In December 2023, The Employees Remuneration Protection Bill, 2023 passed its first reading on the floor of the House of Representatives in Nigeria, similar to the Employees/Workman (Unpaid Wages Prohibition) Bill 2016, which passed the second reading in October 2022. If it becomes law, employees can sue an employer that didn't pay remuneration after a specified period permitted by the legislation.
The proposed legislation is expected to make provisions to:
- Criminalise refusal to pay salaries and compensation by employers and corporate entities especially after the employee has made a written demand for payment of their entitlement. By extension, this also protects contract staff and freelancers.
- Put defaulting employers that disregard a written demand from an employee for five working days at the risk of three to six months imprisonment without the possibility of a fine.
- Punish any corporate establishment for failure to adhere to a court order to pay delayed salaries by imposing a ₦10,000 daily fine or stand the risk of the business being sealed off for a period not exceeding three months provided the default exceeds two months.
- Protect the employee from disciplinary actions, suspension, or termination that might result from submitting a petition to the court.
- Prioritise payment of outstanding remuneration in the event of employer's bankruptcy.
While we await approval, cases of salary and compensation default haven't always been treated directly by the National Industrial Court of Nigeria (NICN) – the court responsible for labour and work-related cases. Instead, such employment disputes have often been resolved through arbitration and mediation.
However, the common issues leading to disputes in employment that end up in the NICN based on the provisions under the Nigerian Labour Act and other established laws like the Employee Compensation Act, include unlawful termination of employment, harassment and discrimination, and unfair clauses within an employment contract.
These usually result from either having a loose approach towards employee relations or outright ignorance. Here are some of the mistakes that lead to litigation in the workplace.
Mistake #1: Improper documentation
One of the obligations every employer is expected to meet in Nigeria is providing a written contract of employment within three months of hiring an employee, especially if the duration of the employment is above one year.
Meanwhile, one of the provisions of the Employees Remuneration Protection Bill — if passed — is that an employer is obligated to provide written terms of employment within 14 working days for terms of employment exceeding one month.
Another important item worth noting is the staff handbook. These documents ensure that the employer and employee know what is expected of them like duration of employment, salary/wage, working hours, statutory deductions, procedure for termination, dispute resolution mechanism, reporting hierarchy, standard operating procedures, etc.
During a fireside chat at the Modern Workplace Africa Conference Startup, Omoruyi Edoigiawerie, an attorney, explained the importance of these documentations and the fine line they present in considering employee relations.
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"We cannot overemphasise the fact that contracts, agreements, handbooks, regulations, corporate governance documents drive the employer-employee] relationship and determine from important to mundane and from zero to hundred. Taking any decisions outside these will most likely be putting the organisation into serious legal jeopardy."
One oversight that happens during the hiring process is paying more attention to discussing remuneration and benefits without addressing these legally sensitive subjects.
With this done, potential employees can point out what they consider unfair terms within the contracts/agreements, and this can lead to one of two things: helping the company assess its legal risks and insure/transfer them by providing warnings and disclaimers or limitation of liability clauses, or providing an exemption for employees under certain terms.
Contracts like employee bonds, non-compete agreements, and non-disclosure agreements, though generally considered restrictive, are enforceable as long as they are deemed fair by the law.
Mistake #2: Having unchecked managers
Companies need to have standard operating procedures (SOPs) to ensure they stay consistent and compliant with business standards, especially in creating a safe work environment and resolving friction. However, lapses occur when there isn't a code of conduct guiding those in management and holding them accountable for relationships with non-managerial employees. Unfortunately, a breach in this aspect can implicate the entire organisation.
Most times individuals sue a company, it is because an employee, a manager or a supervisor, has defaulted. Still, the company is liable for the actions of the managers because of the relationship between the parties.
Litigation can be forestalled by having a transparent procedure for reporting and addressing potential harassment/discrimination/victimisation in the workplace, implementation of anti-bullying policies, compliance training for higher-ups, and employee education.
Mistake #3: Poorly educated/trained workforce
An ill-informed workforce is characterised by internal conflicts. Documentation (through the various agreements and contracts), is important, without regular internal correspondence, employers can be blamed for slips.
For instance, the law mandates employers to provide a safe working environment for workers, but if there are no records of health and safety training or sessions on how to use ergonomic equipment, an employer could be liable in the event of an accident.
The same applies when an employer terminates an employee's appointment for poor performance/below-average work despite failing to adequately train or support them. Similarly, there should be repeated conversations about intellectual property ownership for clarity, especially in tech companies.
When cases like this are properly argued in the NICN, the employer is vulnerable; a fail-safe is documenting company training/education.
"You cannot run an organisation and rely on the standard law -- Labor Act -- as a protection. The Labor Act protects, to a huge extent, employees more. Because as an employer, you are automatically at the higher end of this table; if you want to ensure a balance in protection, you must ensure that the contract of employment is properly done," Edoigiawerie noted.
Fortunately, strategies to avoid these pitfalls can be learnt. How do you assess your workplace's legal compliance? How do you maintain foolproof records and documentation suitable for legal defense?
This workshop -- The Employer Handbook: The 5 biggest hiring and employment mistakes that can lead to litigation, penalties, and loss of funds (and how to avoid them) -- will help you on this journey. Secure a spot.
