Urgent Labour Law Overhaul: What Small Businesses and Startups Must Do to Survive Nigeria’s Economic Crisis

In a critical call to action, Nigeria’s Attorney-General, Lateef Fagbemi, has urged for an overhaul of the country’s labour laws to address the growing economic crisis and industrial unrest. This proposed reform will likely impact businesses of all sizes, including small businesses and startups. Here’s what it means for small enterprises and how they can navigate these changes.

What the Overhaul Means for Small Businesses

The overhaul is aimed at addressing high unemployment, inflation, and frequent strikes that have destabilized the labour market. Fagbemi emphasized that without immediate action, Nigeria risks deeper economic challenges, which could exacerbate issues like job losses and business closures​.¹

The reforms may also align Nigeria’s laws with International Labour Organization (ILO) standards, ensuring that labour disputes are managed more effectively​.²

Key Challenges for Small Businesses and Startups

1. Workplace Compliance: Small businesses may face increased scrutiny in terms of compliance with new labour regulations. This includes how employees are hired, managed, and compensated.
2. Dispute Management: The National Industrial Court of Nigeria (NICN) will play a more proactive role in resolving labour disputes. Startups must be prepared to engage in formal dispute resolution mechanisms, as any misstep could lead to costly legal battles​.³
3. Impact of Strikes and Industrial Action: With strikes and industrial unrest becoming more frequent, small businesses could see disruptions in operations. Labour law reforms might introduce stricter regulations on handling strikes, requiring businesses to be more agile in their workforce management.

Navigating the Changes

1. Review Employment Contracts: Startups and small businesses should immediately review their employment contracts to ensure they are compliant with current laws and anticipate changes. Including flexible dispute resolution clauses and clear terms on termination and employee rights can help mitigate risks.
2. Engage in Dialogue with Employees: Proactive communication with employees about their rights and potential changes to the labour laws is crucial. By fostering good relationships, small businesses can avoid conflicts and maintain workplace harmony during times of legislative transition.
3. Leverage Alternative Dispute Resolution (ADR): As the NICN advocates for greater use of ADR mechanisms, businesses should familiarize themselves with the process. Utilizing ADR can save costs and time in resolving labour disputes before they escalate​.⁴
4. Stay Updated with Regulatory Changes: It’s essential for small businesses to stay informed about the proposed changes to labour laws. Joining business associations or consulting legal experts can ensure compliance with new regulations, minimizing the risk of penalties or disruptions.

By staying informed and preparing for the possible changes, small businesses and startups can navigate Nigeria’s impending labour law overhaul without severe disruptions to their operations.