How to Compensate for Mental Stress at Our Workplaces

workplace-stress

By Michael Dugeri

Work-related mental stress has been described as the adverse reaction experienced by workers when workplace demands and responsibilities are greater than the worker can reasonably manage or are beyond the workers’ capabilities. Therefore, it has been advocated that employers need to balance both demands and resources in the workplace in order to manage work-related mental stress.  This is because high levels of job demand and low levels of job resources could easily result in mental stress for the workers.

Mental health is an integral component of Occupational Safety and Health (OSH), which is a primary concern of labour and employment law. A safe workplace is not only about physical safety – it’s about the worker’s psychological safety too.  This means that employers have a duty of protecting the safety, health and welfare of their workers. The enjoyment of these standards at the highest levels is a basic human right that should be accessible by each and every worker. Regardless of the nature of their work, workers should be able to carry out their responsibilities in a safe and secure working environment, free from all forms of hazards.

The law provides for compensation to workers who have experienced mental stress in the course of their employment. The Employee’s Compensation Act, 2010 (“ECA”) provides that compensation is available to an employee who suffers mental stress, where the mental stress is an acute reaction to a sudden and unexpected traumatic event arising out of or in the course of the employee’s employment; or if the employee has been diagnosed by a medical practitioner as suffering from mental stress arising out of the nature of work or the occurrence of any event in the course of the employee’s employment. See section 8 ECA.

Section 8 (2) of the ECA provides that where the mental stress is caused by the decision of the employer to change the work or the working condition in such a way as to unfairly exceed the work ability and capacity of the worker (thereby leading to mental stress), such situation shall be liable to compensation to the degree as may be determined under any regulation made by the Nigeria Social Insurance Trust Fund (NSITF). The NSITF is the statutory body charged with the responsibility of administering the Employee’s Compensation Scheme (ECS) established under the ECA.

It is pertinent to note that the ECS is a social security/welfare scheme that provides comprehensive compensation to employees who suffer from occupational diseases or sustain injuries arising from accidents at the workplace or in the course of employment. The basis for ‘compensation’ is the employer’s duty of care. The idea of compensation suggests that someone has suffered a wrong for which he has to be compensated monetarily. This implies that another person has a duty to prevent the occurrence of the wrong suffered. Payment of compensation by the employer to the worker is rooted in the accepted common law principle that the employer has a duty of care, a duty to protect the health, welfare and safety of the workers. Where the worker sustains injuries, gets ill or dies under work-related circumstances, the employer is liable to pay compensation to the worker or to his dependents, in the event of death. The ECS is funded by monthly contributions from employers for the purpose of this compensation, as may be required from time to time by deserving workers.

The system of compensation for occupational mental stress established under the ECA is laudable, even though it also poses certain challenges for affected workers. First, having to prove that the worker’s mental stress actually relates to his/her work is tough, especially in an environment like Nigeria that is plagued with many other intervening factors. Second, it is doubtful if monetary compensation is adequate for victims of occupational mental stress or if full rehabilitation of the victim is possible in all cases. It is against the foregoing that it is argued that a better system of compensation is the type that mirrors contemporary frameworks for OSH, which are designed to be proactive rather than reactive to the physical, social and mental aspects of the workers’ health. Just like physical infirmities, mental health problems in the workplace are a global phenomenon. In Nigeria, the typical work environment is full of precipitating factors such as:

  1. High quantitative and qualitative workload,
  2. Inconsiderate work schedules,
  3. Poor remuneration, deficient welfare package, delayed/unpaid salaries.
  4. Neglect of safety measures, etc.

All these translate to an increase in the risk of mental health problems in the workplace. Unlike the ‘loud’ nature of physical health problems, mental health problems in employees is a ‘silent’ phenomenon, which goes unnoticed and may be confused with lack of commitment to the job. Unrecognized mental health problems in the workplace can affect performance and productivity, hence the need for organizations to be proactively pre-occupied with promoting and ensuring both the physical and mental health of its employees. Beyond the issue of high quantitative and qualitative workload, closer attention should also be paid to physical features of the workplace like lighting, ventilation, work space, sanitation and noise levels.

Organisations can manage and prevent stress by improving conditions at work. While the common treatment for mental health problems is prescriptive medication, employers have a role in making adjustments and helping the affected individual to manage the problem at work. Some of the suggestions that have been advanced by experts in the field of OSH include the following:

  1. Having senior management committed to  reduce  workplace stress;
  2. Consulting with workers to create and promote a mentally healthy workplace culture;
  3. Use validated risk assessment processes;
  4. Ensuring the organisation has appropriate policies and procedures in place and workers are aware of these;
  5. Managing workplace psychosocial risk factors and stressors;
  6. Providing regular and respectful performance feedback;
  7. Having a ‘Harassment Contact Officer’ in place for workers to speak to;
  8. Provide training around managing workplace and individual stress levels;

Mental health is an intricate but pressing workplace issue with multiple consequences. Occupational demands can be highly stressful and many jobs make severe demands in terms of responsibility, time, and performance. Rather than continuing with a culture of indifference, denial and evasion, there is need for Nigerian workplaces to recognize mental health as a realistic and legitimate concern, as well as display total commitment to the implementation of policies and practices that will ensure a supportive framework for workers.

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No-Work-No-Pay Policy V. Right Of Workers To Industrial Action

To begin with, is it reasonable to refuse a worker his pay simply because of the decision of a union of his class of employees, who never sought his individual opinion? But then, seeing that this said decision invariably affects the business of his employer, does it also make sense for an employer to pay his employee unearned wages for simply sitting at home? Admittedly, it is very tasking to strike a balance between these two conflicting rights.

The Federal Government of Nigeria on October 11, 2017 announced its resolution to enforce a “No Work No Pay Policy”. This resolution, though couched in the shape of a government policy, is in fact already contained in an existing law as encapsulated in Section 43 of the Trade Disputes Act, which empowers an employer to withhold the employee’s wages for the said duration.

Internationally, strikes are in fact recognised as almost sacred, inalienable rights of workers. Part 111, Paragraph 7 of the International Labour Organisation Convention (No 151) of 1957 provides that “No provision of this convention may be interpreted as limiting in any way whatsoever, the right to strike”. Article 3 and 10 of ILO Freedom of Association and Protection of Right to Organised Convention 1948 (No 87) recognise the rights of workers to organize activities for the furtherance and defence of the interests of the workers. Thankfully, Nigeria is a signatory to the ILO.

In Nigeria though, strike action is highly restricted. For instance, Section 30 of the TDA outlaws strike actions except as in the manner provided for under sub-section 6. Again, a union is required to first comply with the requirement of arbitration under the TDA before embarking on a strike. In what appears to be a stringent clog on the right to industrial action, Section 1 of Trade Disputes (Essential Services) Act Cap 433, LFN 1990 empowers the President to proscribe any Trade Union or Association that embarks on a strike action. Continuous disobedience to the said proscription is an offence punishable by a N10,000 fine or six years imprisonment.

What then is the fate of a Nigerian worker in the event that the Federal Government decides to implement section 43 of TDA? The judicial authorities at the disposal of the writer do not seem to be on the side of the workers. In Adams Oshiomhole and National Labour Congress v Federal Government of Nigeria and Attorney General of the Federation (2007) 8 NWLR (Pt. 1035) at page 58, the Court of Appeal held that the Labour Union as well as other civil society organisations had no right to call out strikes in response to general economic and political decisions of the Federal government as it had nothing to do with the individual contracts of employment these workers had with their various employers as envisaged in the TDA.

On the construction of section 43 of TDA, Justice B.B Kanyip while delivering his judgement in Oyo state Government v Alhaji Bashir Apapa (Chairman Nigeria Labour Congress Oyo state chapter) & Ors in Suit No: NIC/36/2007, held that “section 42(1)(a) of the TDA is self-executory. Its implementation, without more, does not depend on a further enquiry…. A strike, whether legal or not, falls squarely within the ambit of the said section and for which the strikers are disentitled from wages and other benefits envisaged by the section…..” 

From all indications, it appears that implementation of No Work No Pay Policy will be justified by law. Whether same is reasonably justifiable in a democratic state, will be a question for another day.

 

Source: Greymile

Occupational Injury: The NIC Awards N10.3m Against Employer

The National Industrial Court, Lagos Division has ordered Lagos Travel Inn to pay N10.3m to one Mr. Emmanuel Abah, who sustained an ankle injury after being trapped by the hotel’s elevator sometime in 2013.

The court, in a judgment by Justice J.D. Peters, said the order must be complied with within 30 days of the judgment.

Abah had, in the suit filed through his lawyer, Mr. Daniel Onwe, in 2014, explained that he was trapped by the hotel’s faulty elevator in the course of his duty as a cleaner in the employment of the hotel.

He claimed that the management of the hotel had been aware of the faulty state of the elevator, which was noisy and had on several occasions trapped people, but refused to fix it.

He claimed that rather than fix the elevator, the management urged the employees to continue to use it so as not to attract the attention of visitors to the hotel.

He claimed that on November 13, 2013, while trying to take the elevator from the ground floor to clean the rooms upstairs, one of his legs was caught in the doors.

He said that as he stepped his left foot onto the floor of the elevator while lifting his cleaning materials, the elevator swiftly took off in the upward direction with the doors trapping his left leg, pulling and dangling him headlong.

He said his ankle bone was crushed in the process, which eventually caused him a permanent injury.

He claimed that after receiving treatment in a hospital with no improvement, he was advised to seek the intervention of a trado-medical bone centre at Otukpa in Benue State, where he incurred extra expenses of N286,000, and a medical balance of N40,000.

He claimed that upon being discharged from the trado-medical centre, he resumed work on July 1, 2014, and was reluctantly admitted and redeployed to the laundry section.

Abah said he subsequently applied to the hotel for a loan of N40,000 to enable him to defray the outstanding medical bill, but his application was ignored.

He said two weeks after his resumption he was eventually served with a letter terminating his appointment without any reason.

He contended in his suit that his sacking was unjustifiable and urged the court to order the hotel to pay him N30m as compensation for the injury he sustained in the course of duty and another N10m for unfair dismissal.

In his judgment, Justice Peters held that with the permanent damage done to the leg of the claimant, there was no market where he could purchase a new leg.

The court accordingly, awarded the sum of N10.3m against Lagos Travel Inn, as damages for the permanent injury suffered by Abah.

Source: Jimi Disu Blog

Confirmation of employment after probation can be implied by the conduct of the employer.

tumblr_onkbqiRgvE1vdur62o1_1280The Court of Appeal in the recent case of Reliance Telecommunications Limited v. Mr. Olaore Olufemi Adegboyega (reported at (2017) 8 CLRN) held that the employer is deemed to have waived its rights in insisting on issuance of a formal letter of confirmation to its employee if the said employee is allowed to continue in his employment beyond the stipulated probationary period and he is regarded and treated as an ‘several months after the end of the probationary period’. The employment is deemed confirmed by conduct.

This decision is important to check the habit of some employers who, out of negligence or malice, fail or refuse to confirm some deserving employees, only to later turn around and rely on the employee’s probationary status in claiming certain obligations from the employee or denying him some benefits.

Facts of the Case 

In 2004, the respondent entered into a contract of employment with the appellant. The terms of contract indicated that the respondent would be on probation for a period of three months and either party could immediately terminate the employment during the period of probation. Furthermore, the contract of employment stipulated that after three months, the employment of the respondent would be confirmed and that three months’ notice will be required to be given by each party in case of termination of the employment. After the expiration of the three months probationary period, the appellant failed to confirm the employment of the respondent but continued to retain his services, paying him his entitlements and making representations to third parties suggesting that the respondent was in its employment. The relationship between the parties continued until sometime in 2005 when the appellant terminated the employment of the respondent without giving him any notice. The respondent was aggrieved and filed a suit against the appellant at the High Court of Lagos State alleging wrongful dismissal and claiming damages. After the conclusion of trial, the judge gave judgment in favour of the respondent and held that the appellant was liable in damages to the respondent. The trial court however, failed to consider and make pronouncement on the counter-claim incorporated into the statement of defence of the appellant.

The appellant was dissatisfied with the judgment of the trial court and filed a notice of appeal at the Court of Appeal, Lagos Division urging the court to reverse the decision of the trial court. One of the issues formulated for determination was whether the trial court was right in holding that the respondent’s employment was deemed confirmed immediately after the probation period without meeting the other conditions precedent and in the absence of a formal confirmation letter.

Arguing the issue, learned counsel for the appellant submitted that it is trite that parties are bound by the terms of contract freely entered into. Reference was made to a term of the contract of employment stating that the offer of employment is subject to a satisfactory medical examination, satisfactory completion of a three months’ probation period to take effect from date of assumption of duty and that the offer is subject to other terms as set out in the letter of employment and conditions of service as may be determined by the board from time to time. Learned counsel posited that since the employment of the respondent was not confirmed by the appellant before the termination, a condition precedent was not fulfilled and as such the respondent was not entitled to the three months’ notice. Counsel urged the court to resolve the issue in favour of the appellant.

Responding to the argument of the appellant, learned counsel for the respondent relied on the decision in Kablemetal Nigeria Limited v. Gabriel Ativie to submit that in an action for wrongful termination of employment, the claimant is under obligation to plead and prove not only the appointment but also the terms and conditions for it to constitute the foundation of the action. Counsel submitted further that even though the contract of employment stipulated that the employment of the respondent must be confirmed after three months, the fact of non-confirmation was inconsequential and that the trial court was right in holding that the employment of the respondent was deemed confirmed since the appellant allowed the respondent to continue to work beyond the three months’ probationary period stipulated in the contract. Learned counsel relied on Obafemi Awolowo University v. Dr. A.K. Onabanjo and urged the court to discountenance the argument of the appellant and resolve the issue in favour of the respondent.

In resolving the issue, the court held thus:

The Appellant having allowed the Respondent to continue in his employment beyond the three months’ probationary period, paying him all his entitlements and further making representation via Exhibit C5 to third parties affirming that the Respondent is its employee several months after the end of the probationary period must be deemed to have waived its rights in insisting on issuance of a formal letter of confirmation to the Respondent. In such circumstances as obtained in the instant case Estoppel by conduct/representation can readily be invoked.

See: Military Government of Lagos State & Ors v. Adeyiga & Ors (2012) LEPLR 7836 (SC)

Issue is resolved in favour of the respondent.

M.T Odechima with V. I. Okafor for Appellant
TS. Adewuyi with T. O. Shittu Miss for Respondent

This summary is fully reported at (2017) 8 CLRN

Digitalisation, automation and the global labour market

courses-postgraduate-public_health-occupational_health_safety_environmental_management

Introduction

Modern information technology and the daily use of the Internet have strongly influenced the world of work in the 21st century. Intelligent algorithms simplify everyday tasks, and it is impossible to imagine how most steps of a procedure could be managed without them. Further, the use of artificial intelligence (AI) and robotics is accelerating. Thus, the question arises as to what the future world of work will look like and how long it will take for this to happen. Mass unemployment, mass poverty and social distortion may be a possible scenario for the new world of work.(1) Even if intelligent systems and algorithms play an increasingly central role in the new world of work, no jobs will be lost abruptly as a consequence of digitalisation. Rather, a gradual transition will take place, which has already commenced and differs from industry to industry and from company to company.(2)

Big data analyses and intelligent algorithms are also increasingly replacing or supporting humans in the service sector. In the industry sector, automation and the use of production robots will lead to considerable savings with regard to the cost of labour and can release workers from hard and dangerous, repetitive and monotonous work. While in the European automotive industry one working hour in production costs more than €40, the costs for using a robot range from €5 to €8 an hour.(3) A production robot is thus only slightly cheaper than a worker in China.(4)

Robots and intelligent algorithms cannot become ill, have children or go on strike, and are not entitled to annual leave; therefore, for many companies it is worthwhile investing in robots and intelligent software. An autonomous system does not depend on external factors and works reliably and constantly; it can also work in danger zones and overnight.(5)

Categories of AI

The following definitions are of use in this area:

  • Deep learning – machine learning based on a set of algorithms that attempt to model high-level abstractions in data.
  • Gig economy – independent contractors looking for individual tasks that companies advertise on an online platform (eg, Amazon Mechanical Turk).
  • Robotisation – production robots replacing employees because of advanced technology (they work more precisely than humans, eg, three-dimensional printers).
  • Autonomous driving – vehicles have the power for self-governance using sensors and navigation without human input. Taxi and truck drivers are no longer necessary. The same applies to stock managers and postal carriers (eg, delivery drones).
  • Dematerialisation – thanks to automatic data recording and data processing, traditional office activities are no longer necessary (eg, accounting or lawyer assistants).

Impact of digitalisation and automation on labour market

Global view
According to recent studies, about 47% of total US employment is at risk,(6) while around 70% of total employment in Thailand or India is at risk.(7) Low-wage countries such as China, India and Bangladesh are still benefiting from their surplus of low-skilled workers, and western companies have outsourced their production and some services to these countries. In most developing countries, the implementation of (partly) autonomous systems is unlikely to be worthwhile at present for economic reasons, since the labour costs are not much higher than the costs for acquisition, development and maintenance of the necessary equipment.(8) On the other hand, companies also located in low-wage countries must invest in relevant IT systems in order to improve their productivity and attractiveness and remain competitive in the long run.

Eventually, however, these companies will decide to produce in their countries of origin using production robots and only a few workers. In this case, the surplus of low-skilled workers will turn into a curse for developing countries. The question is how to integrate the large number of unskilled production workers into a structurally difficult labour market that depends on the demand of foreign countries. Another problem is that there are no comparable social security systems in place in most developing countries. Possible mass unemployment could lead to humanitarian catastrophes and a wave of migration.

Due to the lack of financial investments in many developing countries, digitalisation will initially be strongly focused on developed countries and Southeast Asia. For example, more than 80% of the robots sold each year are used in Japan, South Korea, the United States and Germany.(9)

New job structures
According to a survey by the Pew Research Centre, 65% of Americans expect that a robot or an intelligent algorithm will be doing their job within 50 years.(10) Individual jobs will disappear partly or completely, and new types of job will come into being, especially in the service sector. That the service sector will be affected can particularly be seen in the insurance and financial branches, where intelligent algorithms are replacing human employees by automatically carrying out traditional back-office tasks, answering client questions via chatbots and presenting financial planning or insurance policies.(11)

A typical example of a new type of job created in recent years is crowdworking. Freelancers represent the typical worker of ‘Industry 4.0’ because they work at any time and in any place. Thanks to the Internet, international borders and time differences also no longer play a role. Owing to the digitalisation and internationalisation of the online platforms on which crowdworkers offer their services, the choice of applicable law is usually uncertain. More precisely, the challenges are how to define ‘crowdworking’, how to establish working conditions for compensation and how to determine which tax regime, social security and welfare rules apply.(12)

It is certain that both blue and white collar sectors will be affected to the same extent. In the medium-wage sector, routine jobs will be eliminated. Up to one-third of the jobs that require a bachelor’s degree may be replaced by a machine or intelligent software in the coming years. At the same time, it is expected that new jobs will be created in the service sector, ranging from data analysts to software programmers.

Labour relations
The role of humans within the world of work is changing. Employee organisations have realised that new challenges are in store for employees from all professional and social classes because of robotics and the computerisation of the workplace. Trade unions will pay particular attention that no ‘lost generation’ is left behind and that there are no mass dismissals caused by the introduction of AI. Unions will advocate further training, advanced training and retraining of employees.(13)

Trade unions will remain the main player when it comes to fighting for employees’ rights and they will expand their constituency by also representing the increasing number of freelancers. Finally, legislators will have to introduce new forms of employee representation structures to avoid their slow decline caused by a decrease in trade union memberships and fewer employees in a company, due to which the required thresholds for works councils can no longer be reached.

Outsourcing employment and creating new internal structures
Companies will focus on their core competencies and will outsource other activities in a cost-effective manner.(14) It is a global trend that ‘Work 4.0’ will take place outside traditional employment structures, with a rise in self-employment.(15) Even in European countries, the so-called platform economy is becoming more and more common. And larger companies use external workers instead of hiring new employees. Some highly qualified young employees enjoy their independence and will focus their work on the development of creative solutions for a changing client base. The demand for social security is no longer as high, but freedom with regard to working time, the place of work and the choice of clients is more important to so-called ‘Generation Y’.

Professional connections between companies, clients, competitors and external providers involve some risks with regard to business secrets, especially if companies create open innovation models or use ‘prosumers’ (who consume and produce media) to develop their products. Particularly in big companies, hierarchy levels will be eliminated and smaller organisational units will be necessary. An automatic supply chain connection between the company’s systems and the systems of its external providers will be the basis for success in the digital world.

Distinction between employee and independent contractor
Classic employment can be detrimental to the business owing to the high wage costs in European countries.(16) An employee is primarily characterised by the fact that he or she is subject to the authority of the employer to issue instructions regarding the job assignment. The borders between the employee’s professional life and private life become blurred. If the place of work, in addition to working time, becomes more flexible, and if employees are granted more powers to work independently, it becomes harder to distinguish between an employee and an external freelance worker or a worker provided by a third-party company.(17)

Liability and safety risks
The introduction of intelligent algorithms and more independent production robots will create new risks for employees and employers. At the moment, a spatial separation between robotic and human workers characterises production facilities. In the future world of work, human workers will have to collaborate with robots and intelligent algorithms. Work will be characterised by the use of connected technical wearables (eg, data glasses or fitness trackers). In the production sector, risk analyses will be carried out in advance.

In addition, software faults can come into consideration as potential safety hazards relating to autonomous systems and assistant robots. Recently, the European Parliament voted for a resolution concerning the introduction of legal standards for robots and intelligent algorithms (eg, electronic person) and compulsory insurance to compensate for damages caused by the systems.(18)

Self-employed contractors are not released from liability. If an independent contractor destroys the principal’s property while working for the principal, he or she must pay full damages, whereas the employee’s liability is limited in most cases.

Working time
In the future, employees and employers will agree on the flexible management of working hours. The breakdown of the boundaries for working hours also makes it possible to implement working life time models that are beneficial to the ‘work-life balance’. In most European countries, the maximum working hours or rest periods are exceeded in everyday practice. National and European lawmakers should create frameworks offering more flexibility and less strict regulations to avoid this legal uncertainty (eg, daily rest periods).

Some (older) alternative working-time models will become common, especially for the younger generation. Examples are home office, job sharing, on-call work, zero-hour contracts, employee-sharing, sabbaticals or reduced working time models for older employees. However, there are individual legal risks concerning the contractual design of every alternative working time model. In most cases, negotiations with employee representatives will be necessary.

Remuneration
The breakdown of boundaries in terms of the place of work and working hours makes it difficult for employers to check how many hours employees have actually worked. There is no factor linking the time/wage system, which makes this system unattractive for employees and employers alike since, in general, employees’ motivation is enhanced by more performance-related payments. In the future, elements of performance-linked payment – or alternatives such as stock options, annual bonuses or company pensions – will thus be used increasingly with regard to non-executive employees.

The central issue regarding performance-related remuneration structures is not the type of agreement, but how to define ‘performance-related’. A combination of an individual team target (turnover or a ‘soft’ target) and the turnover achieved by the company or group is possible.

Data privacy and big data
For big data analyses, data is anonymised and exists in an unstructured form. Thus, in most countries big data analyses do not violate applicable law. For companies, data is not only an asset worth protecting, but at the same time it is merchandise, and has been called the “oil of the future”.(19)Nevertheless, the EU General Data Protection Regulation (applicable as of May 2018) prohibits collecting personal data without a permissive rule in all European countries. US data privacy protection laws are not based on the general assumption that data is confidential, but provide for data confidentiality in individual cases (eg, with regard to health insurance and the protection of minors). In addition, at least in the European Union, the introduction of many technical aids (eg, production robots, wearables, intelligent algorithms and employees’ own devices) is not possible without the consent of employee representatives.

Comment

One certainty is that both blue and white collar sectors will be affected to the same degree.(20) A high level of unemployment in some sectors will be unavoidable, even if the major share of jobs will shift to a different area of work – mainly to the service sector, where new service models will be created. Finally, AI will result in growth and prosperity: employees will also benefit from flexible solutions concerning working time and the place of work caused by the introduction of AI.

The digitalisation (and automation) of services is a global phenomenon affecting a far-reaching and diversified field of advisory services in general, and labour and employment law in particular. Ideally, future laws should take the technological developments and the increased need for flexibility into account. AI is creating a gap between existing legislation and the new laws necessary for an emerging workplace reality.(21)

For further information on this topic please contact Gerlind Wisskirchen or Jan Schwindling at CMS Hasche Sigle by telephone (+49 40 37 63 00) or email (gerlind.wisskirchen@cms-hs.com or jan.schwindling@cms-hs.com). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.

Endnotes

(1) www.spiegel.de/wirtschaft/soziales/arbeitsmarkt-der-zukunft-die-jobfresser-kommen-a-1105032.html.

(2) Brzeski/Burk, “Die Roboter kommen, Folgen der Automatisierung für den deutschen Arbeitsmarkt“, 2015.

(3) www.bcgperspectives.com/content/articles/lean-manufacturing-innovation-robots-redefine-competitiveness/.

(4) “Kollege Roboter,” Fokus No 38/2015 of October 19 2015, p69.

(5) www.faz.net/aktuell/wirtschaft/fuehrung-und-digitalisierung-mein-chef-der-roboter-14165244.html.

(6) Frey/Osborne, The Future of Employment: How Susceptible Are Jobs to Computerisation,” 2013, p1.

(7) “Automat trifft Armut”, Handelsblatt News am Abend, July 15; No 135, p6.

(8) www.bcgperspectives.com/content/articles/lean-manufacturing-innovation-robots-redefine-competitiveness/.

(9) www.bcgperspectives.com/content/articles/lean-manufacturing-innovation-robots-redefine-competitiveness/.

(10) www.pewinternet.org/2016/03/10/public-predictions-for-the-future-of-workforce-automation/ p3.

(11) www3.asiainsurancereview.com/News/View-NewsLetter-Article/id/38286/Type/eDaily/South-Korea-Insurers-to-evolve-into-integrated-service-providers-integrated-service-providers.

(12) “The On-Demand Economy and the impact on employment law”, International Bar Association Employment & Industrial Relations Law, September 2016, p31.

(13) https://innovation-gute-arbeit.verdi.de/++file++540998f5ba949b358400004e/download/138.1411_digit_arbeit_RZ3_web.pdf S.25.

(14) “Understanding the Future of Work“, International Organisation of Employers Brief, July 6 2016, p7.

(15) “Automation and Independent Work in a Digital Economy”, OECD Policy Brief on the Future of Work, May 2016, p3.

(16) “The On-Demand Economy and the impact on employment law”, International Bar Association Employment & Industrial Relations Law, September 2016, p27.

(17) “The On-Demand Economy and the impact on employment law”, International Bar Association Employment & Industrial Relations Law, September 2016, p26.

(18) www.spiegel.de/netzwelt/netzpolitik/kuenstliche-intelligenz-eu-parlament-fordert-regeln-fuer-roboter-technologie-a-1134949.html.

(19) www.faz.net/aktuell/wirtschaft/netzwirtschaft/was-taugt-die-eu-datenschutz-verordnung-13972055.htm.

(20) www.pewinternet.org/2016/03/10/public-predictions-for-the-future-of-workforce-automation/ p5.

Source: International Law Office

Perspectives on Probation, Confirmation and Promotion in Employment Contracts

By Kayode Omosehin 

Probation is simply an agreed trial period for a worker to prove his worth on a job to his employer and assess the worth of the job to himself. Promotion is an elevation of a worker in status within a company based on performance or other considerations as may be agreed in an employment contract or determined by the employer. Confirmation is the intermediate act of endorsement of a new worker’s performance by a company sometimes between the periods of probation and promotion; it is a testament that an employer is satisfied with the performance of a new employee.

Probation and promotion of a worker are, generally, matters which are based on each worker’s contract. As such, an employment lawyer needs to review the employment contract before an opinion can be formed on the ramifications of an employee’s probation or promotion. Where the terms of employment are contained in various documents, it is important to read all the various documents together to decipher the intention of the parties regarding probation or promotion. From experience, the offer letter of employment, the appointment letter (if it is different from the offer letter), the terms and conditions of employment, staff hand book, policy on review of rank/grade level, disciplinary procedures rules as well as official circulars and notices circulated internally are all relevant in determining the respective rights and powers of workers and employers on probation and promotion.

The rights of a worker under probation

A person does not cease to be an employee of a company merely because he is on probation. As such, in my view, a worker on probation is entitled to all express benefits in an employment contract or those implied by the labour law. Interestingly, however, Justice J. D. Peters of the National Industrial Court held in Ogbonna v. Neptune Software Limited [2016] 64 N.L.L.R. (Pt. 228) 511 that an employer is not under any obligation to give notice of termination of the service of an employee who is on probation until the employment is confirmed. In other words, according to Honourable Justice J. D. Peters, the employment relationship between a worker and a company in that Ogbonna case was inchoate and that the need to give a notice for termination for one calendar month stated in the claimant’s letter of employment would only arise after the confirmation of his employment.

It is difficult to agree with the reasoning of the judge in the foregoing case given that an employment relationship is founded on contract following offer and acceptance, with consideration taking the form of the employee’s resumption and performance of a designated job. There are many judicial decisions of a superior court to the effect that a contract of employment comes into existence when a clear offer made by a company is unequivocally accepted by a job applicant provided that there is no outstanding condition precedent to assumption of work which must be fulfilled by the applicant. In fact, and law, if such outstanding conditions are in the form of medical clearance, provision of referees, verification of credentials etc. (as they usually are), the employer can neither unilaterally revoke the offer after the applicant’s acceptance of same before the deadline for fulfilling the other outstanding conditions, nor prevent the applicant from fulfilling the rest of the conditions. So, upon fulfilling the conditions for acceptance of an employment offer and resumption of duty with a company, it will be inconsistent with judicial precedent to hold that the employment contract between the worker and the company, in the circumstances, is inchoate, as Justice J. D. Peters did in the Ogbonna’s case, merely because the employment relationship commenced with probation. Employment contracts are not sui generis as they are governed by common law rules on general contract making which entail offer, acceptance and consideration, including part-performance. See Federal Government of Nigeria v. Zebra Energy (2002) 18 NWLR (Pt. 798) 162.

In my view, a worker on probation is entitled to all the benefits stated in a contract of employment which are enjoyable on probation and those implied by law in deserving circumstances. A worker on probation is entitled to be paid the agreed salaries for the probationary period. He is also entitled to pension contribution from the employer. An employer of a worker on probation cannot deny liability for remitting personal income tax of the employee on the ground that the worker’s employment was probationary. If probation lasts longer than a year, in my view, the worker is entitled to an annual leave. Both the employer and employee are entitled to terminate the working relationship during probation as agreed in the employment contract. It is necessary to repeat here, only for emphasis, that in addition to the foregoing benefits, a worker on probation is entitled to all other benefits or rights provided in his contract of employment which are enjoyable during probation.

The effect of confirmation of employment

Confirmation is an attestation of an employer that a worker’s performance is satisfactory in a period of probation for the purpose of extending the employment in accordance with agreement. The length of probation before confirmation is a matter of agreement. Most employment contracts provide for power of the employer to extend a period of probation if the worker’s performance is unsatisfactory. Whenever confirmation is due, it is advised to be in writing (in a letter or memo of confirmation) with all necessary incidental terms clearly spelt out to avoid the incidence of legal presumptions. Upon confirmation, a worker stands to enjoy all the benefits which are attached to his employment.

Confirmation of employment may be express such that an employer writes a letter or memo to the employee or circulates same within the company to confirm a worker’s employment at the end of probation. However, where probationary period has ended but the employer neither expressly extends it nor terminates the employment, the law presumes that the employment has been confirmed impliedly. Under Nigerian employment law, at least from the various cases reviewed in the course of this work, there is no implied extension of probation by the employer and no such presumption is made in favour of an employer where such employer fails to expressly extends a probationary period or terminates an unsatisfactory service of a worker which extended after the expiration of an agreed probation.

In line with international best practice and labour standard, a Nigerian court held in a case that the continuation of services after expiry of the probation period without a new contract being drawn up means that the employment has been impliedly confirmed and that a contract of indeterminate duration has taken effect from the date when the offer for probationary service began. In the said case, the claimant was engaged for a probationary period of two (2) years but he was made to work for six (6) years without confirmation. The employment was eventually terminated without notice or salary in lieu of notice. The argument advanced by the employer was that the employment was never confirmed. The court rejected the argument of the company and upheld the claims of the employee in part. According to Honourable Justice P. O. Lifu (JP), such termination amounted to unfair labour practice contrary to section254C (1) (f) of the Constitution as same was incompatible with international best labour practice.

There is no specific legislation regulating confirmation of employment in Nigeria. However, whenever there is any employment dispute regarding probationary service, the employment contract is usually the proper guide to understanding the rights of a worker under probation and after confirmation. The employer must follow whatever procedure that is agreed in the employment contract. Where confirmation of employment is subject to satisfactory performance by the worker, a performance appraisal is essential, in my opinion, to evidence a transparent process by which an employer arrives at a decision not to confirm an employee’s service after probation.

Promotion as a right or privilege

Promotion of staff is a most controversial aspect of employment relationship largely because of its perception or misconception as a right or privilege. Promotion or lack of it can turn out to be ugly, leaving an unsavoury feeling in a work environment, depending on the procedures adopted by a company to arrive at a decision to promote or not to promote. Generally, under Nigerian employment law, promotion is not a right but a privilege; it is usually expected to be earned. Though the foregoing principle of law has its exceptions. In a case decided by Honourable Justice Shogbola of the National Industrial Court on 9th April 2014, the court found for a claimant who has been unlawfully terminated from employment as a police officer but refused to grant the reliefs on promotion on the ground that promotion of staff is not a right. Interestingly, however, about a year after, Honourable Justice J. D. Peters of the same court, in another case, held on 5th March 2015 that where promotion is based on agreed conditions which the employee has fulfilled, it would be a breach of agreement if the employer fails to approve his promotion.

What is clear from a review of cases on promotion is that where a company’s staff handbook or terms and conditions of employment provide for clear procedure for promotion, failure of an employer to comply with the procedures may give rise to liability for breach of contract in an action against the company by an aggrieved staff. There is no laid down rule or guide for determining a right or wrong promotion decision. Every employment contract will have its own peculiarities on which, upon a proper review, an employment lawyer can provide independent advice regarding the rights of either party. Perhaps I should add that it is an onerous task for an aggrieved employee to successfully challenge his employer’s decision on promotion, however unfavourable. There is a presumption that every employee understands the terms of his or her engagement at the time of accepting an offer of employment; and the onus to prove any allegation of fraud or inducement rests on him. Malice and discrimination are not enough in themselves to impute liability to a company unless there is a clear evidence to support such allegations. Where a decision on promotion has been wrongfully exercised, the court has power to entertain the complaints of an aggrieved employee who has been affected by such decision.

How to determine “satisfactory performance” of worker in matters of promotion

In the discussion of promotion in employment law, the requirement of “satisfactory performance” is the most subjective condition a worker is required to meet. This is because the management of company determines what amounts to satisfactory performance of a worker. Hence, the court usually adopts a strict rule of interpretation of any promotion policy and will readily resolve any ambiguity in the policy in favour of a worker. In a case decided against Zenith Bank Plc, the employment contract stated that the claimant would be promoted upon confirmation and subject to an above average performance rating (minimum of B+).

The claimant’s employment was confirmed at the end of probation but he was not promoted despite his “A” performance rating. The court, relying on the last performance appraisal, found for the claimant on the ground that his performance was satisfactory to merit promotion. Consequently, the court awarded damages in the sum of money representing the difference in salaries of the claimant as the time of the suit and those which he would have earned in (as well as bonuses and benefits accruable to) the higher office to which he ought to have been promoted.

Review of Promotion procedures

The management of a company reserves the right to review the terms and conditions of an employment contract, including those pertaining to promotion of staff. However, when such review takes place, every affected staff ought to be promptly informed about the details of the new promotion policy. It is advisable to ensure that such management decision is not perverse as such that will give the impression that an employee is obviously prejudiced or denied of an entitlement which has become due. Where promotion is due to a worker, any unilateral decision by a company to review a promotion policy to prejudice or deny the worker may be deemed as a breach of agreement. Such affected worker may be entitled to compensation in damages in any action challenging the company’s decision during or after his resignation from the employment. It only needs to be added that when a prejudicial decision is taken on promotion, a right of action is deemed have accrued to an affected staff and he or she is entitled to resign immediately and seek redress against the company.

 

Legal Treatment of Contracts for Service and of Service in Employment Relationships

 

Employment-Law

Introduction

Contracts of service and contracts for service both connote an employment relationship between the parties. However, they differ in their nature and the legal consequences.  Understanding the difference between both contracts is important for two main reasons, namely, the nature of each party’s respective obligations, and which court has jurisdiction in the event of dispute between the parties.

Delineation

A contract of service is an agreement between an employer and an employee. In a contract for service, an independent contractor, such as a self-employed person or vendor, is engaged for a fee to carry out an assignment or project.

The line of demarcation between an independent contractor and an employee is very thin and the two concepts sometimes overlap. In such a situation, the question about the relationship of employer and employee needs to be determined with reference to the facts and circumstances of each case as to who are the parties to the contract, who pays the wages, who has the power to dismiss, what is the nature of the job, and the place of executing the job, all have to be kept in mind.

 The Supreme Court, in Shena Security Co. Ltd v. Afropak (Nig.) Ltd & 2 Others [2008] 18 NWLR (Pt. 1118) 77 SC; [2008] 4 – 5 SC (Pt. II) 117 laid down the following factors that should guide courts in determining which kind of contract the parties entered into –

  • If payments are made by way of “wages” or salaries” this is indicative that the contract is one of service. If it is a contract for service, the independent contractor gets his payment by way of fees”. In like manner, where payment is by way of commission only or on the completion of the job, that indicates that the contract is for service.
  • Where the employer supplies the tools and other capital equipment there is a strong likelihood that the contract is that of employment or of service. But where the person engaged has to invest and provide capital for the work to progress that indicates that it is a contract for service.
  • In a contract of service/employment, it is inconsistent for an employer to delegate his duties under the contract. Thus, where a contract allows a person to delegate his duties there under, it becomes a contract for services.
  • Where the hours of work are not fixed it is not a contract of employment/of service. See Milway (Southern) Ltd v. Willshire [1978] 1 RLR 322.
  • It is not fatal to the existence of a contract of employment/of service that the work is not carried out on the emjployer’s premises. However, a contract which allows the work to be carried on outside the employer’s premises is more likely to be a contract for service.
  • Where an office accommodation and a secretary are provided by the employer, it is a contract of service/of employment.

 Dispute resolution in contracts of service and for service

Jurisdiction is the all important factor that the courts will consider in any case that is brought before them. It is tempting to assume that all employment or work related disputes are to be settled by the National Industrial Court (NIC) by virtue of the Constitution of the Federal Republic of Nigeria (Third Alteration) Act 2010. However, this is not always the case.

Section 254 C (i) (a) of the Act provides that “the National Industrial Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters (a) relating to or connected with any labour, employment, trade unions, industrial relations and matters arising from workplace, the conditions of service, including health, safety, welfare of labour, employee, worker and matters incidental thereto or connected therewith”.

The above provision notwithstanding, the NIC has held in many cases that its jurisdiction covers only disputes relating to contracts of service, and not contracts for service. This means that only strictly employment contracts may be litigated before the NIC. Cases of an independent contractor, such as a self-employed person or vendor, engaged for a fee to carry out an assignment or project, are not justiciable before the NIC. Such cases may therefore be more appropriately brought before the regular courts (i.e High courts or magistrates courts, depending on the circumstances). In other words, breach of contract for service is regarded as any other breach of contract and treated as such.

In a recent case of The Registered Trustees of Three Wheeler Beneficiaries Operators Association, Lagos State v. Road Transport Employers Association of Nigeria (unreported Suit No. NICN/LA/407/2013), the ruling of which was delivered on 10th May 2017, the NIC held thus:

“This Court does not have jurisdiction over every workplace issue. For instance, as against contracts of service, this Court does not assume jurisdiction over contracts for service, and yet contracts for service are workplace issues strictly so called. See Mr. Henry Adoh v. EMC Communications Infrastructure Limited [2015] 55 NLLR (Pt. 189) 546 NIC, Ozafe Nigeria Limited v. Access Bank of Nigeria Plc unreported Suit No. NICN/LA/179/2014 the ruling of which was delivered on 16th March 2016 and Engr. Jude Ononiwu (Trading under the name of Judeson Chemical and Engineering Co. Ltd) v. National Directorate of Employment & Another unreported Appeal No. CA/OW/32/2015 the ruling of which was delivered on 22nd May 2015”.

In the case of Lawrence Igwegbe v. Standard Alliance Life Assurance Limited (unreported Suit No. NICN/LA/465/2013), the judgment of which was delivered on 11 July 2017, the NIC had to determine on the facts before it, if the relationship between the Claimant and the Defendant was one of an employment relationship (contract of service) or one in which the claimant was an independent contractor (contract for service). The court held that the fact that the Claimant was on commission and not on salary was very suggestive that the relationship was one of a contract for service. The court relied on the Supreme Court decision in Shena Security Co. Ltd and held that salary is a component part of the employment relationship strictly speaking (contract of service).

The facts of the case are that the Claimant was employed as Agency Manager by the Defendant, who is an insurance company. While the Claimant argued before the court that his relationship with the Defendant was an employment relationship, his evidence before the court showed that he was on commission and not on a salary. This meant that he was an independent contractor to the Defendant, and not necessarily its staff. The court in this case took judicial notice of the fact that insurance agents are in the main not salaried employees, but are paid commission based on the volume of insurance business they bring in. The court declined jurisdiction, since it was a case of contract for service as against contract of service.

In the case of Engr. Jude Ononiwu (Trading under the name of Judeson Chemical and Engineering Co. Ltd) v. National Directorate of Employment & Another, the claimant had entered into a contract as a trainer with the 1st defendant under the 1st defendant’s National Open Apprenticeship Scheme of Skill Acquisition Programme. As a result, the 1st defendant sent trainees to the claimant for training. Between 1996 and 2000, the claimant trained for the 1st defendant a total number of 2204 trainees at the training cost of N6,000.00 per trainee bringing the total debt owed the claimant to N13,776,000.00 only. When the 1st defendant refused to pay this sum after repeated demands, the claimant accordingly sued for it at the Federal High Court. The Federal High Court transferred the matter to the Owerri Division of the NIC on the ground that the issue is a labour issue in respect of which it had no jurisdiction given the provision of section 254C(1) of the 1999 Constitution, as amended.

The NIC, not certain as to whether it had jurisdiction either, decided to refer the case to the Court of Appeal to determine if the NIC has jurisdiction over contracts for service. In determining this issue, the Court of Appeal held that the court with jurisdiction, considering the facts of the case, was the State High Court, and not the Federal High Court nor the NIC. The Court of Appeal based its decision on the fact that the case arose from a simple contract between the claimant and the 1st defendant/respondent; and that the relationship between the parties was contractual, the contract being one of contract for service as opposed to a contract of service. The Court of Appeal then considered section 254C (1) in terms of the jurisdiction of the NIC, section 251(1) in terms of the jurisdiction of the Federal High Court and section 272(1), (2) and (3) in terms of the jurisdiction of the State High Court, and then concluded that the claims of the claimant in the case do not relate to the sections dealing with the jurisdiction of the NIC and the Federal High Court. Relying on Onuorah v. Kaduna refining and Petrochemical Co. Ltd [2005] LPELR 2707 (SC) and Integrated Timber & Plywood Products Ltd v. Union Bank of Nig. Plc [2006] 5 SCNJ 289, the Court of Appeal held that neither the NIC nor the Federal High Court had jurisdiction over the matter.

Employer tax obligations in contracts of service and contracts for service

 Employees under contract of service are deemed to have employment contract with the organisation that they work for, which entitle them to employment benefits such as wages and salary, pension, medical insurance and other similar employment benefits. In a contract for service, however, an independent, self-employed, individual is contracted to provide a specific service for the organisation in return for a fee. There is no employer-employee relationship between the organisation and the employees of the independent contractor.

Section 81 of the Personal Income Tax Act Cap P8, LFN 2004, as amended to date (PITA) provides that for employees – under a contract of service, it is the responsibility of their employers to deduct and remit income taxes from the emoluments paid to such employees. Section 82 of PITA provides further that the employer is answerable to the tax authorities for taxes deducted from the employees. The employer is required to file annual returns in respect of emoluments paid to their employees and account for the taxes withheld and remitted to the relevant tax authorities.

Section 81(2) of PITA requires the employer to file annual returns not later than 31 January of every year in respect of all emoluments paid to its employees in the preceding year. Failure to comply attracts a penalty, upon conviction. Whenever the tax authorities intend to conduct tax audit enquiries in respect of employees’ personal income taxes, the employer is usually held answerable.

In cases of contracts for service, however, the independent contractor or self-employed individual is personally responsible for his own taxes. Such individuals are expected to file personal income tax returns under the self-assessment regime. However, the company to whom the services are rendered has the responsibility for deducting and remitting withholding taxes on the fees payable under the contract at applicable rate. In the same vein, a self-employed individual has an obligation to register for value added tax (VAT) and charge VAT on invoices issued for services rendered, unless such service is specifically exempt from VAT.

The Value Added Tax Act Cap V1 LFN 2004 as amended (VATA) defines a taxable person as an individual or body of individuals, family, corporations sole, trustee or executor or a person who carries out in a place an economic activity, a person exploiting tangible or intangible property for the purpose of obtaining income therefrom by way of trade or business or a person or agency of government acting in that capacity. For the purpose of VATA, an individuals under a contract for service falls under this category.

In addition to the need to account for tax, the Pension Reform Act, 2104 mandates employers with five or more employees to make contributions on behalf of their employees into an approved pension fund. As explained earlier, individuals with contracts of service are employees. Hence, pension contributions are mandated for them but not for individuals with a contract for service. Individual with a contract for service could make voluntary pension contributions into their Retirement Savings Account (RSA) if they so desire.

Conclusion

In the world of work, it is not always easy to distinguish a contract of service from a contract for service. Sometimes, the nature of the relationship between the parties is deliberately made nebulous in order to hide its true identity (and thereby deny one party of certain rights). The International Labour Organisation (ILO), well aware of this fact, has provided guidance on how Courts should approach the issue, if it arises. In the ILO Report titled, The Scope of the Employment Relationship (ILO Office: Geneva), 2003 at pages 23 – 25, it is stated thus:

The determination of the existence of an employment relationship should be guided by the facts of what was actually agreed and performed by the parties, and not by the name they have given the contract. That is why the existence of an employment relationship depends on certain objective conditions being met (the form in which the worker and the employer have established their respective positions, rights and obligations, and the actual services to be provided), and not on how either or both of the parties, describe the relationship. This is known in law as the principle of the primacy of facts, which is explicitly enshrined in some national systems. This principle might also be applied by judges in the absence of an express rule.

The ILO concluded by advising that the Judge in a labour dispute must normally decide on the basis of the facts, irrespective of how the parties construe or describe a given contractual relationship.