Funmilayo Odude, Partner, Commercial and Energy Law Practice (CANDELP)

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Balancing the scales of justice in employment matters 16 Sep 2022

The National Industrial Court of Nigeria (NICN) has earned its reputation as a progressive court. Since its elevation as a superior court of record, pursuant to the 3rd alteration to the Constitution, it has through its more efficiently run administrative processes and, more importantly, its decisions and pronouncements, been recognized for its judicial activism in extending the frontiers of jurisprudence in labour and employment matters in Nigeria. In recent years, judicial pronouncements on labour matters by the NICN have deviated from some erstwhile established and trite principles of law and judicial precedents.

This is not entirely unexpected as we live in a progressive world and law must evolve along with the society it regulates. However, there is a delicate balance to be maintained between ensuring certainty in the application of law which is the bedrock of judicial precedents on the one hand, and the progressive application of the law in line with an evolving society on the other. For instance, all litigants must have equal standing before the court.

The NICN has already earned a reputation as being pro-employee. The court admitted this in the recently decided case of the Shell Petroleum Development Company of Nigeria Limited (SPDCN) v. Minister of Petroleum Resources & 2 Ors, where Hon. Justice B.B. Kanyip PhD, who is also the President of the court said in the course of the judgment that: “Today, labour law is replete with rules that favour the employee. Accordingly, found in labour law are rules such as ambiguity being resolved in favour of the employee … since the bargaining power tilts favourably on the side of the employer.” Hence, labour and employment issues are no longer legally being interpreted merely in light of contract between two or more contracting parties. Hon. Justice Kanyip said further in the judgment referred to: “That there is paternalism of the law in labour relations is a given fact. Globally, the jurisdiction of industrial courts is invoked not for the enforcement of mere contractual rights but for preventing labour practices regarded as unfair and for restoring industrial peace.”

There are certain innuendos from this position. First, the courts in its attempt to balance the bargaining powers between employers and employees have intervened in the negotiations of contracts of employments, howbeit at the determination rather than the commencement of such contracts. By importing ‘fair’ terms and invalidating ‘unfair’ terms agreed by the parties, the courts have set the rules of engagement for parties in labour and employment acting under the auspices of ‘international best practices’.

Of course, the determination of what is fair and unfair lies with the courts as the arbiter. The simplest analogy of this is the decision of the NICN in now a plethora of cases that notwithstanding the provision in the contracts of employment that either party may by notice (usually one month’s notice) terminate the contract, employers must give a valid reason before they can terminate the employment of an employee. There should be a distinction between scenarios where there are obvious acts of bad faith, such as termination as a result of exposing fraud in the organization or whistleblowing, or refusal of sexual overtures or filing a complaint of sexual harassment and the termination of a contract of employment without any extenuating circumstance.

Where there is an act or the complaint about an act of bad faith capable of being proven from the circumstances of the events surrounding the relationship of the parties, protection by the courts is expected. Our courts are courts of both law and equity. The application of the principle of providing valid reasons for the termination of a contract of employment, which is important to highlight as a provision in Art 4 of the International Labour Organization (ILO) Termination of Employment Convention 1982, is to all circumstances an overreach. There now seems to be a legal imposition of ‘weakness’ on a class of litigants notwithstanding the facts and circumstances of the case.

In the SPDCN case decided on the 27th of July 2022, SPDCN had challenged the validity of the Guidelines for the Release of Staff in the Nigerian Oil and Gas Industry 2019, issued by the erstwhile Department of Petroleum Resources (DPR), pursuant to the Petroleum Act and Regulation 15(a) of the Petroleum (Drilling and Production) (Amendment) Regulations 1988 (‘the 1988 Regulations’). SPDCN particularly challenged the provision that imposed a duty on all oil and gas companies to seek the approval of the Minister of Petroleum Resources before terminating the employment of any Nigerian employee.

SPDCN had terminated the employment of an employee in June 2021 and paid all her terminal benefits and entitlements. Acting on a petition received from the ex-employee, the DPR (now the Nigerian Upstream Petroleum Regulatory Commission (NUPRC)) alleged that SPDCN breached the Regulations by failing to seek its approval before effecting the termination and directed SPDCN to recall and reinstate the former employee. When SPDCN refused to do so and maintained that it had acted in line with the contract between the parties including payment of all terminal benefits and entitlements, NUPRC imposed a fine of US$250,000 (Two hundred and fifty thousand United States dollars) necessitating the suit.

SPDCN sued the Minister of Petroleum Resources, the NUPRC and the Attorney-General of the Federation challenging the validity of the 2019 Guidelines on a number of grounds including its constitutionality and the invalidation of the Guidelines by both the NICN and the apex court, the Supreme Court in two prior cases. The court in its judgment found that SPDCN was liable to both reinstate the employee and to pay the fine imposed by NUPRC. The court found that the Regulations were valid under the new dispensation of the Petroleum Industry Act (PIA) 2021 and under the Interpretation Act.

Without going into the more technical legal issues such as the applicable law to the cause of action, what is striking in the judgment is the rationale behind the decision of the court to uphold the Guidelines. It is rooted in the paradigm of its duty to protect the employee. The court stated: “Nigeria may not have ratified the International Labour Organisation (ILO) Termination of Employment Convention, 1982 (No. 158), the Convention that promotes security of employment globally. And I must acknowledge that ILO standards, that is, Conventions, Recommendations and Codes of Practice, whether ratified or not, “not only reflect a certain universal wisdom, but they also enjoy a social legitimacy that would seem hard to challenge” — Arturo Bronstein – “The Role of the International Labour Office in the Framing of National Labour Law” [2005] 26 Comparative Labor Law & Policy Journal 339 at page 346. The Guidelines, as legislation, are, Nigeria’s response to ILO Convention No. 158 in the oil and gas industry. The Guidelines represent government policy that seeks security of employment of Nigerian nationals employed in the oil and gas industry. It is not a document that should be dismissed with a wave of the hand. In stating that Nigerian nationals employed in the oil and gas industry cannot be removed by involuntary retirement, dismissal, termination, redundancy or on medical grounds without the prior approval of the Minister of Petroleum Resources, the Guidelines have evinced a government policy meant to safeguard the interests of Nigerian nationals employed in the oil and gas industry. This policy deserves support. It should not be that it is the courts that are shooting it down when, aside from the PIA, the policy is also grounded under the Interpretation Act.”

The NICN had in an earlier decided matter involving the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Chevron Nigeria Limited considered the same Guidelines. In a judgment delivered on the 26th of February 2021, Hon. Justice Elizabeth Ama Oji had in considering the powers of the Minister of Petroleum under the Petroleum Act, the extant law at the time of the judgment, stated: “the Petroleum Act did not contemplate the type of the regulation contained in the Guidelines under consideration. The non-inclusion of the power to regulate private employment contracts is in consonance with the age-old principle of sanctity of contracts. In this case where the parties have agreed on contractual terms, I have not found the legal justification to allow the Minister or his designate to modify the terms by means of Directives, Circulars, Guidelines and similar instrument.”

One of the resultant effects of reviewing the ‘validity’ or ‘fairness’ of contractual terms is the subjective nature of the exercise. This would no doubt result in conflicting decisions on similar issues from the same court. The above provides just one example. The uncertainty does not bode well for legal jurisprudence. It is hoped that the appellate court will provide certainty on this issue – the validity of the Guidelines for the Release of Staff in the Nigerian Oil and Gas Industry 2019 – and more importantly provide the underlying principles by which private contracts of employment are to be interpreted.

The court removes the sanctity of private arrangements when it subjects private engagements to a review of the terms of the agreement, imposition of terms of ‘international best practices’ and governmental approvals. The lady justice who holds the scales of justice is blind to the parties before her. A court of law cannot be tilted in favour of one class of parties thereby placing an extra burden on the other party to first balance the scales before working towards tilting it in its favour.

Funmilayo Odude is a Partner at Commercial and Energy Law Practice (CANDELP).