In the wake of COVID-19, in Nigeria, businesses that provide non-essential services have been forced to shut down operations whilst businesses that provide essential services are mandated to operate under the restrictive guidelines of the Nigeria Centre for Disease Control (NCDC).
In consequence businesses are faced with the imminent loss of: revenue; profits; existing and future business, which in turn is likely to lead to forced reduction in staff working hours, shortage/non-payment of salaries, and mass layoffs.
Guy Ryder, the Director-General of the International Labour Organisation (ILO) recently said “ILO estimates are that as many as 25 million people could become unemployed, with a loss of workers’ income of as much as USD 3.4 trillion. However, it is already becoming clear that these numbers may underestimate the magnitude of the impact”.
Undoubtedly in the coming months and years Nigeria’s National Industrial Court (NIC) is bound to be inundated with an unprecedented number of employment dispute suits.
Inevitably, many companies will be faced with the possibility of substantial litigation risks resulting from the hard decision to reduce working hours, suspend, and lay off employees. It is therefore imperative for companies to be well equipped with answers to key questions on the relevant aspects of Nigeria’s labour laws and procedure vis -a- vis contracts of employment, the relevant terms of the contract of employment, sick pay, suspension, termination/layoffs, and the modes of dispute resolution, amongst other matters.
Key Questions
- What are the implied duties owed by an employer to employees, during the lockdown?
An employer owes its employees the duty to fulfil the terms of the contract of employment and to provide work within a safe and reasonable working environment. Therefore, for those employees that work in the essential service sectors, the employer is expected to engage all necessary measures to protect the health and safety of all its employees at the place of work and during the course of work.
- Is an employee, who has tested positive for COVID-19, entitled to sick leave?
Under section 16 of the Labour Act, a worker is entitled to 12 days of paid sick leave in every calendar year provided the illness is temporary and certified by a registered medical practitioner.
Furthermore, the Employees’ Compensation Act appears to advocate for adequate compensation in respect of employees who may have been infected by the virus during the course of employment.
- In the wake of the unprecedented changes caused by the epidemic, under the law, are parties permitted to review the contract of employment?
Under the Labour Act, there are no specific provisions for the review of the contract of employment. However, parties are, under the principles of mutuality, at liberty to review the terms of their contractual relationship.
- What is the legal position with respect to discrimination on grounds of health status (i.e. contracting COVID-19)?
Unlike the HIV and AIDS (Antidiscrimination) Act 2014, – which prohibits employers from discriminating directly or indirectly against employees on the basis of their HIV status or HIV-related illness – there are no specific provisions upon which an employee may claim discrimination in relation to contracting the COVID-19 disease or any disease of the like.
- Relevant statutory employee benefits to bear in mind
According to the Pension Reforms Act 2014, all employers are mandated to procure a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee. In the event of default the employer shall be liable for claims arising from the death of the employee.
- Trade Unions
Under the Trade Unions Act, employers are mandated to recognise registered trade unions and under the rules on collective bargaining, the members of registered trade union must establish a body of representatives who may represent trade unions when engaging discussions with the employer.
- Can an employer terminate a contract of employment without reason and notice?
Generally, the employer is entitled to terminate the contract of employment without reason, provided termination is in accordance with the terms of employment, although the National Industrial Court of Nigeria has on a number of occasions indicated the need to state the reasons for the termination, in accordance with international standards and best practises.
It is, however, pertinent to state, that a worker under the Act is entitled to be given notice of termination or his/her salary in lieu of notice. Pursuant to section 11(2) of the Labour Act, the respective periods of notice are set out as follows:
- a) one day notice, where the contract has continued for a period of three months or less;
- b) one week’s notice, where the contract has continued for more than three months but less than two years;
- c) two weeks’ notice, where the contract has continued for a period of two years but less than five years; and
- d) one month’s notice, where the contract has continued for a period of five years or more.
Subsection (3) of the Act requires any notice for a period of one week or more to be in writing.
Furthermore, parties are at liberty to agree to longer notice periods, in the contract of employment.
It is important to bear in mind some exceptions. Under the Act (Section 54(4) to be precise), any female worker who is absent due to maternity leave, or any longer period as a result of ill health emanating from the pregnancy or confinement and which renders her unfit for work, cannot be disengaged.
On the contrary, the contract of employment maybe terminated for cause, usually owing to criminal acts, gross misconduct, sexual harassment, assault and the like.
- Under what circumstances can the contract of employment be terminated on grounds of redundancy and does the COVID19 pandemic fall within such grounds?
Redundancy is described, by the Act, as an involuntary and permanent loss of employment caused by an excess of manpower. Section 20 of the Act provides that an employer in the event of redundancy shall take the following steps:
- a) inform the trade union or workers’ representative concerned of the reasons for and the extent of the anticipated redundancy;
- b) the principle of “last-in, first-out” shall be adopted in the discharge of the particular category of workers affected, subject to all factors of relative merit, including skill, ability and reliability; and
- c) the employer shall use best endeavours to negotiate redundancy payments to any discharged worker(s) not protected by regulations.
Clearly by the definition of redundancy it will be difficult for employers, seeking to reduce their workforce in the wake of COVID-19, to terminate contracts of employment by reason of redundancy.
The Emergency Economic Stimulus Bill, 2020
As part of its efforts in mitigating the economic effects of the COVID-19 pandemic, the House of Representatives passed the Emergency Economic Stimulus Bill, 2020 to put in place certain palliative measures.
Section 3 of the Bill provides that any employer duly registered under Part A or Part B of the Companies and Allied Matters Act (CAMA) 2004, which maintains the same employee status without retrenching their staff as at March 1, 2020 till December 31, 2020 shall be entitled to 50 percent income tax rebate on the total of the actual amount due or paid as Pay As You Earn (PAYE) Tax under the Personal Income Tax Act 2004.
However, Section 6 of the Bill goes on to state that this does not apply to employers partly or wholly subject to the Petroleum Profit Tax Act.
The following circumstances shall not preclude the rebate to employers under the Section 3:
- 1. Where an employee dies of natural causes;
- 2. Where an employee voluntarily leaves the employment or has already indicated interest to leave the employment before March 1, 2020; or
- 3. Where the employer breaches the Labour Act.
The rebate period can also be extended by the President of the Federal Republic of Nigeria for the duration during which COVID-19 remains an urgent and severe public health emergency.
However, this must be ratified by a majority of the members of the National Assembly.
Conclusion
Mass sacking and employment review is inevitable. The resultant flurry of settlement negotiations and litigation is equally certain.
What remains uncertain is the readiness of many employers to foresee the extent of the challenge and prepare adequately in order to mitigate litigation risks.
Further losses are bound to be better managed if all relevant heads of human resources and legal departments plan adequately for the eventuality.
This article was written by GRF Dalley & Partners
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