Public Policy

It is no doubt that economic development can only be sustained by human capital. This, in other words, would mean an active workforce. Here, we have identified some of these work arrangements, albeit unconventional employment relationships, and highlighted some of the challenges with these work arrangements, while also proffering possible solutions towards a better and all-inclusive workforce as pivotal to sustainable economic development.

Casualisation and Triangular Arrangement in Employment

There have been a lot of changes to labour relations and issues arising from contemporary labour and employment relations. One of these include casualisation of employment and itsattendant issues. Casual employment or casualisation has been described in many ways and forms depending on jurisdictions. It is a kind of employment where the worker may be deprived of many rights and benefits including lack of paid entitlements such as paid maternity leave, annual leave, sick leave, holidays, bonuses, overtime, redundancy, and even notice of dismissal. It is largely unprotected as it is devoid of social protection afforded to permanent employees, which work arrangement, in some instances, could result in industrial crisis. The ILO definition of casual employment as “workers who have an explicit or implicit contract of employment which is not to be continued for more than a short period, whose duration is to be determined by national circumstances” suggests that casualisation of employment is some sort of temporary employment. Casual arrangement could take different forms, some of which include outsourcing and offshoring, amongst other triangular relationships. 

Offshoring of employment 

There are cases where a company relocates some of its business processes, usually operational processes such as production or manufacturing or supporting processes, by taking personnel outside the national boundaries to other countries to work, either for a specific project or a specific or unlimited period. This kind of triangular relationship is regarded as “offshoring.” Business process offshoring is increasingly becoming a prominent model for international firms as a result of development in information technology and fewer restrictions, and in some cases removal of trade barriers. It helps streamline and reduces labour cost, manage risk, enhance core competencies of the client company or business, and allows the use of skilled foreign personnel and avoid local regulations, especially on labour. Thus, it makes the company “ship” out cheap labour to other business destinations. This has largely been regarded as “job exporting” and this is a legitimate business stratagem as there is no law prohibiting this arrangement.

Outsourcing: The Pros and Cons

Outsourcing is a situation where a client firm contracts another who specialises in that particular activity, usually for a fee/commission, to source or carry out the process of recruitment of personnel/employee and deploys the personnel to the client firm or employer (on a need basis) who are ultimately the end-user of the labour. In some cases, the outsourcing company could engage the services of the personnel for and on behalf of the client firm who is the real user of the services of the personnel. In this arrangement, the contract of employment is between the outsourcing company and the individual employee and not between the client firm (the end-user) and the employee, even though the employee works directly for the client firm. This creates a kind of triangular relationship – the client employer, the employee and the outsourcing company. Employers undertake this system of employment in a bid to cut costs, remain competitive and focus on core business operations and leave out the non-core functions, like recruitment, to external companies to handle.

Outsourcing has several advantages from reducing overhead costs and providing tax reliefs for the beneficiary (client) company for up to an initial period of 3 (three) years renewable for another 1 to 2 years, promoting standardisation of processes, division of labour, to ensuring efficiency and increased productivity, this relationship is nevertheless not without its challenges. The consideration of welfare and discipline of outsourced staff as well as how to locate rights, duties and responsibilities are major concerns in this triangular relationship. For example, who has the power to fire? Who will be held accountable for employee’s welfare, compensation for wrongful termination, injuries or even death? Also, which of the parties, the employer or the outsourced company, will be vicariously liable for the wrongs of the employee done in the course of work? This will be difficult to situate. The question then is, how has the Nigerian labour law fed and attended to this arrangement? In other words, as a result of globalisation and trade liberalisation, management and labour flexibility, the trend across the world is the development of unconventional level relations embracing outsourcing, casualisation, contract work, contingent employment, part-time jobs and other forms of employment, which are usually prevalent at the international labour market particularly in the oil & gas, banking and financial services and maritime industries, amongst others.

Under the Nigerian Labour Act, section 91(1) thereof which defines an employer, gives a legal basis for manpower outsourcing as a legitimate business enterprise in Nigeria. The section provides:

Any person who has entered into a contract of employment to employ any other person as a worker either for himself or for the service of any other person, and includes the agent, manager or factor of that first-mentioned person and the personal representatives of a deceased employer. 

The underlined underscores the fact that an employer can be any person who employs the services of another person whether the services are directly for his benefits or the benefits of another person. Hence, an outsourcing company, though not directly benefiting from the services of the employee, is for this intent and purpose, the employer of the employee and manpower outsourcing as an enterprise is a lawful business venture.

Outsourcing and Trade Union

Thus, due to the nature of the triangular relationship of employment between the outsourced firm, the employee, and the client company (the end-user), the eligible trade union in which the employee can belong has in most cases been a matter of controversy, that is whether to join the trade union of the outsourcing firm or that of the client firm. It is submitted that the personnel of an outsourcing firm providing labour who are deployed to client firms are eligible and in fact, required to join the trade unions recognised for the industry in which the client firm operates and not that of the outsourcing firm.

However, where the personnel of the outsourcing firm only provide services (not labour), and then personnel are deployed to a client company, such personnel are eligible to join the trade union relevant to the outsourcing firm and not the client company. For example, an outsourcing firm providing services (service contractors) like security services and has outsourced their personnel to banks, such personnel cannot join the bankers trade union even though they work directly for the banks. They can only join the trade union on security services. On the flip side, where the outsourcing firm provides personnel for labour, that is employment for work (labour contractors), and the personnel is deployed to a bank and employed as cash officer or into any relevant role in the bank, the personnel will be eligible to join the bankers trade union since he is working in a bank, even though the outsourced firm does not carry out any banking services.

Representational interest in triangular Employment Arrangements

There are thus non-standard work arrangements that have created emerging legal challenges to such extent that it becomes difficult to decide whether an employment relationship exists in a certain “employment” relationship or arrangement. A common way to resolve this problem and define the right, liabilities and duties of the parties to this tripartite arrangement would be a Service Level Agreement, which will define the terms and conditions of the outsourcing contract.

The question also of whether outsourced, contract or casual employees have representational rights as their counterparts in permanent employment will be answered in the affirmative on the premise of section 40 of the 1999 Constitution as amended and the provisions of the ILO Convention on the Freedom of Association and Protection of the Right to Organise (otherwise Convention 87), which protects the right of workers, whether permanent, contract, outsourced or casual, to form and join associations or trade unions and enter into collective bargaining agreements but such personnel can only join trade unions relevant to the industry in which they operate. Hence, a worker does not have the unfettered and absolute discretion to join any trade union of his choice. This choice is circumscribed by the Third Schedule Part B of the Trade Unions Act which defines the relevant trade unions empowered to operate in the appropriate industry, as an employee cannot join a trade union outside the industry of his employer, even though the parties consented to the arrangement. This position has also been judicially endorsed in the case of Patovilki Industrial Planners v. National Union of Hotels and Personal Services Workers.

Conclusion:

The current Nigerian Labour Act does not make necessary provisions for the protection of casual workers, outsourcing, and other triangular employment relationships. It is nevertheless important that there should be legislation regulating job offshoring in Nigeria so as to create an equilibrium in “exporting” employees out of Nigeria and “importing” corresponding employees into Nigeria, just as well as the law should afford protective measures to casual workers and underscore the value of work based on status rather than an emphasis on contract. In this way, the law would indeed be a tool to driving the economy through an active, protected, and non-discriminatory labor force.