Employee Remuneration in Africa and the Middle East: Challenges and Opportunities for Employers. Thursday, July 28, 2016

Transcription

1 Employee Remuneration in Africa and the Middle East: Challenges and Opportunities for Employers Thursday, July 28, 2016

2 Speakers Moderator Sonal Sejpal Anjarwalla & Khanna Nairobi, Kenya 2

3 3

4 4

5 Speakers Ben Brown Clyde & Co. Dubai, UAE Mary Ekemezie Udo Udoma & Belo-Osagi Lagos, Nigeria 5

6 Speakers Rosa Nduati-Mutero Anjarwalla & Khanna Nairobi, Kenya Mohamed Oulkhouir CWA Morocco Casablanca, Morocco 6

7 Speakers Isaac Walukagga MMAKS Advocates Kampala, Uganda 7

8 To What Extent Are Employers Bound to Honour Fixed Bonuses and Other Emoluments? 8

9 Kenya Not a statutory right - Kenya Chemical & Allied Workers Union v. Bamburi Cement Ltd [2013] eklr 3 types of bonuses: Christmas bonus Annual performance bonus Production bonus Employer is free to negotiate the criteria, manner, and mode of payment 9

10 Kenya The Employment and Labour Relations Court recognises that, where an employer has consistently and persistently paid a 13th month cheque/bonus and such practice or custom is reasonable, certain and notorious, it becomes an implied term of the employment contract that can be legally enforced, provided that sufficient and clear evidence is placed before the Court. 10

11 Nigeria Other than statutory emoluments - transport allowance, annual leave pay, and maternity leave pay - prescribed under the Labour Act, and which only apply to workers (persons who perform manual or clerical work), the payment of bonuses and other emoluments is primarily governed by the terms of the contract or the terms of the CBA negotiated between the employer and employee. The most common types of bonuses in Nigeria are: 13th Month Salary Annual Bonus (typically discretionary; tied to profits of the company) Productivity Bonus (based on performance; tied to profits of the company) 11

12 Nigeria Employer is bound by the terms of the contract and is obliged to pay any such bonuses and other emoluments such as agreed by the parties under the terms of the employment contract. Any variations from the obligation to make the payments must be in accordance with the contract and/or agreed between the employer and employees individually or collectively, as the case may be. 12

13 Uganda Contract provisions/wording Company policy Implied? Discretionary bonus based on performance How is performance determined? Financial state of employer 13

14 UAE No statutory references to bonus entitlement Is the bonus contractual or non-contractual? Is the bonus discretionary or guaranteed? UAE Courts adopt a generous approach to bonuses on termination of employment Changing contractual terms requires employee s consent 14

15 Morocco Contractual Bonus, premiums Company car, housing etc. Non contractual, i.e. unilateral decisions of the employer Bonus plans 15

16 Morocco Seniority employers must legally pay a Seniority Bonus as follows: 5% of salary after two years service; 10% after five years; 15% after 12 years; 20% after 20 years. 16

17 Should a Director Accept Bonuses When the Company Is in Financial Difficulty? 17

18 Nigeria Although a director is obliged to act in the best interest of the company, the payment of a bonus is a contractual obligation of the company that the company is bound to honour. Circumstances under which a company can be excused from its payment obligations are subject to the following: The terms of the contract between the company and the director; and The conditions attached to the payment of such bonus. 18

19 Nigeria Even if a director elects not to accept bonuses when they fall due, such payments would, if they are contractual obligations, constitute a debt owed to the director by the company. 19

20 Uganda Good faith Contractual rights Directors in Financial institutions 20

21 UAE No specific statutory restrictions on directors remuneration But, Federal Law No.2 of 2015 (UAE Companies Law) contains a statement of directors duties: Obligation to act in company s best interests Obligation to exercise degree of care Obligation to act within powers granted to management 21

22 Morocco Corporate officer status Bonus and remuneration to be approved by shareholders. Employee status Subject to the provisions of the contract. Financial situation of the Company not relevant. 22

23 Kenya Increased poor performance by companies in Kenya Example of Kenya Airways Establishment of Code of Corporate Governance Practices for Issuers of Securities to the Public 2015 Requires Companies to establish and approve formal and transparent remuneration policies and procedures 23

24 The Effect of Insolvency on Employees 24

25 Uganda Usual termination by receiver or change of terms If winding up or insolvency automatic termination of contract of service Preferential claims Severance allowance 25

26 UAE No formal concept of redundancy under UAE Federal Law No.8 of 1980 (the Labour Law) Business closures No statutory system of redundancy payments Exposure to arbitrary dismissal Settlement agreements 26

27 Morocco Redundancies are not possible without a state prior authorization No specific protection for employees in case of insolvency of the company 27

28 Kenya Automatic dismissal at commencement of receivership An employer company is insolvent if: A winding-up order or an administration order has been made, or a resolution for voluntary winding-up has been passed, with respect to the company; or A receiver or a manager of the company s undertaking has been duly appointed, or possession has been taken, by or on behalf of the holders of any debentures secured by a floating charge, of any property of the company comprised in or subject to the charge. 28

29 Kenya Application by employee to Cabinet Secretary for Labour that employer is insolvent; that employee has been terminated; and that on insolvency employee entitled to payment. The Cabinet Secretary, if satisfied, shall pay the employee out of the National Social Security Fund, the amount to which, in the opinion of the CS, the employee is entitled in respect of the debt. 29

30 Kenya Preferential payments (second priority claims): Wages or salaries payable to employees during the 4 months before commencement of the liquidation; Any holiday pay upon termination of employment before, or because of, the commencement of the liquidation; Any compensation for redundancy that accrues before or due to commencement of the liquidation; Amounts deducted by the company from the wages or salaries of employees in order to satisfy their obligations to other persons; 30

31 Kenya Preferential payments (second priority claims) (cont d): Any reimbursement or payment provided for, or ordered by, the Industrial in respect of wages or other money or remuneration lost during the 4 months before commencement of the liquidation, provided that the total amount may not, in the case of any one employee exceed KES. 200,000 31

32 Nigeria Where a company is insolvent, the effect of the insolvency is subject to whether: A receiver has been appointed over the property or undertaking of such company; or A winding-up order has been made and a liquidator has been appointed in respect of such company. 32

33 Nigeria In relation to the appointment of receivers: This will not adversely affect the employees remuneration, as the receiver is obliged to pay their salaries in priority to any claim for principal or interest (Section 182 of CAMA). Where receiver or manager is appointed over the whole or substantial part of the undertaking or property of the company, he/she will have the power to appoint or dismiss the employees (Section 393 and Schedule 11 of CAMA). 33

34 Nigeria Where winding up order is made and a liquidator appointed: Liquidator may carry on the business of the company only if necessary for the beneficial winding-up of the company. Liquidator is obliged to make employees remuneration and payments to the Employees Compensation Fund as preferential treatments and as a priority to all other debts, save for taxes, levies, rates, and charges made in respect of one year of assessment. 34

35 To What Extent Can an Employer Claim Diplomatic Immunity in a Labour Law Situation? 35

36 UAE UAE is a signatory to the Vienna Convention on Diplomatic Relations 1961 Immunity only applies to diplomatic missions in the UAE Labour Law contains specific exemptions: Government entities Armed forces / police Domestic staff Agricultural workers 36

37 Morocco Legally outside the scope of the labour Code (article 3 and article 6) BUT note the Ministry of Foreign affairs confirming that local labour code is applicable to employees of embassies of foreign states 37

38 Kenya Diplomatic Immunity under the Privileges and Immunities Act Application to Cabinet Secretary Immune from civil or criminal prosecution* See: African Development Bank v Beatrice Agnes Acholla Rosemary Ambalo Acholla (Representatives of the Estate of the Late Bonaventure Eric Acholla) *Can be waived 38

39 Kenya Incompatibility with Human Rights Law? Benkharbouche v Embassy of Sudan; Janah v Libya [2015] EWCA Civ 33 State Immunity Provisions incompatible with the European Convention on Human Rights 39

40 Nigeria Diplomatic immunities are governed by the Diplomatic Immunities and Privileges Act. Beneficiaries are foreign envoys, foreign consular officers, family members of such envoys and officials, international organisations, and their officials/representatives. Merchants and traders in the service of such envoys and officials, however, are not entitled to the immunity. 40

41 Nigeria Beneficiaries enjoy personal immunities: Freedom from suit and legal process; Inviolability of residence; and Freedom from obligation to appear before any court/tribunal as witness. Personal immunity does not apply to things done or omitted to be done in the course of the performance of official duties. Beneficiaries may waive their immunity. 41

42 Uganda Private contract between the parties 42

43 Is it Discrimination to Offer Expats Different Benefits From Those Offered to Local Employees? 43

44 Morocco Discrimination Article 9 of the Labour Code Local employees and expats are in different situations, so it is possible to have different treatments 44

45 Kenya Section 5(3) of the Employment Act, 2007 provides: No employer shall discriminate directly or indirectly, against an employee or prospective employee or harass an employee or prospective employee on grounds of race, colour, sex, language, religion, political or other opinion, nationality, ethnic or social origin, disability, or pregnancy, mental status or HIV status 45

46 Kenya Subsection 5(4) of the Employment Act provides: An employer shall pay his employees equal remuneration for work of equal value. See: Igbal Parvez v. Simba Colt Motors Limited David Wanjau Muhoro v. Ol Pejeta Ranching Limited 46

47 Nigeria Freedom of contract Parties are free to agree on the terms and conditions of their contract. Employers are required, however, to treat employees equally. Arguable that benefits offered to expatriates is compensation for the expertise they bring to the employer s business and, therefore, is not discriminatory. 47

48 Uganda Equal remuneration for equal value Discrimination based on race, nationality, etc. Contract 48

49 UAE Labour Law does not contain specific antidiscrimination provisions Article 32 of the Labour Law - women must be paid the same as men Federal Decree Law No.2 of 2015 on Preventing Discrimination and Hatred DIFC Employment Law contains antidiscrimination provisions prohibiting discrimination on grounds of sex, marital status, race, nationality, religion or disability 49

50 Contact Our Speakers for More Information Ben Brown Clyde & Co. Dubai, UAE Mary Ekemezie Udo Udoma & Belo-Osagi Lagos, Nigeria Rosa Nduati-Mutero Anjarwalla & Khanna Nairobi, Kenya Mohamed Oulkhouir CWA Morocco Casablanca, Morocco Sonal Sejpal Anjarwalla & Khanna Nairobi, Kenya Isaac Walukagga MMAKS Advocates Kampala, Uganda 50

51 Please Complete our Survey Please complete the survey that should appear on your computer screen when you disconnect from the webinar. To listen to this webinar again or to any past ELA webinars, please visit our website at: The ELA is not authorized to give continuing education credit for its webinars; however, a Certificate of Attendance and supporting materials are posted on the ELA website (click this webinar s title; the link to the Certificate is on the landing page). Attendees seeking continuing education credit should submit these materials directly to the appropriate organization. 51