The principle of Triangular Employment is unique in that it involves three or more parties in an employment relationship. The most common form of this arrangement is where a labour outsourcing agency recruits employees (and/or contract staff) and assigns them to third parties/end-users. The employees are primarily recruited to perform services or work for third parties. Based on this arrangement, the labour outsourcing agency is the employer of the employee, and the third party/end-user is not directly involved in the employment of the employee. As such, a labour outsourcing arrangement would have two contracts, a contract of services between the employer/end-user and the labour outsourcing agency, and an employment contract between the labour outsourcing agency and the employee. This has introduced various challenges when it comes to the status and rights of parties when enforcing an employment claim at the National Industrial Court of Nigeria (“NICN”). From an employee’s perspective, the contention is that both the third party/end-user and the primary employer are jointly liable under the employment contract whilst the end-users argue that they are not parties or privy to the contract of employment which was executed between the outsourcing agency and the employee. This is the contrasting position that the NICN is usually faced with in an employment dispute involving a triangular relationship.

A review of most of the decisions of the NICN in matters involving triangular relationship will show that the NICN’s position on the liability of the third party/end-user is dependent on the peculiar facts of the cases decided by the Court. In our view, the NICN has not made any general pronouncement regarding the liability of an end-user in a triangular relationship. Rather, it is the facts of the case that will determine whether the third party is liable to the employee as a co-employer under the contract of employment. In Pengassan vs. Mobil Producing Nigeria Unlimited (2012),¹ the NICN whilst relying on provisions of the International Labour Organization (“ILO”) on scope of employment held that recourse must be had to the facts of each case in ascertaining the liability of the end-user. Some of the relevant factors considered by the NICN in its decisions include the policy under which the employee performs his responsibilities, the party responsible for payment of the employee’s salary, the party that exercises control and disciplinary powers over the employee. In the case of Tunde Ayoola-Johnson vs. 1004 Estates Limited & Anor judgment delivered on January 18, 2018,² the NICN in applying the above conditions held as follows:

“I have on record that the 1st Defendant was paying the salary of the Claimant but through the 2nd Defendant…I have again the unchallenged testimony of the Claimant… that until he was suspended by the 1st Defendant, he was subject to the control and direction of the 1st Defendant during the course of his employment because the 1st Defendant provided the tools and equipment for the performance of his duties, the 1st Defendant also exercised disciplinary control over him…In the instant case, the 1st Defendant exercised visible power of an employer over the Claimant…. From the facts, pleadings and evidence led in this case I have reasons to hold and so hold that both the 1st and 2nd Defendants are joint/common employers of the Claimant”.

In fact, very recently in Norbert Chukwuemeka Nworah vs. Zenith Securities Ltd. & 3 Ors (2022)³ the NICN held that the three defendants (Zenith Securities – first defendant, Zenith Bank PLC – second defendant and PeoplePlus Management Services Ltd -third defendants) 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.

On the issue of privity of contract, the general attitude of the NICN is that privity of contract is not a sufficient defence to a claim of co-employment under a triangular relationship. In Stephen Ayaogo & Ors. vs. Mobil Producing Nigeria Unlimited (2013),⁴ the 1st Defendant (the end-user) had argued in its objection to the suit, that by reason of the doctrine of privity, there is no employment relationship with the Claimants. In dismissing the objection, the NICN stated:

“in hinging its argument on privity of contract, the 1st defendant stressed the formalism of the two contracts in issue. While the privity rule is clear in its general prescription that one cannot benefit or suffer from a contract one is not a party to, this rule remains what it is: a general rule that is not absolute.⁵ In appropriate circumstances, it admits of exceptions. So when the 1st defendant talked of the privity rule as if it is sacrosanct, it missed out the point that the rule is not absolute” .

Significantly, the above positions of the NICN were recently presented to the Court of Appeal for review in Luck Guard Limited vs. Felix Adariku & 5 Ors (2022).⁶ In this case, the NICN had applied the principles established in its previous decisions relating to triangular employment and held the Defendants in the suit liable as joint employers of the employee. Dissatisfied with decision of the NICN, the Defendants appealed to the Court of Appeal. In setting aside the judgment of the NICN, the Court of Appeal made several pronouncements relating to the nature of an employment relationship and the doctrine of privity of contract. The Court of Appeal held with that “…Issues of contract of employment are definite things. They are not what one can under any guise consign to circumstantial predictions. If there is a contract of employment, there must be clear evidence of such a contract laying out clearly the terms and conditions of the contract.”

This pronouncement defeats the position that the question of who an employer is can be resolved by circumstantial predictions or facts of the case. It is the contract of employment that determines the employer.

The Court further upheld the defence of privity of contract which contradicts the position of the NICN. The Court held that:

“…the doctrine of privity of contract is all about the sanctity of contract between the parties to it. It does not extend to others from outside. The doctrine will not apply to a non-party to the contract who may have, unwittingly, been dragged into the contract with a view to becoming a shield or scapegoat against the non-performance by one of the parties”.⁷

The general effect of the decision of the Court of Appeal in Luck Guard’s case is that the previous positions of the NICN on the issue of triangular employment no longer represent the position of the law in Nigeria. An end-user can rely on the principle of privity of contract to avoid liability in any claim for co-employment in a triangular relationship.

Looking closely the following pronouncement of the Court of Appeal in Luck Guard’s case: “…there is no iota of evidence to indicate that the arrangement and agreement of the parties could admit of any triangular employment relationship”. (Emphasis provided by us)

It is our view that this suggests that where there are facts to show that the nature of the arrangement between the parties can admit a triangular employment relationship, the Court of Appeal may reach a different decision. Arguably this aligns with the general principles established by the NICN particularly that the Court can examine the nature of the arrangement between the parties to determine whether the end-user can be held liable. It may therefore be hasty to conclude that the above decision of the Court of Appeal has settled with finality that an end-user cannot be liable to an employee under a triangular relationship.

Please contact the authors if you have any questions or seek any legal advice regarding issues raised in this article.

1. Pengassan vs. Mobil Producing Nigeria Unlimited unreported Suit No. NIC/LA/47/2010.
2. Tunde Ayoola-Johnson vs. 1004 Estates Limited & Anor Suit No. NICN/LA/100/15 (unreported) judgment delivered on January 18, 2018.
3. Norbert Chukwuemeka Nworah vs. Zenith Securities Ltd. & 3 Ors (2022) Suit No: NICN/EN/48/2019 (NICN Enugu) Judgment delivered on June 29, 2022.
4. Stephen Ayaogo & 16 Others vs. Mobil Producing Nigeria Unlimited & Another [2013] 30 NLLR. (Pt. 85) 95.
5. Ruling per Hon. Justice B. B. Kanyip https://www.nicn.gov.ng/view-judgment/424.
6. Luck Guard Limited vs. Mr. Felix Adariku & 5 Ors - CA/A/1061/2020 delivered on 15th December 2022.
7. Per S.J. Adah, JCA in Luck Guard Limited vs. Mr. Felix Adariku & 5 Ors delivered on 15th December 2022.