Introduction
Traditionally, employment relationships were strictly between two parties - the employer and the employee. Employment relations in Nigeria have evolved to modern-day employment relationships which includes agency contracts. A recent trend in employment disputes shows a disturbing trend to hold a third party responsible for employment contracts. This article examines the nature of co-employment in Nigeria and the attitude of courts in Nigeria to co-employment litigation. We also provide a guide of how to prevent unintended interpretation by the courts to employment contract.
Co-Employment Principle
Co-employment principle, also referred to as the triangular employment relationship, occurs when employees of an enterprise perform work for a client company - the end user -) to whom their employer provides labour or services1. It typically involves one or more third parties2. It can also take the form of an agency relationship where a private agency engages labour to supply or fill vacancies for another entity (the user enterprise). The agency then becomes an intermediary between the workers and the user enterprise. The typical issue is the difficulty in determining who is the workers' actual employer to enforce employment contracts.
Attitude of Courts in the United Kingdom
The principle's watershed is the case of Dacas v. Brook Street Bureau (UK) Ltd3. Dacas was registered under Brook Street Bureau - an employment agency. The employment agreement between Dacas and the agency stated that there was no contract of employment between them, and between Dacas and the local council where she was assigned to work. Dacas worked at the local council-run hostel for years as a cleaner. The council, through the hostel's management exercised daily control over her and gave her cleaning materials and equipment for her job. She also received her remuneration from the agency, who paid her from the council's payment to it for its services. Subsequently, the agency discontinued its relationship with her, and she sued the agency for unfair dismissal.
The UK Employment Tribunal held that Dacas had no contract of service with the agency and the council. However, on appeal, the Employment Appeal Tribunal held that Dacas was employed by the agency. On a further appeal, the Court of Appeal held that there was no employment contract between Dacas and the agency. Instead, there could have been an implied contract between the council and Dacas, considering all the evidence.
In the more recent case of Uber BV v. Aslam4, the UK Supreme Court had the opportunity to examine when a person can be deemed a worker of an entity. The issue before the Court was whether the drivers of private hire vehicles in London using the Uber app were Uber's workers. In a unanimous decision, the Supreme Court found that Uber exercises control over: (1) the fees of the drivers; (2) the terms on which the drivers carry out their services; (3) the driver's choice to decline or accept requests; (4) the way in which drivers deliver their services; and (5) communications between passenger and driver. As such, the Court held that the drivers were rightly found to be Uber's workers.
Attitude of Courts in Nigeria
Nigeria has no provision in the Labour Act sregulating co-employment.. However, the National Industrial Court of Nigeria ("NIC") has made notable pronouncements on this principle. In Oyewumi Oyetayo v. Zenith Bank Plc5, the NIC held that where an employee is under the control of a subsidiary company of his employer and his appointment is terminated by the subsidiary acting upon the written instruction of the parent company, the letter of termination by the subsidiary company gives rise to the cause of action. Both companies will be regarded as employers of the employee.
Also, in Anthony Agum v. United Cement Company Ltd. and anor6, UNICEM entered a service contract with MS Outsourcing Services to provide and manage drivers, cooks and stewards. Further to this agreement, MS Outsourcing employed the claimant and assigned him to UNICEM. There was no contract of employment between the claimant and UNICEM and the payment of the claimant's salary was the sole responsibility of MS Outsourcing. In its decision, the NIC found that the Claimant had established a "triangular employment relationship". The court declined UNICEM's argument on privity of contract. The court then held that the claimant was well within his right to bring this action against both defendants as co-employer.
In Mr. Morrison Owupele Inimgba v. Integrated Corporate Services Ltd. & Anor7, the first defendant - Integrated Corporate Services - employed Mr Inimgba and assigned him to the second defendant (Ecobank Nigeria Plc) to work as a transaction officer. There was no written contract between Ecobank and Mr Inimgba. Nevertheless, the NIC held that Integrated Corporate Services and Ecobank were Mr Inimgba's co-employers. The Court relied on the first defendant's offer letter which stated that Mr Inimgba was employed as a transaction officer and seconded to Ecobank.
The Nigerian decisions largely mirrored the UK courts' decision. For a co-employment claim to succeed, the claimant must show some relationship with the client company (end user). The relationship can be day-to-day control or supervision by the end user. It can also be payment of the claimant by the provider (main employer) from the funds received from the end user for the services rendered by the claimant. Co-employment can also arise where the claimant shows that the end user exercised great control over the claimant's services; or that the claimant is subject to some disciplinary measures imposed by the end-user without recourse to the main employer.
Need for Worries?
The courts' decisions have opened the gates for several cases where claimants allege co-employment. Of great concern are instances where claimants have stretched the principle to include to even cases where the main employer provide professional or technical services (other than supply of labour) to third parties. They take agency contract to mean usual principal-agent relationship in commercial transactions with independent contractors engaged for technical or professional services.
The decisions should also concern companies transitioning from the traditional employment model into agency contracts. It is no longer necessary to have direct employment contract with the end user. A contract between an employee with the main employer coupled with a contract to provide labour by the main employer and the end user (including secondment) is sufficient to establish co-employment. There is no more hiding place for such employer.
How End-Users can Guard against Co-Employer Liability
Notwithstanding the evident worries that have arisen from the liberal application of co-employment principles, there is still some silver lining for end-user companies. End users that do not intend their employment relationships with third parties to be construed as a triangular relationship should be careful about the degree of control they exercise. However difficult this might be, it must be consciously adhered to by the end user.
The major determining factor in deciding the existence of a co-employment relationship by the courts is control. End users should refrain from carrying out disciplinary actions directly on employees of third-party companies. They should allow the main employer to directly impose sanctions for disciplinary actions. End users should also limit the amount of day-to-day control they exercise on employees of service providers, and also ensure that there is a secondment agreement between the provider, end user, and employee.
Conclusion
Under the current legal regime, there is a high chance that most secondment arrangements and employment relations with third parties will be caught in an unintended triangular relationship. The most potent way to guard against unintended consequences is to limit the degree of control. End users should not always rely on the non-existence of contracts as a defense to co-employment principle. As we have shown in this article, the Courts would always consider each case based on the facts and circumstances peculiar to it. This is known as the principle of primacy of facts. If the facts of a case disclose a co-employment relationship between the claimant, the main employer and the end user, the Court will hold the main employer and end user as co-employers.
Until such a time when the legal regime changes by reason of an amendment to the labour laws, the courts will, more often than not, imply a co-employment relationship notwithstanding that there was strictly no privity of contract between the claimant and the end user.
1 International Labour Organisation Report on the Scope of the Employment Relationship 2003 (Page 37)
2 See Deloitte's 2018 Global Human Capital Trends survey sourced at https://www.deloitte.com . See also the
Mckinsey Global Institute (MGI) 2018 report titled, Skill Shift: Automation and the Future Workforce sourced at
3 [2004] EWCA Civ 217
4 [2021] UKSC 5
5 (2012) 29 NLLR (Pt.84) 370 (NIC)
6 Unreported Decision of Kanyip, J delivered in Suit No: NICN/CA/71/2013 on March 3, 2017
7 (2015) 57 NLLR (Pt. 195) 268 (NIC)
Practice Group: Dispute Resolution
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