The Trend of Labour Outsourcing in Nigeria. What is the Position of the Law?


Nigeria’s Labour Law has different dimensions and labor outsourcing is the new one. Labor outsourcing is a new labor relationship in Nigeria. It means outsourcing the provision of the labor force by a labor outsourcing service provider (“Labour Outsourcing Provider”) to an independent enterprise. It is now a common practice in Nigeria, especially in the oil and gas and banking sector for the outsourcing company to recruit workers on behalf of a company.
In labor law, there are two types of contract of employment which are contract of employment and contract for employment.
A contract of employment is a type of master-servant relationship between an employer and an employee. In this type of relationship,  the employer has control over the employee and is liable for the negligent act of the employee in the course of the business. A contract for employment, on the other hand, is a contract between an employer and an independent contractor,  in this instance, there is no liability on the employer. In labor outsourcing, there is a relationship between the employer, the employee, and the outsourcing firm. It is important to determine the rights and liabilities involved of the parties. The trend has since emerged in Nigeria and there is now a guideline that determines the liabilities of the parties.

Position of the Law Before the Issuance of the Guidelines.

The Labor Act does not capture the labor outsourcing relationship between an employer, an employee, and the outsourcing company. In 2019 the National Industrial Court of Nigeria (“NICN”) the court responsible for entertaining labor disputes in Nigeria held in the case of COLLINS U. OKEKE & ANOR. V. DELONG MEDICAL SERVICES LIMITED & ANOR that a labor contractor is the employer of the contract staff. While in 2022 in NORBERT CHUKWUEMEKA NWORAH V. ZENITH SECURITIES LTD. & 3 ORS.[17] the court held that both the labor contractor and the end user would be jointly or severally liable to the contract staff over breaches of employment terms.

Labour Outsourcing Guidelines

The Federal Ministry of Labour, as the regulator, has issued sector-specific guidelines spelling out the status of the outsourced employee and contract staff.

Feature of the Guidelines

Some of the notable provisions of the guidelines include
1. The labor outsourcing practice is now recognized by the Nigeria Government.

2. The employee is now referred to as an employee of the outsourcing company and not the end user; This means that in the event of a breach of employment terms, or disputes, the employee will sue the outsourcing firm and not the company he works for.

3. The establishment of minimum wage pay for employees in the financial sector.

4. The outsourced employee has the right to Freedom of Association by section 12 of the Trade Union Act and Section 40 of the 1999 constitution.

5. The clause in the agreement between the employer and the outsourcing company/firm must provide for the means of settlement of disputes.

6. The  Principal Company (employee) must ensure that the outsourced company is licensed under section 8.4 of the guidelines.

7. Labour Recruiters must comply with all relevant labor laws as well as the International Labour Organizations standards. This is contained in sections 8.3 and 8.5 of the finance sector guidelines

8. The Guidelines also make provisions for job security and capacity development for contract staff working in the oil and gas sector. This is by section 6 of the oil and gas guidelines.

The guideline is a welcomed development in the labor sector. It defines the roles and responsibilities of the labor outsourcing tripartite relationship in Nigeria.

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