The business world is a confusing and oftentimes dangerous place. This explains why business laws and regulations are made to protect business stakeholders. Without business laws and regulations, consumers will be at the mercy of business owners, employees will be at the mercy of employers and business owners will be at the mercy of their competitors and suppliers, and the environment will be at the mercy of humans. If you’re running your own business or company, it is important to know and understand some of the protection provided by these laws and regulations in order to prevent any surprises or costly mistakes down the line. This article will set out basic employment, consumer, and environmental laws and regulations in Nigeria.
The first principle of employment law is that no one should be held in slavery, servitude or forced to perform forced or compulsory labour.
- Slavery is when someone owns a person like a piece of property.
- Servitude is similar to slavery – A person might live on another’s premises, work for them, be unable to leave, but they don’t own such person.
- Forced labour means getting a person to do a work that he/she is unwilling to do under the threat of punishment/compulsion.
Section 34 (2) of the Nigerian Constitution allows forced or compulsory labour in special circumstances such as where a competent national authority prescribes compulsory service for citizens.
Another important principle is that workers have the right to associate with others including the right to join trade unions. Business owners should note that membership of trade unions is voluntary, even for public servants. The implication is that workers need not be compelled to join any labour union or worker’s association against their wishes.
Letter of Employment: Employers should ensure that they issue letters of employment to their workers within 3 months from the date of commencement of employment. The letter of employment should contain the following:
- the name of the employer and an undertaking where the employee is employed;
- the name and address of the employee;
- the date of engagement;
- the nature of employment;
- If the contract is for a fixed term, the date it expires;
- the period of notice for termination;
- the rates of wages and method of calculation;
- the manner and periodicity of payment of wages;
- terms and conditions relating to hours of work, holidays and holiday pay, incapacity for work due to sickness or injury including any provisions for sick pay etc.
The letter of employment must be signed by the employer or his accredited agent. The implication of signature is that it binds the employer to the terms except he/she can show that he did not sign it, it was signed without his authority or worse still, it was signed in error. It is important to note that where there are no clear terms in the letter of employment or where the terms of employment is not in writing and the court cannot discern the true intention of the parties, it may imply terms that are customary or part of trade practices; or such terms that are imposed by statutes; or implied by courts.
‘Contract of Service’ or ‘Contract for Service’:
An employment may either be in the form of a ‘contract of service’ or a ‘contract for service’. A ‘contract of service’ is a longstanding employment with all the benefits of tenure. A ‘contract for service’ does not make a person an employee. Where the contract is a contract of service, it must be disengaged by giving the appropriate notice. The notice to be issued shall be in this format by the provisions of the law;
- One day, where the contract has continued for three months or less.
- One week, where the contract has continued for more than three months but less than two years.
- Two weeks, where the contract has continued for two years but less than five years.
- One month, where the contract has continued for five years.
A ‘contract for service’ can be dispensed with without resort to prior notification or payment of salary in lieu. It is also important that employers disengage their employees after complying with due process. Where they fail to follow the express terms of the contract or where, in the case of ‘contract of service’ they fail to give the appropriate notice, the court will hold that the employee remains in their employment and may award damages against them. It is also important that the letter of dismissal does not mention criminal misconduct or allege that the employee has committed grievous misconduct. Where such allegations are made, the employee must be given a right to fair hearing before the employee is sacked or dismissed.
It is also important to bear in mind the requirements of occupation safety and social welfare and security. The Labour law imposes responsibility on employers to make sure their work environment, including offices and factories satisfy safety standards. Some of these standards are based on the International Labor Organization Convention (ILO). Nigeria is a signatory to the ILO Conventions and its many statutes. This means that entities and persons in Nigeria ought to abide by their stipulations. These stipulations include provisions as to health and safety, working time and overtime minimum wage etc. It is important to note that some of these provisions may not apply strictly, although every employer of labour, whether a big or small business person, should know them.
With the increase in globalization and sustainability advocacy, nations of the world are becoming more committed to the collective governance of the environment. As a result, business owners particularly those involved in manufacturing and other industrial activities that can impact on the environment will be required to pay special attention to environmental regulations in the course of their operations. Two categories of environmental regulations include: domestic laws and international treaties and conventions. Domestic laws include regulations enacted by national and municipal authorities; while international laws are laws, rules or regulations that govern the relationship between nation states. They are further subdivided into hard and soft laws. Hard laws are legally binding either because nations have signed up to them or they have become customary. Soft laws are not so binding.
Some basic domestic laws on environmental regulation in Nigeria are the National Environmental Standards Regulations and Enforcement Agency (Establishment) Act 2007 (NESREAA) and the 33 Regulations made by the Minister of Environment under section 34 of the Act, the Environmental Impact Assessment Act (Cap E12 LFN 2004). This law sets out the general principles, procedures and methods of environmental impact assessment in various sectors, the Harmful Waste (Special Criminal Provisions etc.) Act (Cap H1 LFN 2004). This law prohibits the carrying, depositing and dumping of harmful waste on land and in territorial waters. The National Environmental Standards Regulations and Enforcement Agency (NESREA), the major federal body responsible for protecting Nigeria’s environment, is responsible for enforcing all environmental laws, regulations, guidelines, and standards. This includes enforcing environmental conventions, treaties and protocols to which Nigeria is a signatory.
Each of the 36 states has its own environmental protection bodies. For example, the Lagos State Environmental Protection Agency (LASEPA) Law authorizes officers to search and seize offending items and to arrest offenders engaged in the production of these items. Offences under the LASEPA law include: Discharge of raw untreated human waste into any public drain, gorge; Discharge of any form of oil, grease, spent oil including trade waste from manufacturing into any public drain, watercourse, gorge or road verge. The key point to note is that any enterprise engaged in activities that may adversely impact on the environment must first do an Environmental Impact Assessment before commencing industrial activities. Failure to carry out an EIA can lead to closure of factory or industrial plant and render the entrepreneur to serious legal liability resulting in payment of damages or criminal prosecution.
Business owners should also watch out for myriad of regulations from Local Government Council on factory and urban pollution although some of these regulations are overburdening and exploitative. Business owners should ensure that they are not being exploited by criminals masking as local council agents, hence they should insist on seeing the law that authorizes such regulation. Advisably, they should quickly seek the advice of a legal practitioner as soon as they suspect criminality or exploitation. If a Business owner fails to pay attention to these environmental regulations, they may render themselves liable to prosecution by government and private citizens. In addition to the provisions of the law, environmental misconduct can also constitute nuisance which is actionable in court against the Business owners by either the government or private citizen. The Courts have established that a nuisance creates a right of action which either the Attorney General can prosecute on behalf of the government or a private citizen can prosecute for himself. Nuisance can arise in many ways such as deliberate acts of trespass or by unintended consequences of legitimate actions by the Business that nevertheless cause damage to property or interests of another person. For example, where a man sinks a borehole on his premises for the business of manufacturing ‘PURE WATER’, and the borehole overflows into a neighboring premises and causes harm. The owner of the boreholes will be liable for damages at the suit of the innocent neighbor, notwithstanding that he did not intend the harm.
Business Owners should note that consumers have rights that the court and other government agencies are willing and eager to protect. These rights are either created by statutes or embodied in the common law and recognized by courts over the years. It is expected that with the liberalization of the Nigerian economy, more of these rights will be created and enforced against businesses. The Federal Competition and Consumer Protection Act, 2018 (“FCCPA”) is the primary legislation that governs and protects the rights of consumers in Nigeria. The FCCPA is administered and enforced by the Federal Competition and Consumer Protection Commission (“FCCPC”). The FCCPA applies to all persons involved in the production of goods and the provision of services in Nigeria and this includes the government and its agencies.
The FCCPA provides that the consumer has a right to services performed in a manner and quality that “reasonable persons” are generally entitled to expect. In relation to the quality of goods, the FCCPA states, amongst others, that every consumer has a right to goods that are of good quality, in good working order, free from defects, and that comply with any applicable standards set by the industry sector regulator. In addition, there is an implied warranty in any transaction that the goods comply with good quality and applicable standards set out in the FCCPA, and the customer has a right to return the goods within a prescribed period for failure to comply. The FCCPA prohibits business practices/conducts that are misleading, fraudulent, unconscionable or generally anti-competitive for instance issuing a false or wrong advertisement; altering, defacing, covering, removing or obscuring a trade description, or trade mark applied to etc.
In addition to the provisions of the FCCPA, there are other guidelines/regulations made by the FCCPC such as (a) the FCCPC (Sales Promotion) Registration Regulations, 2005; (b) the FCCPC Guidelines for Sales Promotion Registration; (c) the FCCPC Business Guidance Relating to COVID-19 on Business Co-operation/Collaboration and Certain Consumer Rights Under the FCCPA, 2020 (“Business Guidance”); (d) the FCCPC (Administrative Penalties) Regulations, 2020; and (e) the FCCPC Investigative Cooperation/Assistance Rules & Procedure, 2021. There are other sector regulators who, by virtue of their establishing/enabling laws in addition to their primary responsibilities, have responsibilities to protect consumers in Nigeria. Such sector regulators include: The Central Bank of Nigeria (“CBN”), Nigerian Communications Commission (“NCC), the Nigerian Electricity Regulatory Commission (“NERC”), National Agency for Food and Drug Administration and Control (“NAFDAC”), Standards Organisation of Nigeria (“SON), Nigerian Broadcasting Commission (“NBC”), Nigerian Civil Aviation Authority (“NCAA”). Where a business operator violates any of the provisions of the FCCPA or other Sector specific consumer protection legislation, it could attract, huge damages, penalties or fines, temporary closure of premises or facilities, monetary restitution or compensation and imprisonment.
Basic Rules on Contracts:
Business Owners have to bear in mind the fundamental rules of a valid contract. Where a contract is not valid, the other person may not perform the contractual terms and may actually apply to court to nullify the contract. When making contracts, the Business Owner should note that:
- When a contract is rendered unlawful by statutes. No benefit can be acquired from an unlawful contract.
- A contract to commit a crime or a tortuous act is unlawful and will not give rise to a legal obligation.
- A contract to enter into commercial transaction with an enemy of the government in time of war or open hostility will not be enforced.
- A contract whose aim is to corrupt a public officer or corrupt public morality will not be enforced and no benefit will be acquired under it.
- A contract to oust the jurisdiction of the court will not be honored by such court because it is illegal.
Guidelines to Ensure Well-Drafted and Enforceable Contractual Agreement:
- Ensure that parties agree to basic and fundamental terms;
- Ensure that the contract is signed by the party or his duly authorized agent;
- Employ the services of a legal practitioner to vet the contract document particularly one that involves a landed property or objects of substantial monetary value,
- In a contract to buy or sell land, ensure that a lawyer investigate the genuineness of the title, draft the agreement and comply with all requirements like registration and Governor’s consent;
- As much as possible reduce every contractual term to paper and leave little to interpretation.
Regulation: Half a Dozen Rules
In conclusion, Business Owners should ask the following questions about their enterprises before commencing operations:
- Is the enterprise properly registered, that is, is it incorporated as a business name, a limited liability company, a company limited by guarantee or even an unlimited liability company?
- Is the product or service proposed registered with the sectoral regulator or authority like the National Communication Commission (NCC), National Agency for Drug and Food Administration and Control (NAFDAC), Standard Organization of Nigeria (SON), Broadcasting Organizations of Nigeria (BON), etc.
- Do you know about and have you paid the prescribed taxes and charges applicable to your business?
- Do you know about and have you complied with licensing requirements of state and local council authorities?
- Are your business premises installed with prescribed safety standards and are there strong business continuity plans and provisions?
- Are employee terms of agreement clearly set out and in writing?
Uchechi Ofoegbu – Associate.