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On 26th February 2021, the Lagos Division of the National Industrial Court of Nigeria (‘NICN”) delivered a rather pivotal judgment on the legality of the Guidelines for the Release of Staff in the Nigeria Oil & Gas Industry 2019 (“the Guidelines”). The judgment was made in respect to a suit filed on the 7th October 2020 between the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) & Ors. (Claimants) v. Chevron Nigeria Limited (Defendant).

Amongst the issues for determination in the suit was whether oil and gas service companies must pursuant to the Guidelines, obtain the prior written approval of the Minister of Petroleum Resources before embarking on any staff reduction and or redundancy exercise.

Article 4 of the Guidelines provide that an employer who wishes to release a worker[1] from its employment, must make a written application to the Director of Petroleum Resources (the “Director”) for the consent of the Minister of Petroleum Resources (the “Minister”) prior to such release (“Consent”). The Guideline makes it mandatory for an Employer to obtain the consent of the Minister where any Employee is to be released on grounds of dismissal, retirement, termination, redundancy, release on medical grounds, resignation, death or abandonment of duty post. However, Article 4.3 of the Guidelines stipulates that a mere notification to the Minister (through the Department of Petroleum Resources) (“Notification”) will suffice where the worker voluntarily retires, resigns, dies or abandons his duty post.

The NICN in delivering its judgment on this particular issue held that it is not mandatory for the holder of an Oil and Gas Industry Service Provider (OGISP) license to obtain the Consent of or provide Notification to the Minister before embarking on any staff reduction, release and or redundancy. The rationale for the court’s decision is that there is no legal justification for the Guidelines to modify, alter or affect any existing employment agreement between holders of the license and their respective employees, the terms of the Guidelines having not been incorporated by reference into their employment agreement.  The NICN further held that the Petroleum Act does not empower the Minister or the Director on behalf of the Minister to make the provisions stated in the Guidelines, hence, the Guidelines cannot create such an obligation on a license holder to that effect. The NICN relied on NNPC v Famfa Oil Limited [2012] LPELR-7812(SC) and Micheal Smith Atoe v Petrofac Energy Services Nig. Ltd [Unreported] Suit No. NICN/LA/506/2015 delivered in 2016

Whilst at this time we are not aware of any appeal to the Court of Appeal, the Judgment if upheld will obliterate the regulatory bottleneck associated with the release of workers by holders of oil and gas licenses.

To see the full judgement, click here

[1] The Guidelines define a worker as “any Nigerian National who is employed by the holder of an oil mining lease, license or permit issued under the Petroleum Act or under any Regulations made thereunder or any person registered to provide any services in relation thereto”.

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