NUPENG, PENGASSAN and Outsourced Workers: Which Trade Union Has Jurisdiction in Nigeria’s Oil and Gas Sector?

An increasingly common source of industrial disputes in Nigeria’s oil and gas industry is the attempt by petroleum sector trade unions, particularly the National Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), to unionise employees of companies engaged by oil and gas operators to provide outsourced services.

The issue commonly arises where an oil and gas company engages an independent contractor to provide services such as catering, medical services, security, facilities management, engineering support or other ancillary services. The contractor deploys its employees to the operator’s facilities, where they may work alongside the operator’s own employees and under similar working conditions.

The question is whether those employees should belong to the trade union representing the petroleum industry in which they are deployed, or the trade union representing the economic activities of the contractor that employs them.

In our view, the starting point for resolving this question is the statutory framework governing trade union jurisdiction in Nigeria, rather than simply the industry in which the contractor’s client operates. We highlight some key considerations below.

1. The Trade Unions Act establishes a structured system of industrial representation

The Third Schedule to the Trade Unions Act reveals a deliberate legislative design for organising industrial representation in Nigeria. The structure is not an unrestricted system in which workers may simply choose any union they consider appropriate.

The Schedule organises representation along two important dimensions.

First, it recognises a distinction between industrial unions and senior staff associations. Parts A and B deal with the restructured industrial trade unions and their respective jurisdictional boundaries, while Part C identifies senior staff and employers’ associations. This reflects the distinction between the representation of workers through industrial unions and the separate arrangements for senior staff.

Second, the industrial union structure is organised along sectoral lines. Part B expressly defines the jurisdictional scope of individual unions by reference to specified economic activities and categories of workers. For example, it identifies the sectors and categories of workers within the jurisdiction of the relevant unions, including those representing petroleum, construction, maritime, catering and other services.

The implication is that industrial representation is not determined simply by the physical location at which an employee performs work. Nor does the fact that two groups of employees work at the same facility automatically place them within the jurisdiction of the same trade union.

The statutory framework instead requires attention to the relevant industrial category and the jurisdictional scope assigned to the union concerned. Section 12(4) of the Trade Unions Act makes membership voluntary, but that freedom operates within the statutory framework governing union jurisdiction. An employee’s freedom to choose a union does not necessarily extend to choosing one whose jurisdiction does not cover the employee’s category of work.

2. The 2011 Outsourcing Guidelines expressly distinguish labour contracts from service contracts

The Federal Ministry of Labour’s 2011 Guidelines on Labour Administration Issues in Contract Staffing/Outsourcing in the Oil and Gas Sector provide an important framework for resolving this issue.

The Guidelines distinguish between two forms of outsourcing arrangements: manpower or labour contracts, and service contracts.

Under the Guidelines, contract staff engaged under manpower or labour contracts are to belong to NUPENG or PENGASSAN, as appropriate. This reflects the nature of the arrangement, where the contractor essentially supplies personnel to the principal company.

The position is different for service contracts. The Guidelines expressly provide that trade union membership under a service contract is to be determined by reference to the economic activities of the contractor, in accordance with Part B of the Third Schedule to the Trade Unions Act.

The Guidelines also provide a fallback where a contractor undertakes multiple economic activities and it is difficult to identify the relevant category under Part B. In that situation, the employees are to belong to the union applicable to the industry in which the particular contract operates.

The distinction is significant because it recognises that a company supplying personnel to an oil and gas operator is not necessarily in the same position as an independent business providing a specialised service to that operator.

The Guidelines further provide that a contractor supplying only personnel is to be treated as operating under a labour contract, while a contractor supplying personnel together with equipment is to be treated as operating under a service contract.

Accordingly, the description given to an arrangement in a commercial contract should not be the only consideration. The substance of the arrangement, including what the contractor actually supplies and the nature of its business, will be relevant.

For oil and gas operators, this distinction is particularly important when structuring outsourcing arrangements and assessing the potential for trade union disputes.

What should oil and gas companies consider when engaging service contractors?

For oil and gas operators, the issue is not merely an academic question of trade union classification. An incorrect assessment may expose the operator and its contractors to industrial disputes, competing unionisation demands, check-off dues claims, disruption of operations and litigation.

Before engaging a contractor, or responding to a unionisation demand, operators should consider the following:

1. The nature of the contract: Is the arrangement essentially a manpower or labour supply arrangement, or is the contractor providing an independent service?

2. The contractor’s actual business: What economic activities does the contractor undertake? Do those activities fall within the jurisdictional scope of an existing trade union under Part B of the Third Schedule?

3. The substance of the arrangement: Does the contractor supply only personnel, or does it provide personnel together with equipment and assume responsibility for delivering a defined service?

4. The applicable union jurisdiction: Does the relevant union’s statutory description cover the contractor’s business and the employees concerned?

5. The contractual documentation: Does the contract clearly identify the arrangement as a labour or service contract and accurately reflect the parties’ actual responsibilities?

These considerations should inform both the structuring of outsourcing arrangements and the operator’s response to subsequent unionisation demands.

5. Managing trade union jurisdiction disputes

Where a dispute arises, oil and gas operators should resist the temptation to treat a union’s demand as automatically determinative merely because the employees concerned have been deployed to an oil and gas facility.

The relevant statutory provisions, the contractor’s business activities, the nature of the outsourcing arrangement and the applicable administrative guidelines should be examined together.

It is also important to distinguish a trade union jurisdiction dispute from a co-employment dispute. The question of whether an oil and gas operator is a joint or deemed employer of outsourced personnel is a separate inquiry from the question of which trade union has jurisdiction to organise those personnel. The two questions may arise from the same outsourcing arrangement, but they should not be conflated.

Where competing unions assert jurisdiction, the employer should establish the factual and legal basis for its position, preserve relevant contractual and employment records, and follow the applicable statutory procedures for resolving trade disputes.

A poorly managed dispute may result in competing demands for recognition, deductions and remittance of check-off dues, threatened industrial action and proceedings before the National Industrial Court.

Conclusion

The fact that an outsourced employee works at an oil and gas facility does not automatically make that employee a member of the petroleum industry’s workforce for trade union purposes.

The Trade Unions Act establishes a structured system of industrial representation, with jurisdiction allocated by reference to the statutory descriptions of the relevant unions. The 2011 Outsourcing Guidelines further recognise the distinction between manpower contracts and independent service contracts, expressly providing that union membership under service contracts is to be determined by reference to the contractor’s economic activities, subject to the stated exception for contractors engaged in multiple activities.

For oil and gas operators, the practical lesson is that the legal character of an outsourcing arrangement and the contractor’s actual business activities matter. These issues should be examined before a unionisation dispute arises, rather than after competing unions have begun asserting jurisdiction.

Balogun Harold advises businesses in the oil and gas sector and other regulated industries on employment, outsourcing, industrial relations and trade union disputes, including the defence and resolution of claims arising from competing assertions of trade union jurisdiction.