Oil and gas companies in Nigeria are now required to obtain the approval of the Minister of Petroleum Resources, through the Department of Petroleum Resources (DPR), before they can remove any staff from their employment.
This is according to new guidelines approved by President Muhammadu Buhari, who doubles as Minister of Petroleum Resources.
Failure to comply with this directive attracts a penalty of $250,000. In addition, any permit, licence or lease granted to that company may be withdrawn or cancelled by the DPR.
In letters issued by the DPR to oil companies in Nigeria, the agency informed them that Regulation 60b of the Petroleum (Drilling and Production) Amendment Regulations 2019 was recently reviewed and signed into law by the president of the Federal Republic of Nigeria.
The regulation states that “the holder of an oil mining lease, licence or permit issued under the Petroleum Act 1969 or under regulations made there under or any person registered to provide any services in relation thereto, shall not remove any worker from his employment except in accordance with guidelines that may be specified from time to time by the Minister”.
Legal analysts who spoke to BusinessDay say the new regulations, while intended to protect Nigerian oil workers from indiscriminate retrenchment by oil companies, may be challenged in court as it impedes contract terms between employer and employee.
“Government will argue that the purpose is to enhance local content but Nigeria risks violating terms of multilateral contracts and treaties it signed with other countries,” said Ayodele Oni, an energy lawyer and partner at Lagos-based Bloomfield Law firm.
The amendment, which was drafted in October 2019, says any employer in the oil and gas industry who wishes to release a worker “shall apply in writing to the Director for the Minister’s approval stating the manner of staff release, the reasons for the proposed release, the compensation due to the worker, and any proposed replacement for the worker”.
The guideline says the application shall contain a copy of any document relevant to the worker’s employment, including the employer’s conditions of service as defined under the guidelines. Where the employer fails to submit any required information to the DPR, such application for staff release shall not be eligible for the minister’s approval.
It further says that an employer shall only be required to notify the minister through the DPR where the worker’s release occurs by way of voluntary retirement, resignation, death and abandonment of duty post.
But “where the Worker’s release is by involuntary retirement, dismissal, termination, redundancy or on medical grounds, the DPR shall conduct an inquiry into the circumstances of the proposed staff release and make a decision on whether to convey the Minister’s approval or otherwise”.
“To this extent, the Employer shall not advertise, publish or make a press release in respect of the release of the Worker prior to the DPR’s decision as such an advertisement, publication or press release may prejudice the outcome of the inquiry. The DPR’s decision shall be implemented no later than ten days after it is received by the Employer,” it says.
Chuks Nwani, an energy lawyer, said this provision negates labour laws.
“You cannot force a willing employee on an unwilling employer. Besides, only statutory employment has this kind of protection,” he said.
Nwani argued that the cyclical nature of the oil and gas sector allowing for boom and bust makes the guideline unrealistic. “When oil prices fell to less than $30 in 2016, workers had to be removed so the companies can remain in operation. Forcing companies to keep workers they no longer need will ultimately be injurious to their business and even to the government as it will affect tax remittances,” he said.
Analysts expect oil companies to challenge the rule and where they are not successful, foresee a situation where oil companies will prefer contract staff rather than offering full employment to Nigerians.
These guidelines may have been created to deal with incessant sacks of oil workers in Nigeria leading to strike actions by labour unions.