There appears to be a recent wave of retrenchment in the global employment market (especially for technology companies like
Redundancy under the Nigerian Labour Act
The Nigerian Labour Act (the "Act") is the principal legislation on labour and employment in
Notwithstanding that the provisions of the Act are primarily applicable to Workers, most employers use the provisions of the Act as a minimum guide or standard in establishing the terms of the employment relationship between the company and all its employees, including managing redundancy process.
Definition and Scope of Redundancy
Redundancy is defined under section 20(3) of the Act to mean the '...involuntary and permanent loss of employment caused by excess manpower'. The Act contains no reference as to the events that could lead to excess of manpower, however, factors such as the acquisition of a company, restructuring, cessation of business operations or operational requirements could be considered as valid grounds for declaring redundancy. In Alexander O. Ejah & Ors v
Also, the Court had the opportunity to explain the nature of redundancy in
Procedure to be followed in carrying out a redundancy in
The major issue to note in a redundancy scenario is that reliance on the Act will only cater for employees who fall within the statutory definition of workers as defined in the Labour Act. Barring any collective agreement between the affected employees and the employer which streamlines a procedure for seeking compensation for such disengagement, workers who are administrative staff, management staff and skilled workers may not be protected in such instances.
For Workers, the Act expects the employer to be open and transparent about the redundancy process and that such employees be informed of the intention of the employer to declare a redundancy as well as negotiate a disengagement package.
On the procedure, the Act in section 20 (1) (a) - (c) provides that in the event of a redundancy:
- The workers to be affected are to be informed through their representative or union of the reasons for and extent of the proposed redundancy exercise (this will only seem to apply if they have a union).
- The employer must adopt the principle of 'last in, first out' in discharging the categories of workers, subject to such factors as relative merit, skill, reliability and ability.
- The employer is expected to use its best endeavours to negotiate redundancy payments with any discharged worker who is not covered by any regulation made by the Minister of labour for compulsory payment of redundancy allowance5.
It is worthy to note that the court has observed that when an employer relies on redundancy to disengage the services of an employee, the burden is on the employer to satisfy the court on the reason and furnish facts or law in support of his action6. Besides the duties imposed by section 20 (1) of the Act, where there is no collective agreement reached between any employees' union and the employer, the courts will often resort to the common law principles with respect to fairness and reasonableness in relation to redundancy. In Mr. J. M. J. Asinobi & Ors v
However, if there exists a collective agreement, or the company's redundancy policy is engrafted in the employees' individual contracts, there would be contractual expectations and the employer will be duty bound to meet those expectations. In SPDCN v. Nwaka8, following a re-organization of staff and roles within Shell Nigerian,
International Best Practice
In recent times and in line with section 12 of the 1999
In the case of
There are some salient provisions of the ILO Convention No. 158 as they relate to redundancy. The procedure for redundancy is provided for in Articles 13 and 14 of the Convention No 158.
- Provide the workers' representatives concerned in good time with relevant information including the reasons for the terminations contemplated, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out;
- Give, in accordance with national law and practice, the workers' representatives concerned, as early as possible, an opportunity for consultation on measures to be taken to avert or to minimize the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.
Article 14 of Convention No 158 provides that; "When the employer contemplates terminations for reasons of an economic, technological, structural or similar nature, he shall notify, in accordance with national law and practice, the competent authority thereof as early as possible, giving relevant information, including a written statement of the reasons for the terminations, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out."
From the foregoing, the obligation of an employer under the convention includes information, consultation, and notification. An important improvement on the position under the Act is the requirement for the employer proposing redundancy to enter consultations as to efforts to mitigate the job losses.
In conclusion, the lack of regulation on the issues revolving around compensation for redundancy by the Minister of
Footnotes
1. According to the
2. Section 91 of the Labour Act
3. NICN/CA/97/2013,
4. (1997) 11 NWLR (Pt. 530) 625
5. Please note that there are currently no regulations, and the Act does not provide a compensation guide.
6. National Electricity Power Authority v. Friday Edokpayi Eboigbe (2008) LPELR-8576,
7. NIC/ EN/05/2009,
8. (2003) 6 (NWLR) Part 815, pg 184
9. Suit No. NICN/ABJ/144/2018
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Temiloluwa Fakolade
AELEX
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