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A perspective on DPR’s guidelines for the release of oil workers in Nigeria’s oil and gas industry

On the 5th of March, 2015 the erstwhile director of the Department of Petroleum Resources (DPR) signed the Guidelines and Procedures for the Release of Staff in the Nigerian Oil and Gas Industry. The Guidelines were issued pursuant to Regulation 15A of the Petroleum (Drilling and Production)(Amendment) Regulations.

Regulation 15A was itself issued pursuant to section 9 of the Petroleum Act which empowers the Minister of Petroleum Resources to issue regulations for the purpose of giving effect to the Act. In view of this, can it be said that the Guidelines have the force of law and as such are enforceable? If actually they are enforceable, are they appropriate? Do the Guidelines contravene well-established labour and employment laws which make a contract of employment the foundation and bedrock of every employer/employee relationship?

The collapse in crude oil prices have continued to affect oil companies globally, leading to massive layoff of workers by these companies. Nigeria has not been an exception in this light. Does the Guideline make ‘release’ of a staff from work subject to the Minister/DPR’s approval? Do oil companies need the prior the consent of the Minister of Petroleum resources/DPR before they can ‘release’ any person from employment, either through termination, dismissal, or even redundancy?

Indeed, the Guideline raises a lot of issues and stirs a lot of controversies. Some of these have been publicly expressed. Here, we set out to take a deeper legal examination of this Trojan instrument and hope to answer every legal question that might be asked in relation thereto.

Application of the Guidelines

The Guidelines is to apply to an ‘employer’ and for the benefit of a ‘worker’ as defined therein. With respect to an ‘employer’, an ‘employer’  is defined as “any organisation, company, partnership, or registered business name which holds an oil mining lease, licence or permit (or interest therein) issued under the Petroleum Act or under Regulations made thereunder or any person registered to provide any service in relation thereto”. The implication of this definition is that the Guidelines apply to upstream companies, downstream companies, oil servicing companies, and even oil refining companies. Upstream companies are caught by the Guidelines as they hold their oil mining lease pursuant to section 2 of the Petroleum Act. Downstream companies also hold their licence or permit pursuant to section 4 of the Petroleum Act. Oil servicing companies are covered by the part of the Guidelines which says “…any person registered to provide any services in relation thereto”. Oil refining companies hold their licence pursuant to section 3 of the Petroleum Act.

With respect to a ‘worker’, the Guidelines define it as “any Nigerian national who is employed by the holder of an oil mining lease, licence or permit issued under the Petroleum Act or under Regulations made thereunder or any person registered to provide any services in relation thereto”. From this definition, the Guidelines apply to only Nigerians employed in the oil and gas industry, and do not benefit foreigners or expatriates. It is also important to note that the Guidelines do not distinguish between category or grade of workers. Consequently, it can be argued that all classes of workers, including menial, casual, part time, outsourced, junior staff, senior staff, office as well as field workers are all contemplated and protected by the Guidelines.

Obligations Imposed by the Guidelines

On providing information of employees

The Guidelines mandate every employer to submit to the Director of Petroleum Resources within seven (7) days of the employment of a new worker, the following information on the worker: name of the worker, date of birth of the worker, date of commencement of employment, designation of the worker at the time of commencement of employment, and one coloured passport sized photograph of the worker.

With respect to its current and existing employees, the Guidelines require every employer to submit to the Director of Petroleum Resources, within sixty (60) days of the enactment of the Guidelines, the following information on each worker in its current workforce: name of the worker, date of birth of the worker, the date the worker commenced work, the designation of the worker at the time of commencement of work, the worker’s current designation, and one coloured passport sized photograph of the worker.

Procedure for staff release

The Guidelines require any employer who wishes to release a worker from its employment to apply for the consent of the Director of Petroleum Resources prior to such release, and the application must be in writing. It must also state in the application the compensation due to the worker and the proposed replacement for the worker (if any). Documents relevant to the worker’s employment shall accompany the application. This will include contract of employment, letter of confirmation, letter of promotion(s), if any, queries and response to queries (if any), and the documents required to be submitted under paragraphs 4.2. Where these documents are not provided, the application for staff release will not be eligible for consent under the Guidelines and the Petroleum Act.

The Guidelines define ‘staff release’ to mean the removal of a worker from the employment of an employer company as defined in the Guidelines. This could be in the form of dismissal, retirement (whether voluntary or forced), termination, redundancy, release on medical grounds, resignation, death or abandonment of duty post.

Employers shall not release any worker without the prior consent of the Minister through the Director of the department. However, in the following instances, a mere notification to the Director will suffice without a formal application for staff release:

Where the worker is retired at his instance;

Where the worker resigns;

Where the worker dies;

Where the worker abandons his duty post. In this case, the employer may release the worker two weeks after notifying the DPR.

Upon submission of the application for staff release, the DPR shall conduct an investigative inquiry into the proposed staff release and make a Decision on whether to grant consent or otherwise. Until the DPR has given its decision, the employer is prohibited from advertising, publishing or making  press release in respect of the release of the worker. Once the DPR gives its decision, it shall be implemented by the employer no later than ten (10) days after the decision is delivered.

Penalties for default

The Guidelines created five (5) offences for which penalties were imposed. An employer who fails to submit information on the employment of a new worker will:

pay a fine of N100,000.00 for every day the employer fails to submit the information after the 7 day period and grace period of 3 months

Receive a letter from the Department indicting the company

Have its permit and approvals in the DPR suspended.

An employer who fails to submit information on the employment of current workers will:

Pay a fine of N150,000.00 for every day the employer fails to submit the information after the 60 days period and a grace of 3 months

Have its lease, licence or permit suspended

Have its lease, licence or permit cancelled.

An employer who fails to seek the DPR’s consent prior to release of a worker will:

Pay a fine of N10,000,000.00 (ten million naira)

Recall the worker until a decision is reached by the DPR

Have its lease, licence or permit suspended

Have its lease, licence or permit cancelled.

An employer who publishes information on staff release prior to obtaining consent of the DPR or without obtaining the DPR’s consent will pay a fine of N5,000,000.00 (five million naira)

An employer who fails to implement the DPR’s decision on staff release will:

Pay a fine of N5,000,000.00 (five million naira)

Have his lease, licence or permit suspended.

Legal issues arising from the Guidelines

Legal status of the Guidelines

The legal status of a Guideline is primarily dependent on whether it is made pursuant to powers conferred by a law. If it is made pursuant to such powers, then it is deemed as a law. However, if it is not made pursuant to a law, then it is a mere advice or guidance to help understand how to comply with a law. In the case of Ogunniyi v. Hon. Minister of FCT & Anor (2014) LPELR – 23164(CA), the Court of Appeal was considering the legal effect of Exhibit Q, which was the Approved Guidelines for the Sale of Federal Government Houses in the FCT to Career Public Servants, and was issued pursuant to section 14 of the Federal Capital Territory Administration Act, CAP. F6 LFN 2004 which empowers the President to make regulations generally for carrying into effect the provisions of the Act, and which such powers was delegated to the Minister of the Federal Capital Territory vide section 18 of the Act. The Court held that the Guidelines can pass as law since they were made by the Minister pursuant to the powers conferred on him by section 18 of the FCT Act. The Court went further to examine the meaning of ‘law’ as defined in the Interpretation Act, CAP. I92 LFN 2004 in which it was said to include instrument made under a law.

Giving support to this position that the legal status of a Guideline is dependent on its source rather than its content is the decision of the Court of First Instance of the Court of Justice of the European Union in the case of Archer Daniels Midland Co. v. Commission of European Communities (Case T-59/02, Judgment of the Court of First Instance (Third Chamber) 27 September 2006, para. 43) where the court held as follows:

First, the Guidelines are capable of producing legal effects. Those effects stem not from any attribute of the Guidelines as rules of law in themselves, but from their adoption and publication by the Commission.

As was with the Ogunniyi’s case, the enabling law for the DPR Guidelines is Regulation 15A of the Petroleum (Drilling and Production) Regulations 0f 1969 (as amended) which was made pursuant to Section 9 of the Petroleum Act. It is submitted that this gives the DPR Guidelines a legal status and a force of law.

The power of the Director to issue the Guidelines

Another issue worth considering is the power of the Director of DPR to issue the Guidelines. It has been argued that the Director does not have the powers to issue the Guidelines as the said power having been delegated to him by the Minister of Petroleum Resources, ought to be gazetted. This submission was anchored on the provisions of section 3(1) of the Ministers’ Statutory Powers and Duties (Miscellaneous Provisions) Act. Indeed, this is the correct position of the law. However, there are instances where powers are delegated by statute, in which case there would be no need for a notification in the Federal Gazette. Again, the Ogunniyi’s case and the Federal Capital Territory Act (FCT Act) come in handy here. Section 18 of the FCT Act delegates the powers of the President to the Minister of the Federal Capital Territory. Giving judicial endorsement to this practice, the Court of Appeal held as follows:

Section 14 of the FCT Act empowers the President to make regulations generally for carrying into effect the provisions of FCT Act. These powers were delegated by the President to the Minister of Federal Capital by s. 18 of the Act. These guidelines published as “PUBLIC NOTICE NO 1” – Exhibit Q, were made by the Minister pursuant to the powers conferred on him by Section 18 of the FCT Act.

Similarly, vide section 10 of the Nigerian National Petroleum Corporation Act, 2004 the Minister of Petroleum Resources has delegated his regulatory powers over the Nigerian oil and gas industry to the Director of the DPR. The said section provides as follows:

…notwithstanding the foregoing, any regulatory function conferred on the Minister pursuant to the said Acts [i.e. the Oil Pipelines Act, the Petroleum Act, or any other enactment…] or any other enactment shall, as from the appointed day, be deemed to have been conferred upon and may be discharged by the chief executive of the Inspectorate [i.e. the Director of the Department].

The effect of the foregoing is that even without a notification in the Federal Gazette, the Director can exercise the powers of the Minister of Petroleum Resources including the powers to issue Guidelines, and as such the power to issue the Guidelines was validly exercised.

Are the Guidelines effective and enforceable?

It won’t be out of place to describe the Guidelines as being “draconian” with unimaginable effects on the Nigerian oil and gas industry. This makes it highly undesirable. This notwithstanding, it is submitted that the Guidelines became effective the day it was signed by the Director of the DPR. It is important to state at this point that a Guideline need not be gazetted before it becomes operative or effective. It becomes effective upon signing not upon gazetting, or upon the day it is declared in the Guideline to be effective. This is because the primary purpose of a gazette is for notification only. It is the main vehicle of communicating Acts of both the Federal and State governments (See Tobi, JCA in Imade v. Military Administrator of Edo State (2001) 6 NWLR (Pt. 709) 491). In Ogundipe v. The Minister of FCT, (2014) LPELR-22771(CA) the Court of Appeal per Joseph Tine Tur, JCA defined a ‘gazette’ as “an official publication of the Federal Government of Nigeria or a State in which the official acts of the government e.g. appointments, notices and other legal matters are reported”.

As regards the time an enactment becomes operative, Section 2(1) of the Interpretation Act, 2004 provides as follows:

When no other provision is made as to the time when a particular enactment is to come into force, it shall, subject to the following subsection, come into force –

(a) in the case of an enactment contained in an Act of the National Assembly, on the day when the Act is passed;

(b) in any other case, on the day the enactment is made.

Section 37 of the Interpretation Act defines ‘enactment’ as “any provision of an Act or subsidiary instrument”. The Guidelines will pass as a subsidiary instrument, since they were made pursuant to the Petroleum Act. As such, they became enforceable the day they were made, which is the date it was signed by the Director of the DPR.

Do the Guidelines offend the law on Master and Servant?

Employment in Nigeria is governed by legislation and common law and other international labour treaties to which Nigeria is signatory to. The question is whether the Guidelines offend the age long and trite principles of labour and employment.

In this light, two arguments can be canvassed. The first is that one cardinal principle of Nigerian labour law is that the law will not foist a willing employee on an unwilling employer and vice versa. Thus, except in cases of employment with statutory flavour, an employment relationship is primarily governed by the contract of the parties and each party (the employer and the employee) is at liberty to terminate the contract whenever he deems fit subject to the giving of the agreed length of notice (See College of Medicine of the University of Lagos v. Adegbite (1973) 5 SC 149). This principle is as old as the Garden of Eden when Adam committed gross misconduct by disobeying lawful orders. He was dismissed from his duty post as the keeper of the Garden of Eden, despite his unwillingness to leave. At common law, a master is at liberty to terminate the employment of his servant for good reason, bad reason or no reason at all (See Isievwore v. NEPA (2002) 13 NWLR (Pt. 784) 417 at 434) and the motive for doing so is irrelevant (see See Nfor v. Ashaka Cement Co. ltd (1994) 1 NWLR (Pt. 319) 222 at 232).

The second argument is that the principle of supremacy of the contract of employment in a master/servant relationship is derived from the common law of contract, (See Tobi, J.C.A. in Orient Bank (Nig) Plc v. Bilante Int. Ltd (1997) 8 NWLR 37 at 76) and where there is an express legislation covering a particular field, common law ceases to have jurisdiction over such field. In such instances, solace will be found in decisions like Patkun Industries Ltd v. Niger Shoes Manufacturing Company Limited (1988) LPELR-2906(SC) where Karibi-Whyte, J.S.C. held that:

It is well settled law that where the provisions of a statute are positive, clear and unequivocal as to the abrogation of existing rights whether statute or common law, the words of such statutory provision must be given effect. Again where a statutory provision is in conflict or differs from common law, the common law gives place to the statute.

The effect of this line of argument is that the provisions of Regulations 15A of the Petroleum (Drilling and Production)(Amendment) Regulations, having been made pursuant to the Petroleum Act, override any common law provision on master/servant relationship as it relates to the Nigerian oil and gas industry, and as such, the Guidelines which were made pursuant to the said Regulations, are valid as same overrides the trite common law principles on master-servant relationship.

Reference, in support of this line of argument is also made to employments with statutory flavour. By statute, such employments are taken above the ordinary common law of master/servant relationship and are governed by statute not the contract of employment simpliciter. The case of Longe v. First Bank of Nigeria Plc (2006) 3 NWLR (Pt. 976) 228 defeats the possible argument that employments with statutory flavours only exist in government establishments or public sector employment. (For further readings on Longe v. First Bank of Nig PLC, see Bimbo Atilola, Expanding the Frontiers of Employment with Statutory Flavours: A Review of the Supreme Court’s Decision in Longe v. First Bank” in Labour Law Review (NJLIR) Vol 5. No. 3 2011, p. 1).

While the above two arguments are convincing, the latter, based on a long list of judicial authorities, is certainly the correct position of law. The implication of the subject matter DPR Guidelines is that employment in the Nigerian oil and gas industry, at any level, is now clothed with statutory flavour and consequently, a staff terminated, dismissed or otherwise “released” from employment in the industry without the requisite approval of the DPR is liable to be reinstated by the Court, National Industrial Court in this case. This is because any purported termination, dismissal, redundancy or any form of “release” in the industry without the requisite approval of the DPR will be unlawful and null and void.

Employment is said to have a statutory flavour when the terms and conditions, especially appointment and termination is governed by a statute, a subsidiary legislation, or a regulation made thereto. In Imoloame v. WAEC (1992) 3 NSCC 374 at 383, the Supreme Court stated inter alia that

“it is now accepted that where the contract of service is governed by the provisions of a statute or where the conditions of service are contained in regulations derived from statutory provisions, they invest the employee with a legal status higher than the ordinary one of master-servant. They accordingly enjoy statutory flavour”.

The DPR Guidelines, though not a regulation itself, was made pursuant to Regulation 15A of the Petroleum (Drilling and Production)(Amendment) Regulations which in itself was made pursuant to section 9 of the Petroleum Act.

Whatever may be the intention of the DPR in issuing the Guidelines, suffice to say that the Guidelines and even Regulation 15A of the Petroleum (Drilling and Production)(Amendment) Regulations are highly undesirable and should not have a place in our society. It is indeed unthinkable that every single person working in an oil and gas company, irrespective of his level and nature of employment, cannot have his employment terminated by his employer in accordance with the contract of employment freely entered into by the parties. If the consent of the DPR is needed to terminate a worker, is the consent of the DPR needed before a worker resigns his employment? It is the opinion of these writers that this is a case of regulation taken too far and the regulator is advised to retrace their steps and withdraw the said Guidelines. The legislators are also called upon to review the Petroleum (Drilling and Production)(Amendment) Regulations and expunge Regulation 15A. That way, the undesirable tree would have been taken out from its root.

Conclusion

The DPR Guidelines have raised a lot of issues, all of which have been addressed in this paper. The summary of these issues is that the DPR has the powers to issue the Guidelines, the Guidelines have legal effect, they are effective and enforceable, but highly undesirable and may be counter-productive in the short and long run.

It is the view of the authors that the Guidelines will cause more harm than good and as such should be vehemently kicked against. It won’t be out of place for oil companies who will be affected by this Guideline to lobby the National Assembly for a repeal of the Regulation 15A. They may also bring a representative action in Court challenging the said Guidelines and getting the Court to make a pronouncement on it. That way, the issue can be settled once and for all. It is hoped that the Regulator will let reason and realistic aspirations prevail.

Bimbo Atilola and Harrison Declan

Bimbo Atilola and Harrison Declan are both of Hybrid Solicitors and are Editors-in-Chief of the Labour Law Review and the Energy Law Review respectively.

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