THE CHANGING NATURE OF THE STATUS AND CLASSIFICATION OF CONTRACT OF EMPLOYMENT

BY

DR. EMMANUELO.C OBIDIMMA

AND

MATTHEW IZUCHUKWU ANUSHIEM ESQ

Abstract

Contract of employment as a specialty contract has in so many ways

undergone several changes as to its nature These changes emanate

from judicial authorities based on review and interpretation of

labour legislations and common law positions in line with changing

circumstances. As society changes, so also contract of employment

changes in its nature. Contract of employment means any agreement,

whether oral or written, express or implied, whereby one person

agrees to employ another as a worker and that other person agrees to

serve the employer. This contract of employment is built around

employer- employee relationship. Over the years, there have been

persistent efforts by scholars and jurists to ascertain the precise

criteria for determining who are actually employees or workers and

the exact status of an employee as well as the requisite legal

classification of contract of employment. This has led to

prevarications of the perception of the status of an employee and

the consequent classification of a contract of employment. This

paper x-rays the statutory provision of Nigeria’s extant laws as

well as judicial authorities around which these changes have

occurred with a view to finding the correct and extant legal status

of employee in Nigeria and the classification of contract of

1

employment under which he or she belongs. At the end, the writers

make recommendations geared towards correcting the defect arising in

their findings. The paper also seeks to correct any wrong societal

notion about the status and classification of contract of

employment.

1. Introduction

Contract of employment is simply an agreement between the

employer and the employee.

It means any agreement whether written, express or implied

whereby one person agrees to work for another as employee or

worker1 This contract of employment presumes that both the

employer and the employee stand on equal footing while

negotiating the terms and conditions of the employment.2

Contract of employment may arise out of agreement which is not

enforceable in the law courts because it lacks consideration

which is one of the essential ingredients of enforceability of

a contract. For instance, any one may offer his service or

labour to another person for no reward or payment. However, we

are concerned here with such contract of employment which is

backed by consideration and is enforceable at law. Contract

of employment presupposes the concept of free- bargaining

between the employer and the worker or employee as the case

may be, but this concept of free- bargaining seems to favour

1Dr. E.O.C Obidimma is a senior lecturer, Faculty of Law, Nnamdi Azikiwe University, Awka and M.I Anushiem Esq is a lecturer, Faculty of Law, Nnamdi Azikiwe University, Awka Labour Act, cap L1 LFN, 2004 section 91; Employees Compensation Act, 2010; section 73 Unions Act. cap T14 LFN, 2004 section 54. 2 G.O.S Amadi, lecture notes on Industrial Law 1, university of Nigeria, Enugu Campus.

2

the employer more than the employee probably because the

employer has the job as well as the economic power. The

employer also has the exclusive preserve to decide whom to

employ or not. The employer also has the right to hire and

fire at will subject to some legal limitations.

Notwithstanding these predicaments, the common law still

recognizes the employee’s interest even in his begger- has no-

choice situation, the moment he enters into the employment of

the employer.

2. Employer And Employee Defined3

The terms “employer and employee” are normally inter-

changeable with “master and servant” respectively. Employee is

also known as a worker or workman. However, the terms used by

statutes and case laws are ‘employer’ and ‘employee or

worker’. Because of the prevalent problems and difficultly

inherent in attaching a precise meaning to these terms, each

statute book has made effort to obviate such problems by

defining these terms for purposes of its provisions. This

means that the meaning of a worker in the labour Act4 is purely

for the purposes of the provision of the Labour Act. Implicit

in this, is that all rights and liabilities in the provisions

of the Labour Act5 can only accrue to a person who has

qualified as a worker by that definition aforesaid. The Labour

Act6 defines a worker as

3 See the definitions in the various definition sections of labour laws4 Op cit S. 91 5 Ibid

3

‘any person who has entered into agreement to

work under a contract with an employer whether

the contract is for manual Labour or clerical

work, is expressed or implied, oral or written

and whether it is for contract of service or a

contract personally to execute a work. Any

person who has entered into a contract of

employment to employ any other person as a

worker either for himself or the services of

any other person and include the agent, manager

or factor of that first- mentioned person and

personal representation of the deceased

employer’.

It is pertinent to know at this juncture that certain

categories of employees do not fall within the meaning of a

worker in the above definition. They are:

(a) Any person employed otherwise than for the purpose of the

employer’s business, or

(b) Person exercising administrative, executive, technical or

professional functions as public officers or otherwise, or

(c) Members of the employer’s family, or

(d) Any representatives, agents and commercial travelers in so

far as their work is carried on outside the permanent work

place of their employer’s establishment; or

(e) any person to whom articles or materials are given out to

be made up, cleaned, washed, altered, ornamented, finished,

6 Opcit 91, See also Trade Unions Act Cap T14 LFN2004; Employees’ Compensation Act, 2010.

4

repaired or adapted for sale in his own home or on other

premises not under the control or management of the person who

gave out the articles or other materials; or

(f) Any person employed in a vessel or aircraft to which the

laws regulating shipping or civil aviation apply. At common law, master and servant have the advantage of being

the only terms that refer precisely to the employment

relationship of contract of service as opposed to contract for

services where the servant is not actually a servant but the

so-called independent contractor otherwise known as self-

employed person. But under the Labour Act7 a worker is referred

to as one who enters into a contract of service or contract to

personally execute work or Labour. However, these statutory

definitions of contract of employment and worker in the

statutes above x-rayed, have been given judicial

interpretation by the Supreme Court of Nigeria in the case of

Shena Security Co. Ltd V. Afro Pak (Nig.) Ltd & 2 ors8, where the court was

faced with the issue of whether the contract to supply

security guards and supervisors by the appellant to the

respondents was a contract of service or one for service to

qualify the appellant as a worker. The court held that:

‘ a worker is defined by the Labour Act as any

person who has entered into or works under a

contract with an employer whether the contract

is for manual or clerical work or is expressed

or implied, oral or written and whether it is a7 Op cit S. 91. 8 [2008] 18 NWLR (pt 1118) p.82

5

contract of service or a contract to personally

execute any work or Labour’.

Such a contract according to the Supreme Court, is commonly

referred to as contract of service9. On the meaning of contract

of employment, the court had this to say.

The Labour Act10 which applies to workers,

strictly to the exclusion of the management

staff, defines a contract of employment as

any agreement whether oral or written

expressed or implied whereby one person

agrees to employ another as a worker and that

other person agrees to serve the employer as

a worker.

Employment may give rise to a number of relationships. A

person may be employed as an employee or an independent

contractor or as an agent11.

The relationship of employer and employee must of necessity

be distinguished from other relationships close to it such as

principal and agent, principal and independent contractor. The

importance of the distinction between an employee and other

related relationships in a contract of employment are as

follows:

9 Shena Security cov. Afropak (Nig) Ltd Supra10 Op.cit S. 9111 E E Uvieghara, ‘Labour Law in Nigeria’, (Lagos Malthouse Press Limited 2001). P3.

6

a. To know when the common law implied duties inherent in a

contract of employment is applicable12.

b. Secondly, the common law doctrine of vicarious liability is

confined to the relationship of employer and employee13. An

employer may be held liable for a tortuous act committed by

his employee in the cause of the employee’s employment14.

c. The various labour statutes do not apply generally to those

who are not employees at common law15 and none of those to

whom the statutes does not apply can claim validly under the

statutes as employees. In other words there must exist

between the employer and the employee or the worker, the

relationship of master and servant16.

3. The Status of the Employee and its Changing Nature

The concept of master and servant as a common law concept is

very important in the contract of employment because it helps

to distinguish between employment based on a contract of

service and another founded on contract for service. In the

former, the employee is regarded as a servant whereas in the

later the employee is referred to as an independent

contractor.The difficulty in arriving at the proper status of

12 Ibid:13 Ibid:14 Ibid: Iyere V. B.F.F.M. Ltd [2008] 18 NWLR (pt 1119) p.30015 Ibid16 Atedoghu V. Alade [1957] W.N.L.R, 184. see also Olaja V. KADUNA TextilesLtd (1972) 2 UILR 1; Shena Security Co. Ltd. V. Afropak (Nig) Ltd, Supra where the courts held that even if the relationship of master and servant exists, a worker claiming under the Act must show that he is covered by the definition.

7

an employee has been prevalent over the years leading to the

evolving of certain criteria for distinguishing an employee

(one who works under a contract of service) from one who

merely enters into contract to personally execute work or

service. The following tests have been applied:

a. Control test

b. Organization test

c. Multiple test

d. The modern approach

3.1 The Control Test

Control test is the original or traditional test. It is also

referred to as the superintendent test, under which an

employee is properly called a servant if he is subject to the

control of his employer as to the manner of doing his work.

This test covers what the employee does as well as the manner

and time at which he performs the work17. The proper test is

“who has the right at the moment to control the manner of

execution of the acts of the servant?”18. However, the control

factor can be overshadowed by some other factors such as the

non-employment factors introduced in Ready Mixed Concrete (South

East) Ltd V Minister of Pension and National Insurance19.

3.2 The Organization Test:

This is also known as Integration test. It was propounded by

Lord Denning L.J. (as he then was) in Cassidy V. Minister of

17 Yewens V. Noakes (1886) 6 OBD 530; Dola V John (1973) 11 N.M.L.R, 5818 Gibb V. United Steel Co. Ltd (1957) 1 WLR 668 at 670; Dola V. John (1973) 11 N.M.L.R 58. Atedoghu V. Alade Supra

19 Supra. Gould V. Minister of Pension and National Insurance (1951) IKB 7318

Health20. This test arose out of the inadequacies of the

control test in view of the sophistication of modern

industrial establishments as well as high level of

professionalism and skill of modern day employees. Also

because of the fact that the modern day employee has acquired

a high level of technological know-how, the employer may not

be in a position to control the manner in which his employee

does his work. The organization test therefore allows the

employee some level of freedom from control yet the employee

remains the employee of the employer irrespective of the fact

that the employer has no control over him as to the manner of

doing his work.

Under this test, it became less difficult to assign a status

to an expert or professional employee because he is required

to use his initiatives to perform the work assigned to him.

The sole reason this type of person is considered and regarded

as a servant according Lord Denning, is because he is employed

as “part and parcel” of the establishment and his work is done

as an integral part of the business.

According to Lord Denning:

‘one feature which seems to run through the

instances is that under a contract of service, a

man is employed as part of a business and his

work done as an integral part of the business,

whereas under a contract for services his work,

20 (1968)7 QB, 497.9

although done for the business is not integrated

into it but is only accessory21’.

The reason employers are still liable for any tort of their

employee in such cases is not because the employer controls

the way in which the work is done for they have no sufficient

knowledge to do so but because they employ the staff and have

chosen them for the task and have in their hands the ultimate

sanction for good conduct, the power of dismissal22. It is our view that the organization test under the common law

did not outrightly displace the control test but merely

improved it to cover perceived difficulties in cases of

experts and professionals. To arrive at a conclusion that one

is a servant of a master the two must be considered.

In westell Richardson Ltd v. Roulson23, an outworker in a cutlery

industry rented a workshop in a factory to polish cutlerly

manufactured in the factory. It was held that even though he

formed an integral part of the business undertaken in the

factory, the “outworker” was self-employed because the factors

of independence which he enjoyed were greater than that of

control. It is contended that this decision might not have

been the same if it were today particularly in the light of

section 91 of Labour Act and the case of Shena Security Co. Ltd v. Afropak (Nig)

Ltd24.

21 Stevenson, Jondan and Harrison Ltd V. Macdonald and Evans (1952) ITLR;22 Cassidy V. Minister of health supra 23 (1954)2 ALL ER 44024 Supra

10

3.3 The Multiple or Mixed Text

There is a marked difference between the multiple test and the

organization test. Organization test widened the scope of

control test to accommodate professionals and experts without

actually destroying it. Multiple test posits that the

organization inherent in employment is shown by multiple

factors apart from control. Such factors as time of work,

provision of working tools, holiday and gratuity or pension

benefits within the meaning of organization are typical

elements of employment which are much less normally

encountered in self-employment. The multiple test envisages

that in any particular circumstance, two or more elements of

employment pointing consistently to one direction or another

may determine whether there exists a contract of service or

contract for service25.

It is to be noted that under the common law, parties cannot

alter the true nature of their contract by simply attaching a

different label to it26. But where the nature of the

relationship is ambiguous and there exists an agreement

whether oral or written, showing intention of the parties, the

agreement will be decisive27.

3.1.4 The Modern Approach

25 Murren V. Swinton and Panddlebury Borough Council (1965) ALL ER 349; Ready missed concrete (South East) Ltd V. Minister of Pension and National Insurance, supra.

26 Furguson V. John Dawson & Partners (contractors) Ltd [1976]1 WLR 1213.27 Massey V. Crown life Insurance Co (1978) ICR 590.

11

In Ready Mixed Concrete (South East) Ltd V. Minister of Pension and National

Insurance28, Mackenna, J suggested that a contract of service

exists if the following conditions are in place:

i. The servant agrees that in consideration of a wage or other

remuneration he will provide his own work and skill in the

performance of some service for his master;

ii. he agrees expressly or impliedly, that in the performance of

that service he will be subject to the other’s control in a

sufficient degree to make that other master; and

iii. that the other provisions of the contract are consistent

with its being a contract of service29.

Also, in an addendum to the criteria for ascertaining the

appropriate status of a worker or servant, Coker J. had this

to say in the case of Market Investigations Ltd V. Minister of Social

Society30.

The fundamental test to be applied is this:

is the person who has engaged himself to perform

these services performing them as a person in

business on his own account? If the answer is ‘yes’

then the contract is a contract for services. If

the answer is ‘no’ then the contract is contract of

services. No exhaustive list has been compiled and

perhaps no consideration which are relevant in

determining that question, nor can strict rules be

laid down as to the relative weight which the

28 Supra.29 Supra30 (1968) 3 ALLER 732

12

various considerations should carry in particular

cases.

The most that can be said is that control will no

doubt always have to be considered, although it can

no longer be regarded as the sole determining

factor and that factors, which may be of

importance, are such matters as to whether the man

performing the services provides his own equipment,

whether he hires his own helpers, what degree of

financial risk he takes, what degree or

responsibility for investment and management he

has, and whether and how far he has an opportunity

of profiting from sound management in the

performance of his task31.

The purport of the above dictum of Mackenna J. is that the two

afore stated criteria of control and organization are now mere

guides and has little or no place and recognition in theory as

the modern approach is the consideration of all the facts and

circumstances of a particular case to know whether the

employment factors present are consistent and points to one

direction, that is, the direction of contract of service or

otherwise the employee become an independent contractor. This

is the current legal position on the issue of how to ascertain

the requisite legal status of an employee as against an

independent contractor. In the S.S. Co Ltd V. Afropak (Nig) Ltd32, the

Supreme Court of Nigeria had this to say:

31 Ibid, p. 737-73832 Supra, p.82-83

13

“where there is dispute as to what kind of

contract of employment parties entered into,

there are factors which will usually guide a

court of law to arrive at a right conclusion.

For instance:

a. if payments are made by way of “wage” or

“salaries” this is indicative that the

contract is one of service. If it is a

contract for service, the independent

contractor gets his payment by way of “fees”.

In a like manner, where payment is by way of

commission only or on the completion of the

job, that indicates that the contract is one

for service.

b. Where the employer supplies the tools and

other capital equipment, there is a strong

likelihood that the contract is that of

contract of service. But where the person

engaged has to invest and provide capital for

the work to progress, that indicates that it

is a contract for service.

c. In a contract of service/employment, it is

inconsistent for an employee to delegate his

duties under the contract. Thus where a

contract allows a person to delegate his

duties thereunder it becomes a contract for

service.

14

d. Where the hours of work are not fixed, it is

not contract of employment/service.

e. It is not fatal to the existence of a contract

of service/employment that the work is not

carried out on the employers premises.

However, a contract which allows the work to

be carried on outside the employer’s premises

is more likely to be contract for service.

f. Where an office accommodation and a secretary

are provided by the employer, it is a contract

of service/employment.

4.1 Classification of Contract of Employment

Before now, the categorization of contract of employment was

into the following:

a. Domestic servants, office holders and Public Officers.

It is pertinent to distinguish between these various classes

of employees for the purpose of appreciating some common law

rules and statutes which may apply to some but not to all of

the classes and the consequences attached to each class.

4.1.1 Domestic Servant

The Labour Act33 defines a domestic servant as any house,

stable or garden servant employed in or in connection with the

domestic services of any private dwelling house, and includes

a servant employed as a driver of a privately owned or used

car. The Act does not define the term “domestic servant”

thereby allowing for the meaning to be derived from the facts33 Op cit S. 91

15

and circumstances of each case in consonance with common law

rules. Domestic servants are engaged mainly to attend to the

personal needs of their employers, including the needs of

members of their family as well as their guests. Oputa J.S.C

(as he then was) noted in Olaniyan V. Unilag34 that “in this

type of contract, personal pride, personal feelings, personal

confidence and confidentiality may all be involved.

The consequence of this class of employment is that the

employee is only entitled to one month’s notice or reasonable

notice in the absence of agreement to enable a party terminate

the contract of employment. The employer can terminate at will

with one month notice or salary in lieu of notice35. Todd V.

Kerrick36, it was held that a governess could not be treated as

a domestic servant entitling her only to the customary one

month’s notice of termination of service available to that

type of menial employment. Also in Wilson V. Uccelli37, it was

held that a private tutor is not a domestic servant. A

domestic servant is not also entitled to fair-hearing. However

the position under the common law cannot override the

agreement of the parties irrespective of the nature of the

work the employee is employed to do and if the relevant

employment factors are present as was in the case of S.S. Co

Ltd V. Afropat (Nig) Ltd38.

34 [1985]2 NWLR (pt.9) p.59835 George V. Davis (1911) 2 KB; Mandidas V. U.J. Tangalakis & Co (1932) II N.L.R.6236 (1852) 8 Exch. 152.37 (1929) 45 TLR, 395 38 Supra

16

4.1.2 Office-Holders

At common law, persons who do not fit into the definition of

servants but nonetheless, enjoy the advantages inherent in the

consequences of employment are called office-holders. The

rationale for this is that a holder of an office is usually

not under a contract to personally execute any work for any

person and his employment is not necessarily one of contract

of service. But by virtue of holding office, he is entitled to

a hearing before termination of his appointment and if he is

wrongly removed from office, the court will make an order of

reinstatement upon the application of the office holder.

In Great Western Railway V. Bater39, Rowlatt J. defined an

office as:

‘a subsisting, permanent, substantive

position which had an existence

independently from a person who filled it,

which went on and was filled in succession

by successive holders40’.

The importance of office holding lies in the remedy available

at common law to a person who is wrongly removed from his

office41.

Two consequences attach to the tenure of employment of an

office-holder; firstly, the office-holder is entitled to the

benefits of natural justice in deciding whether or not he is

39 (1923) KB. 266 at p.27440 Ridge V. Baldwin (1964) A.C. 40, at p.65-6641 Ibid

17

liable for dismissal42. Secondly, if the principle of natural

justice is not observed, he is entitled to reinstatement by an

order of certiorari quashing his removal from office or a

declaration to render his removal null and void, invalid and

of no legal effect whatsoever43.

Examples of office-holders are Ministers of religion as was

held in Rt. Rev. N.A.T Aboh V. The Most Rev. J.O Ademulegu &

Anor,44 Vice Chancellors of Universities, etc.

4.1.3 Public Officers

Another category are those employed by either Federal, State

or local government agencies, parastatals or any statutory

corporation wholly or substantially owned by the governments.

These employees are called public officers by virtue of

section 318 of the Constitution45.

Generally, employment of public servants has constitutional

force46.

It is to be noted that it is erroneous to think that all

public servants have the same contract of employment because

42 CFRN 1999 as amended, S.36(1), Egevafo V. Ikono Wanogho [2005]12 NSCR 249.43 Ridge V. Badwin supra; Olaniyan V. Unilag supra; Oguche V. Kano Public Service Commission [1974]1 NMLR 128; Adedeji V. Police Service Commission (1967) 1 ALL NLR67.44 Unreported suit No. 1/236/82; Ibadan H.Ct delivered 20/2/04; President of the Methodist Conference V. Parffit (1984) Q.B. 368; Davis V. Presbyterian Church of Wales, the tells March 7.45 CFRN 1999 as amended, Shitta-Bay V. F.P.S.C. (1981) S.C.40.46 Ibid section 318.

18

the Constitution called them “public servants”47. Currently,

what actually determines the status or category of an

employment whether in the public sector employment or not, is

the contract document or statutes regulating the employment.

In the case of civil servants strictly so-called, that is

public officers in the departments or ministries of Government

whether Federal or State, it is the Civil Service Rules of the

Federal Civil Service that of the or state as the case may

be48.

It is to be noted further that the fact that an employee is

employed in the private sector does not leave his employment

at the whims and caprices of the employer49. This is in line

with the classification of contract of employment by Oputa

J.S.C. (as he then was) in Olaniyan V. Unilag into:

i. Master-servant relationship, which is otherwise called

contract of personal service.

ii. Office holders, that is those who hold their office at

pleasure with a requirement of fair hearing; and

iii. Contract with statutory flavour50.

47 Ujam V. I.M.T [2007]2 NWLR (pt 1019) p. 476-477; Fakuade V. OAUTH [1993]5 NWLR (pt.291) p.47 at p.490; Haruna V. Uniagric, Makurdi [2005]3 NWLR (pt.912) p.233 at p.246.48 Iderima V. R.S.C.S.C [2005]16 NWLR (pt.51) p.378 at 382; F.C.S.C. V. Laoye [1989]2 NWLR (pt.106) p.65249 Longe V. FBN Plc [2010] 6 NWLR (pt.1189) 1.SC.50 Longe V. FBN Plc supra. Ujam V. I.M.T supra, Igwillo V. CBN [2000] 9 NWLR (pt.672) p.302 at 332; Iyase V. UBTHMB [2000] 2 NWLR (pt.643) p.45 at 58; UNTHMB V. Nnoli [1994] 8 NWLR (pt.363) 374 Adeniyi V. Governing Council Yabatech [1993] 6 NWLR (pt.300) p.426.

19

The point above is that the fact that an employer is a

creation of statute does not make the employment of all its

employees one with statutory flavor. It must be shown that the

statute regulates the employment of that employee whether

expressly or by necessary implication51. In the same vein,

where an employee in a private sector has his employment

backed by statute or by a regulation made under that statute

the procedure prescribed therein must be complied with. For

example, in the cases of directors of public limited companies

and auditors of public companies where the Companies and

Allied Matters Act52 gives statutory protection by prescribing

the statutory procedure which must be followed before they are

removed subject to some exceptions53. They cannot be removed

arbitrarily. The Supreme Court of Nigeria in fact introduced a

new dimension to the status of an employee employed in the

private sector in Longe v. FBN Plc54. Although some have argued

that Longe v. first Bank Plc55 simply restated an already

existing position of the law. We do not totally agree with

that view because though the provision of the section of the

Companies and Allied Matters Act has been in existence, the

court has never given this interpretation to it.

51 Ujam V. I.M.T supra; Idoniboye-Obu V. NNPC [2003]2 NWLR (pt.805) p.589; UMTHMB V. Dawa Dawa [2001] 16 NWLR (pt.739) Azenabor V. Bayero University, Kano [2009]17 NWLR (pt.1169) p.100. 52 Cap C20 L.F.N 2004.53 Powers of the C.B.N Governor to remove directions of banks pursuant to

Banks and other financial institutions Act cap BLFN 2004.54 Supra. 55 Supra.

20

What the above means is that where an employee in a private

sector has his employment backed by statute or by a regulation

made under a statute such employee cannot be removed without

compliance with the laid down statutory procedure56. It is also important to state here that under the Banks and

other Financial Institutions Act57, the Governor of Central

Bank is vested with the power to remove directors of banks

without compliance with the procedure laid down the in

Companies and Allied Matters Act. Except where the C.B.N

Governor exercises his powers as stated above, an employee in

a private sector whose employment is backed by statute or by a

regulation made under a statute, such employee’s contract is

regarded, on the authority of Longe v. First Bank 61 (supra) to

be tainted with statutory flavour and elevated to the status

of employment that is known to have statutory flavour. The

employee’s contract of employment is deemed to be with

statutory flavour and is elevated to the same status and

classification with any contract of employment with statutory

backing or flavour attracting the remedy of reinstatement

which is hitherto settled to be absent in pure master and

servant relationship.

Finally, the view earlier held by many authors that, it is

only employees in the employ of the government that have their

employment regulated by statute is no longer tenable in view

56 Longe v. First Bank Plc supra.57 Cap B3 LFN, 2004.

21

of the decision of the Supreme Court in Longe v. First Bank

Plc58.

5.1 E-Contract Of Employment

E-contract is defined as contracts concluded electronically.

Many transactions and other forms of trade including contract

of employment are now concluded electronically. Negotiations,

giving of quotations or submission of tenders for work may all

be done electronically. Electronic contract of employment is

therefore, an agreement concluded electronically whereby one

person agrees to employ another as a worker or employee and

that other person agrees to work for the employer59.

5.1.1 Formality of E-Contract of Employment

Contracts can take a number of forms. Contract can be in

writing, oral or by conduct of the parties. Certain contracts

of employment are statutorily required to be in writing e.g.

contract of employment of seamen and contract of

apprenticeship60 and will be void if they fail to comply with

the statutory requirement.

The form of electronic contract of employment depends on the

nature of the contract. If it is such a contract that requires

writing documents which are stored in digital form in the

computer hard drive will make it comply with the requirement

of writing as provided Section 1 of the interpretation Act61

which defines writing to include typing, printing,

58 Longe v FBN Plc. supra.59 www.inbrief.co.uk/contract-law/electronic-contracts, accessed 29/8/2012.60 Labour Act op. cit S. 49.61 Cap 1 - LFN 2004, see also section 258 of Evidence Act 2011

22

lithography, photography and other modes of representing or

reproducing words in a visible form. This sentence is too long

and clumsy. The meaning is not clear. Since words stored

digitally in a computer may be reproduced in a monitor or

printed on paper, it would appear that computer storage is

covered by this definition. The pertinent point here is that

electronic contract of employment can no doubt meet the

formalities inherent or required in any other forms of

contract of employment. The only difficulty is to be able to

identify when an offer is made and when it is accepted as well

as when a purported offer is merely an invitation to treat62.

5.1.2 Formation of Electronic Contract of Employment

The question how, when and where contracts are formed over the

internet is no longer academic. It is an important commercial

consideration. People now enter into contracts including

contract of employment electronically. Employers of labour now

find the internet as a viable means of advertising vacancies

which exists in their establishment and receive applications

online as well as employ people without the necessity of the

parties meeting physically.

E-contracts of employment are usually concluded via the

internet by means of e-mail, telephone, telex and fax

machines. There is no reason to suppose that the development

of e-mail or the World Wide Web will affect in any way the

application of the current principles of law of contract,

62 Appleby v. Johnson (1874)9 L.R.C.P 158; Ajayi Obe v. Executive Secretary family planning council of Nigeria (1975)3 S.C.I.

23

though the internet raises unique technological issues when

examining the formation of e-contract of employment63. It is

these technological issues that too often cloud our analysis

of e-contract of employment.

5.1.3 Extant Laws on E-contracts

The first question to be addressed, with regard to e-contract,

is whether such virtual contracts are allowed at all by the

current laws. When it is resolved in the affirmative, we can

then move on to complex issues of when is contract of

employment concluded electronically? What its terms are? and

how is it regulated?

In Nigeria today, there is no law which specifically provides

for electronic contract including electronic contract of

employment. Contracts concluded electronically are guided by

the general laws on contracts simpliciter and the common law

principles as well as case laws. It is also interesting to

note that Nigerian Courts are yet to be faced with the issue

of the validity of an electronic contract of whatever class

including electronic contract of employment.

However, this paper examines the practice in other

jurisdiction and efforts made so far by their parliaments in

legally contending with the vexed issue of electronic

contracts generally. Many everyday contracts are devoid of

formalities, and as such may be concluded in writing, orally,

63 Entering into Contracts Electronically: The Real w.w.w Andrew D. Murray, accessed 28/8/2012.

24

electronically or physically. These informal contracts, which

are the vast majority of all contracts can safely be concluded

over the internet. Many contracts though are required to be in

writing or have some other form of formal requirements such as

the attachment of a physical signature or attestation by

witnesses to be effective. These formal requirements can no

longer cause problems when the principles of e-contracting are

applied.

A major issue is the application, in cyberspace, of rules

which require the contract to be “written” or in writing. Can

a digital document fulfill the necessary formal requirements

of such contract? Experts agreed that the answer was ‘no’. If

the requirement is for contract to be ‘in writing’, reference

will usually be made to the Interpretation Act which defines

writing as including typing, printing, lithography,

photography and other modes of representing or reproducing

word in a visible form64.

The United Kingdom Department of Trade and Industry having

recognized the place of e-contract and communication in the

growth of the United Kingdom economy recommend the proposed

the electronic, communication bill, This bill was later

enacted as the Electronic Communication Act 2000. Equivalence

is a commonly used method of integrating new systems or

technologies into a developed legal system; one replaces the

function of a specific document or rule with a replacement

which is deemed to be functionally equivalent to it. Fro

64 Cap I... Laws of Federation of Nigeria 2004 65; Evidence Act, 2011, S. 258 and 84.

25

example, a written document may communicate information,

provide a formal record and be used as evidence of the

parties’ intentions. All these roles of the written document

may be equally well met by the use of electronic documents

particularly in the light of the new Evidence Act. Therefore,

in such cases, an electronic contract may be the functional

equivalent of a written document, and simply replacing the one

with the other has no wider impact on the specific

contractual/ evidential rules of the system in question.

The United Kingdom’s Act, unlike many of its counterparts65,

does not simply provide blanket equivalence for electronic

communication. It instead empowers Ministers to give full

legal effect to electronic communication by sub-ordinate

legislation66.

5.1.4 Offer and Acceptance in E-Contract of Employment

A contract is formed at the point where there is consensus ad

idem between the contracting parties, and this is usually when

there is an unconditional acceptance of an offer67. An offer

must be distinguished from an invitation to threat bearing in

mind that while the acceptance of the former will ripen into a

contract, the later will not68. The key features of an offer

65 UNCITRAL Model Law on Electronic Commerce 16 Dec. 1996, European Union, Directive on Electronic Commerce Directive 2000/31/EC.66 S. 8 of the UK Act67 In the words of Viscount Stair, ‘an offer accepted is a contract’. Stair,Institutions 1.X.3.68 Ajayi Oba v Executive Secretary Family Planning Council supra.

26

are that it contemplates acceptance and is capable of being

accepted69.

A consideration of the formation of e-contract of employment

must of necessity examine the effect of the rules guiding an

offer and invitation to threat. A prospective employee must be

careful to distinguish between when an employer merely makes

an invitation online and when he makes an offer capable of

being accepted in which case it will ripen into a contract of

employment. Applying the principles of offer and invitation to

treat in actual reality to virtual reality, we find that

advertisement on websites may be dealt with in a similar

manner to their actual reality counterparts.

The process of contract negotiation over the internet is the

same as in the normal contract involving invitation to treat,

offer and final acceptance. A contract is concluded when

acceptance is communicated to the offeror70. Such acceptance

may be express, either written or oral, or may be implied by

conduct of the offeree. However, in view of the fact that what

we are primarily concerned with here are e-contracts of

employment, it goes without saying that acceptance of an offer

of employment made via the internet must be accepted expressly

and this is usually by wiring, as other forms of acceptance

orally, or by conduct cannot be effective to communicate

acceptance to an employer who is not physically present.

69 Thomson v. James (1855)18 D1.70 Carlill v. Carbolic Smoke Ball (1893)1 QBD 256

27

The formation of electronic contract of employment is not

diametrically opposed to what obtains in the normal contract

formation. Parties to a contract of employment in actual

reality undergo series of negotiations in an effort to arrive

at acceptable terms between the parties. The same is

applicable to electronic contract, the difference being only

that such negotiations take place electronically. In the e-

contract also the elements of a valid contract namely offer

acceptance, consideration and intention to create legal

relationship must also be present.

At present in Nigeria, there is no known legal regime

regulating e-transactions which include e-contract of

employment. Should any case arise bothering on e-contract of

employment, Nigerian courts will definitely fall back to the

well-known principles of law of contract to determine the

rights and liabilities of the parties.

5. The Legal Status of Electronic Contract of Employment

An analysis of the legal status of a thing is a determination

of whether the thing in question satisfies the legal

requirements for its validity. In analyzing the legal status

of e-contract, we must bear in mind that electronic contracts

of employment is like every other contract. The only

difference being that e-contract is negotiated and concluded

electronically and in many cases, the employee earns his or

her salary without the necessity of the employer knowing him

or her and vice versa. Therefore, except there is any glaring

28

defect, every electronic contract of employment is legal and

will be awarded legal recognition under our laws.

6. Conclusion

The status and classification of contract of employment is

prevaricating. It undergoes changes with the changing

circumstances of a particular society and time vide statutory

intervention and judicial authorities. It has also been found

that the status of an employee in the private sector whose

contract of employment is protected by statute is yet to be

stabilized. The protection to his contract of employment given

to him by statutes making procedural prescription which must

be followed before the removal of the employee has received

judicial sanction. Moreso, there is no uniformity in the

definition and nature of employee and classification of

contract of employment in Nigeria labour and industrial law

jurisprudence. The impact of technology on contract of

employment and positive consequences is also discovered in the

cause of this research work. It is also the researchers

conclusion that once e-contract of employment meets the known

constituents of a valid contract of employment, it can no

longer be nullified only on the ground that it was entered

into electronically. The global electronic moving trend cannot

elude Nigeria as we cannot live behind in this moving

electronic world.

6. Recommendation

29

1. Nigerians should be awake to the reality on ground and

embrace the e-world as non-committal to the ever-growing

electronic world will negatively affect us.

2. There should be enacted in Nigeria, as in other

jurisdiction, a law on e-contracts which will make

provisions for the regulation of e-contract of whatever

nature in keeping with the global trend.

3. The government should encourage computer education at all

levels of learning. The only way e-contracts can make sense

to any person is when that person has, not just a passing

knowledge of computer, but such knowledge that will

position him or her adequately to access the net and make

the best use of it.

30