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Protecting Workers’ Rights in an Outsourced Environment

12 Nov 2012

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Emeka Wogu, Labour Minister


Linda Eroke highlights the responsibilities of service providers and service beneficiaries towards the protection of workers’ rights in an outsourced environment

Outsourcing has become a global phenomenon to which no country is immune. The technological and organisational changes currently taking place across the globe are due to increasing sophistication, liberalisation and privatisation policy of government, which has brought significant transformation into labour market with new patterns of labour utilisation.


Enterprises are increasingly using work arrangements involving outsourcing as a cost-saving strategy to improve their competitive positions.


Outsourcing is the transfer of the management and/or day-to-day execution of an entire business function, project/programme execution of part of it to an external service provider.


Outsourcing arrangements in the context of labour is a situation whereby a company hires workers for the normal work of a company through a third party; being referred to in labour parlance as a ‘recruiter’ or ‘labour contractor’.

The term outsourcing, which became popular in the 21st century, has become a feature of any modern economy. This is because outsourcing is believed to offer greater budget flexibility and control as well as help firms to perform well in their core competencies while mitigating the shortage of skill or expertise in the areas where they want to outsource.


Since the infiltration of this new work arrangement into the Nigerian labour market, concerns have arisen in various quarters as to the protection of the rights of the workers being supplied by the employment agencies.

It is pertinent to emphasise that contract workers, like any other person who enters into a contract of service, are entitled to equal treatment. This means that contract workers are equally entitled to all the rights guaranteed by national law and international best practices. Such rights include but are not limited to the following: the right to join trade unions, protection against discrimination, work safety and health, adequate remuneration, access to training, maternity rights and benefits, minimum age provisions, rest period, holiday with pay (annual leave), right to redundancy employment among others.

Role of Labour Ministry


The Federal Ministry of Labour and Productivity is statutorily responsible for regulating and enforcing legal provisions regarding working conditions and protection of workers in Nigeria; as spelt out in the relevant International Labour Organisation (ILO) conventions, constitution and legislations.

Moreso, the national policy on labour is based on the provisions of Section 17 of the 1999 Constitution of the Federal Republic of Nigeria. Section 17 (1) states that “the State social order is founded on the ideals of Freedom, Equality and Justice.” Section 17 (3) enumerates the areas towards which the policy should be directed and this includes ensuring:


According to the law, non-discrimination in opportunities for securing adequate means of livelihood and suitable employment must apply. It further states that conditions of work should be just and humane.

The country’s labour policy also provides for the safety, health and welfare of persons in employment and preventing their exposure to danger or abuse. It emphasises the need for equal pay for equal work, without discrimination on account of sex or any other ground whatsoever, protection of children, young persons and the aged against exploitation.


In order to check working conditions abuses emerging from the outsourcing of labour arrangement, the labour ministry adopted convention 181 of 1997 on private employment agencies and activated section 23-25 of the Labour Act.


Convention 181 of 1997 recognises private employment agencies as capable of playing a role in a well functioning labour market and also recognises the need for effective monitoring of the agencies to protect workers against abuses.

However, in recent times, there have been reports and complaints of unfair labour practices arising from contract staffing and outsourcing of employment especially in multinational companies operating in the country. This has brought about concern over the health, safety and general welfare of employees in such undertakings.

In response, the labour ministry, in the discharge of part of its statutory functions of protection of employment and employees, decided to check the proliferation of unfair labour practices by third party employers; otherwise known as outsourcing firms.

Specifically, in 2007, the ministry, in fulfillment of Section 23 of the Labour Act, put in place a system of licensing and certification of labour contractors/private employment agencies for identification, regulation and streamlining of the labour recruitment business.


State Controller, Federal Ministry of Labour and Productivity, Lagos State Office, Mrs. Nofisat Arogundade, said the license confers on the labour contractor of private employment agency, a formal status to carry out his/her business of hiring labour for other establishment legitimately within establishment laid down rules and regulations.

According to her, the licensing procedure provides some element of in-built mechanism for control and monitoring.


“It is pertinent to state that section 25(5) empowers the Minister of Labour to suspend or withdraw license granted if the licensee is convicted of any offence under the Labour Act or any other law or has conducted himself as in the opinion of the minister to be no longer a fit and proper person to undertake recruitment operation,” she said.

Clashes of Interest


Arogundade maintained that it was the role of the labour ministry to regulate employment in the country, adding that past experiences had shown that some employers, in their desperate bid to maximise profit, do not bother about health, rights and well being of the human capital.


“We know what is going on in business organisations. The human capital must be protected. Some employers are having slave camps in their business organisations in their desperate bid to maximise profit. We are talking about decent jobs, the safety of workers, and the right of workers to collective bargaining and freely associate as recognised by the law. We are saying you should do your businesses right in all ramifications.” 

Speaking further, she said periodic monitoring of the activities of the companies would continue through both scheduled and impromptu visits by officers of the Federal Ministry of Labour to ascertain compliance by these companies. She emphasised that defaulters would have their licences revoked by the ministry or denied renewal when the issued ones expire, noting that these are some of the options available to enforce compliance by the ministry.

In his opinion, the immediate past President of Nigeria Employers’ Consultative Association (NECA), Mr. Sam Ohuabunwa, charged government, employers and labour to focus on developing institutions and framework that would ensure the protection of the rights of workers; rather than focusing on the scope and limit of outsourcing.

Ohuabunwa said: “For some time now, the issue of outsourcing has been a sore matter for the unions. Our response has always been that it is part of the rights of an enterprise to determine how it intends to run its business. The issue at stake here goes beyond core or non-core business, as there are no rules in business management or any law that compels an enterprise to deliver products and services to its market in a particular way.”

He argued that employers should not be dictated to on how on to run their businesses, adding that if an enterprise chooses to outsource its entire business, there should be no hue and cry about it. However, he stressed the need for employers to respect the rights of its workers noting that without employees, there will be no organisation.

“As a responsible association, NECA has recognised the need for any employer to respect the rights of its workers. We believe this is the heart of the matter. Instead of focusing on scope and limit of outsourcing, employers’ associations and the unions should channel their energy into developing institutions and framework that will ensure the protection of the rights of workers, whenever these workers are engaged,” he said.

Responsibilities of Service Beneficiaries and Providers


There is no doubt that outsourcing of labour arrangement has come to stay in Nigeria. Therefore, the responsibility to protect workers’ rights in an outsourcing arrangement should be a joint one. So, in order to maintain a balance between the promotion of the growth of the business and the protection of workers’ right, the service providers and the service beneficiaries have important roles to play.

The labour ministry expects every party involved in the arrangement to conduct the business within the framework of the extant labour laws and international best practices for the good of the nation. Below are some of the responsibilities of both the service beneficiaries and service providers.

Role of Service Beneficiaries


. The principal must not deal with a contractor without a valid recruiters’ license.


. Ensure that all jobs on the organogram of the company that are regular jobs must be occupied by permanent employees of the company. Where regular jobs in the organisation are found to be occupied by non-permanent employees, such workers must be converted to permanent staff.


. The principal should restrict outsourcing to non-core business functions of the company except for proven short term processes.

. The principal should respect the right of contract workers to unionise and bargain collectively.


. The contract agreement between the principal and the contractor should make collective bargaining between contractors and the employees mandatory and this process should be included in the scope of the contract.


. The principal should oversee and monitor compliance of the contractor with National Labour Laws and ILO core standards in the relationship between the contractor and contract-employees.


. The principal should ensure that service agreement include a clause which empowers the principal company to deduct from the contract sum, whatever is owed to the contract staff by the contractor in case of default in payment of wages and/or other agreed entitlements.


.  It is the duty of the principal to provide a safe and healthy system of work and ensure the safety and health of all his workers whether direct or outsourced.

Responsibilities of Service Providers


. First and foremost, it should be noted that a service provider is expected to discharge all the obligations of an employer to his employees whether permanent or outsourced.


. He must possess a recruiter’s license which shall be valid for 12 months subject to renewal.


. He must conduct his operations within the ambit of the Nigerian labour laws and ILO core standards


. It is the duty of a service provider to provide working tools and personal protective clothing. The practice of deducting cost of uniforms, batons, safety shoes etc. from workers’ salaries is unlawful.


. A service provider should respect the right of the outsourced workers to be unionised and bargain collectively in line with Trade Union Act.

. For the sake of clarity all contract staff can belong to union relevant to the economic activity of the principal. Whereas for all Service Contract, trade union membership shall be determined by the economic activities of the contractor company in line with the extant labour law as contained in the 3rd schedule part B of the Trade Union Act, 2004.

. Where a service contractor is engaged in multiplying economic activities that makes it difficult to pin the contract down to a Particular area in the 3rd schedule of part B of the Trade Union Act, staff of such contractor company shall belong to the Trade Union where the contractor in reference operate. This shall however be without prejudice to the rights of the contractor employees to deploy any of his staff from one areas of his company operation to the other.


. He must keep records of his recruiting operations which shall be produced for inspection on demand by an authorised labour office.

. He must not recruit in excess of the number of workers authorised by the permit.


. He must not recruit from any area or place not specified in the permit.

Tags: Nigeria, Featured, Business, Emeka Wogu

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