The duration of the leave may not be as long as that of maternity leave.
Every employer must protect their interests by including airtight non-compete clauses in cases of termination/dismissal. This is especially true in especially in industries and ecosystems where there is plenty of competition, and the skills and knowledge of the employee can be used to devastating effect by a competitor. Breach of a non-compete clause can be a ground for a breach of contract. Neither party is obligated to provide any justification for terminating the contract in all cases of the termination of a contract of employment.
In cases of dismissal, employers are entitled to opt for the dismissal of its employee’s contract, in situations, where the conduct of the employee “…… is of some grave and weighty character that it undermines the relationship of confidence which must exist between a master and a servant”. Employers need to utilise omnibus clauses in couching the grounds for dismissal as grounds for dismissal usually vary from case to case. Nigerian courts in practice do not grant the relief of specific performance of contracts of employment in the private sector. The Courts will instead grant damages in cases of wrongful dismissal in order to not impose a willing employee on an unwilling employer and vice versa.
Conclusively, although the Labour Act being the primary regulation that guides employment relationship in Nigeria is not the only legislation that aims at protecting the rights and interests of workers. Other Laws, such as the Employee Compensation Act, also seeks to protect several core rights and interest of employees in Nigeria. The legal regime in Nigeria needs to be revamped to include specific protective clauses in the contracts of employment such as paternity leave, increase in the yearly holiday leave period, the inclusion of the mandatory insurance scheme. The legislature should be steadfast, swift albeit thorough in passing bills that aim at protecting the rights and interests of workers.