The term “Contract Staff” is gaining momentum in the Nigerian employment space largely because employers see contract staffing as a way of managing budgets. However, the term is often confused with “Casual Staff.” In this discussion, we shall be looking at what contract staffing really means, the legal obligations of an employer regarding the practice, limitations in using this employment model, and possible alternatives.
Who is a Contract Staff?
In Nigeria, the employment relationships under various legislations are classified into three categories. These are: (1) express and implied employment; (2) contracts of service against contracts for service; and, (3) permanent against temporary employments.
- Express and Implied Employment
This is about the formation of the employment contract. An express employment is one where the terms are expressed either orally or in writing. An implied employment, on the other hand, is where the terms are not directly expressed but can be inferred from the conducts of the parties, the nature of the job, and relevant laws.
- Contract of Service Vs. Contract for Service
The contract of service is a conventional relationship between employer and employee, with the former exercising control over the work and the way it is done. Elements that define a contract of service include paying wages, providing equipment, controlling hours of work, and stipulating where the work is to be done. A contract for services, on the other hand, is an independent contractor who would be employed to provide a result in a project but has full control over how the work is executed. Unlike employees, however, contractors have the freedom to take on other work simultaneously.
- Permanent vs. Temporary Employment
A permanent staff is employed for an indefinite period but has a fixed end either way of retirement or termination in line with the condition of the employment. A temporary employment normally adopted for contract staff, is for a specified period; it automatically expires on the expiration of such agreed period. For this reason, contract staff are usually not accorded the same benefits as permanent employees, since they are not considered a permanent addition to the workforce. While this might be viewed as justifiable, at least labour laws of Nigeria do not draw such distinctions between permanent and contract staff with regard to employment benefits. This therefore means that contract staff should technically enjoy the same benefits as permanent employees under most statutory provisions.
The status of contract workers is settled in Nigerian Labour law. The Supreme Court, in Thomas v. Local Government Service Board, declared temporary employment valid. For instance, the court cited examples of the engagement of a school teacher for only one term or an engineer for the duration of a particular project. This is a precedent which has been reinforced in modern case law, such as Casmir Onuchukwu v. Petroleum Products Pricing Regulatory Agency, and as provided by the Labour Act, which states the terms of employment shall state the duration of the contract.
Statutory Provisions for Contract Staff
While it may appear that the legal stand on contract staff remains grey, various laws in Nigeria govern the rights and obligations of contract staff. These include the Labour Act, Industrial Training Fund Act, Employees Compensation Act, Trade Union (Amendment) Act, Trade Dispute Act, National Industrial Court Act, Nigeria Social Insurance Trust Fund Act, Pension Reform Act, and National Health Insurance Scheme Act. All these aforementioned statutes also define “employee” to include contract staff, either directly or indirectly. The implication, therefore, is that all the said protections and benefits also accrue to the contract staff.
For instance, employers are expected to pay for pension and health insurance for all staff including contract staff, contributing on their behalf to Industrial Training Fund and Nigerian Social Insurance Trust Fund. This, of course, casts a question of whether strictly speaking, it is cost-effective to adopt the contract staffing policy if an employer has to bear all these costs and the answer may be no, especially if the employer fully complies with the law.
However, employers can save money on discretionary benefits, such as company cars, lunch allowances, accommodation, transportation, and bonuses through contract staff. Though the contract staffing arrangements may not reduce statutory obligations, it could help employers to limit non-mandated expenditures.
This article provides a general overview of the subject. Please contact us directly for any specific Legal assistance.