In order to guarantee better working conditions and address challenges arising from casual employment, labour outsourcing and contract staffing, the Federal Ministry of Labour and Employment (the “Ministry”) released the Guidelines of Labour Administration Issues in Contract Staffing/Outsourcing Non-Permanent Worker In Banks, Insurance and Financial Institutions (the “Guideline”) .¹

The Guidelines are a product from the collaborative effort of the Central Bank of Nigeria (“CBN”), the Nigeria Employers’ Consultative Association (“NECA”), the Association of Senior Staff of Banks, Insurance & Financial Institutions (“ASSBIFI”), and the National Union of Banks, Insurance & Financial Institutions Employees (“NUBIFIE”).

The Guidelines set out the basic terms and conditions finance and insurance companies are to observe when engaging contract staff or non-permanent workers.

Applicability and Enforcability

Relevant stakeholders, especially employers in the Banking, Insurance and Financial sector are to implement (where necessary) and adhere to the provisions of the Guidelines. Although, the Guidelines do not impose penalties or sanctions for non-compliance with its provisions, regulated entities such as financial institutions² must comply with the laws and guidelines as a condition precedent for maintaining or renewing their licences.

The compliance obligations of the entities subject to the Guidelines are limited to contract staff or non-permanent employees engaged to perform manual labour or clerical work as the Guideline cannot be interpreted to expand the scope of ‘workers’ as defined in the Labour Act .³

Key Provisions of the Guidelines

1. Definition of Parties. The Guidelines provide a definition of Principal and Labour Recruiter. It also makes a clear distinction between a permanent worker and non-permanent worker. The term ‘non-permanent’ worker⁴ is used to identify employees who are outsourced by a recruiter or a third party. However, the National Industrial Court of Nigeria (“NICN”), relying on the provisions of the International Labour Organization (“ILO”) and international best practices, has established outsourcing by a recruiter or third party as triangular employment and in several cases has treated the end user as the employer or co-employer of the employee. In Norbert Chukwuemeka Nworah vs. Zenith Securities Ltd. & 3 Ors (2022)⁵ the NICN held that the three defendants (Zenith Securities – first defendant, Zenith Bank PLC – second defendant and PeoplePlus Management Services Ltd – third defendant) are the claimant’s employer and are, jointly and severally responsible for any breach of the terms of employment or, torts committed against the employee.

The term ‘permanent worker’ is used to identify employees directly employed and renumerated by a principal. This form of employment is generally considered to be the typical employment relationship involving two parties. “Principal” is defined as all Nigerian employers in financial and insurance institutions. Whereas “Labour recruiter” is defined as an institution registered to offer labour recruitment services. A non-permanent worker on the other hand, will be classified based on whether the Principal operates in the financial and insurance sector.

2. Entry Requirements and Minimum Wage. The Guidelines states that companies in the specified sectors shall determine entry requirements into organisations operating in Finance and Insurance sectors based on industry best practice whilst the minimum wage shall be determined and reviewed annually by the bodies of stakeholders which shall be made up of the representatives of the principal companies, the labour recruiters and the relevant unions.⁶

3. Yearly Salary Increment, Career Path and Development. Employers in the Finance and Insurance sectors are now required to (i) provide opportunities for self-development and career path progression for non-permanent employees and (ii) promotion within (2) two years but no later than (3) three years from when an employee commences work in the relevant sectors. The Guidelines mandate the increase of salary on an annual basis for all categories of employees including contract staff. Additionally, the Guidelines provide that opportunity for regular or permanent employment where vacancies exist in the organization should be offered to non-permanent workers.

4. Unionization & Exit Procedure. The Guidelines expressly give non-permanent workers the right just as permanent workers to be unionized and to collective bargaining. This provision seeks to address the denial of representational rights – one of the challenges faced by casual employment, labour outsourcing and contract staffing. No employer, recruiter, principal company or third-party contractor shall overtly or covertly hinder the right of non-permanent workers to join a union.⁷ This right is also protected by the Nigerian Constitution⁸ and the Trade Union Act.⁹ All non-permanent workers shall belong to the National Union of Banks, Insurance and Financial Institutions (NUBIFIE) or the Association of Senior Staff of Banks, Insurance, and Financial Institutions (ASSBIFI) as appropriate.¹⁰

5. Disciplinary Procedures and Dispute Resolution. The Guidelines affirm the right of an employee including non-permanent workers, to a fair hearing.¹¹ Every Labour recruiter must now set up a disciplinary committee to deal with disciplinary issues. The Guidelines provide that a union representative must attend disciplinary proceedings of both the recruiter and the financial institution to ensure fair hearing for non-permanent workers.

It further provides that all parties governed by the Guidelines are to comply with the dispute resolution provisions of the Trade Dispute Act of 2004 and exhaust all measures to resolve disputes in the Act before seeking an industrial action.¹² Parties shall also respect the pronouncements of the Industrial Arbitration Panel and the NICN.

6. Compliance with International Labour Standards Requirements. Compliance standards are imposed on recruiters.¹³ They require a recruiter’s license issued by the Ministry to operate as recruiters and it is an offence for financial institutions to engage a non-licensed recruiter. Financial institutions are also required to monitor labour recruiter’s compliance standards with Nigerian Labour laws and ILO standards and ensure that they fulfil obligations to non-permanent workers in relation to the deduction and remittance of personal income tax, pension contributions, and provision of health and life insurance. The Guidelines state failure of a labour recruiter to comply with the provisions is sufficient ground for termination of contract between the financial institution and such labour recruiter.

Conclusion

These Guidelines are a step in the right direction for employment and labour law. The Labour Act 1970 has not been able to stay relevant in the face of the changes since it came into law. These Guidelines however, go a long way to close the gap although it only pertains to certain sectors. A number of provisions, whilst not novel, will have positive and major implications for employment and labour in Nigeria. For example, - the annual minimum wage review which requires the input of the unions - this discretion and autonomy (not reliant on the government) will go a long way to address the issue of wage inequality between non-permanent workers and permanent worker in those sectors.

Our excitement has been tempered by the fact that being a guideline, the Guidelines are superseded by the Labour Act and other laws mentioned herein. Still, the Guidelines if implemented and adhered to, will represent a small step for employment relations in the financial and insurance sectors and a giant leap forward for labour and employment law in Nigeria. Banks, Insurance companies and Financial institutions should be guided by these provisions when developing and adjusting their internal policy of hiring non-permanent staff.

Ultimately, it is our hope that an amendment to the Labour Act enshrining these developments (and more) in the Guidelines will be enacted soon.

This article does not, and is not intended to, constitute legal advice; instead, the information is for general informational purpose only. Please contact the authors if you have any questions or seek any legal advice regarding changes that may affect your business in light of this Guidelines.¹⁴

1. The Guidelines on Labour Administration Issues in Contract Staffing/Outsourcing, Non-permanent Workers in Banks, Insurance and Financial Institutions was issued on September 8, 2022. The Guidelines were issued pursuant to the powers conferred on the Minister by section 88 of the Labour Act which amongst other things, empowers the Minister to make regulations that contain ancillary provisions deemed necessary or facilitate the operations of the Act. The Guidelines are subsidiary legislation and have the same force and effect as the principal legislation.
2. The Guidelines do not define financial institutions, however, the Banks and Other Financial Institution Act 2020 and the rules of the CBN provides that Financial Institutions include commercial banks, merchant banks, microfinance banks, primary mortgage banks, payment service banks, Development Finance Instructions, finance companies, discount houses and Bureau de Changes.
3. Section 91 of the Labour Act, (Cap L1 LFN 2004 Laws of the Federation of Nigeria 2004) “Labour Act”
4. Guidelines on Labour Administration Issues Part I, paragraph 1.2 -1.4
5. Norbert Chukwuemeka Nworah vs. Zenith Securities Ltd. & 3 Ors (2022) Suit No: NICN/EN/48/2019 (NICN Enugu) Judgment delivered on June 29, 2022.
6. Guidelines on Labour Administration Issues Part II 2.1-2.2
7. Guidelines on Labour Administrative Issues Part IV 4.1 -4.3
8. Section 40 of the Constitution of the Federal Republic of Nigeria guarantees freedom of association, as a fundamental human right, and entitles every person to belong to and freely associate with any group, including trade unions, for the protection of that person’s interest.
9. Section 12 of the Trade Union Act states that membership of trade union shall not to be restricted on discriminatory grounds.
10. Guidelines on Labour Administrative Issues Part IV 4.2
11. Guidelines on Labour Administrative Issues Part VII 7.1 -7.3
12. Guidelines on Labour Administrative Issues Part VI 6.1 - 6.2
13. Guidelines on Labour Administrative Issues Part VIII 8.1 – 8.5
14. We acknowledge the contributions of Tomi Ososami to this publication.