CIRCULAR TO MEMBER-COMPANIES ON THE MINISTER OF LABOUR & EMPLOYMENT’S DIRECTIVE TO SUSPEND RETRENCHMENT

Our Ref.: NECA/SELA/H.9

6th June 2016

To: All MEMBERS IN THE BANKS AND FINANCIAL INSTITUTIONS SECTOR

Dear Sir/Madam,

RE: DIRECTIVE FROM THE FEDERAL MINISTRY OF LABOUR & EMPLOYMENT TO SUSPEND RETRENCHMENT

We are aware of the uninformed and reckless directive of the Honourable Minister of Labour & Employment to the Banks and Financial Institutions to suspend retrenchment exercise in the sector. Please, note that the Minister has no power under the current labour laws to act in the way and manner he has done, which amounts to gross violation of the rights of employers to hire and fire; and determine the manning level for their operations in line with the employment contract and the labour law. We, therefore, advise you to ignore the Minister’s directive.

On the subject of retrenchment/ redundancy, the position of the law (section 20 (1) of the Labour Act) is clear, as follows:

“In the event of redundancy-

(a) the employer shall inform the trade union or workers’ representative concerned of the reasons for and the extent of the anticipated redundancy;

(b) the principle of “last in, first out” shall be adopted in the discharge of the particular category of workers affected, subject to all factors of relative merit, including skill, ability and reliability; and

(c) the employer shall use his best endeavours to negotiate redundancy payments to any discharged workers who are not protected by regulations made under subsection (2) of this section.”

In effect, it is the prima facie right of the employer to initiate and execute redundancy based on the dynamics of the business. Furthermore, an employer is not obliged to obtain the approval of the Minister for this purpose. The key issue is for the employer to follow the laid down procedures in the law. Where it had failed to do this, the employee or the trade union can challenge the action of the employer by invoking the trade dispute procedure.

In the light of the above, we consider rather strange the pronouncement of the Minister. We are already taking steps to protest to the Minister his rather uninformed and prejudiced disposition in presiding over labour issues, which could endanger industrial harmony and stifle development.

We wish to advise you once again to disregard this “populist” and illegal directive by the Minister.

Thank you.

Yours faithfully,

O.A. Oshinowo

Director-General