By GIBRIL K. THOLLEY, ESQ
The new Employment Act, 2023, which came into effect in May 2023, has far-reaching implications for businesses across Sierra Leone. The severity of those implications may be so great as to force some businesses to close. What was the legislator’s intention? Let’s explore the Act in this article. We must, however, ask what the law was before the new Act was passed.
Before the enactment of the Employment Act, 2023, the relationship between an employer and an employee was determined by the Regulation of Wages And Industrial Relations Act (No. 18 of 1971). Section 7(1) of that Act created Trade Group Negotiating Councils, which were responsible for negotiating “wages, terms and conditions of service” for the workers under the various Trade Groups (see Section 11 of Act No. 18 of 1971). However, the definition of “worker” under that Act did not include persons employed in a supervisory role or management roles (see Section 2 of Act No. 18 of 1971). The Act also empowered the Minister responsible for employment to issue Collective Bargaining Certificates to the various Trade Group Negotiating Councils Labour (see Section 8 of Act No. 18 of 1971). Under these Certificates a Trade Group or 2 or more Trade Groups can negotiate “wages, terms and conditions of service” for the workers under that/those Trade Group(s). The agreements reached between the Trade Group(s) and the representatives of the employers within that Group are subsequently published in the National Gazette as Collective Bargaining Agreements embodying the minimum terms and conditions of service for all employees under those Trade Groups.
For persons employed in supervisory roles or management roles within any organisation or firm the employers set out the terms and conditions of services in the letters of engagement and/or employee handbook. This relationship, like any other contractual relationship is governed by the common law that was in force in England on the 1st day of January 1880 (see Section 74, Courts Act, 1965). Here, the Courts are very slow to interfere where the terms of the contract of employment are clear and unambiguous.
It is trite law that where parties have entered into a contract or an agreement, they are bound by the provisions of that contract or agreement as this is the whole essence of the doctrine of sanctity of contract. The dictum of Sir George Jessel is apt here:
“It must not be forgotten that you are not to extend arbitrarily those rules which say that a given contract is void as being against public policy, because if there is one thing which more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when freely and voluntarily entered into shall be held sacred and shall be enforced by Courts of justice. Therefore, you have this paramount public policy to consider – that you are not to lightly interfere with this freedom of contract.” (PRINTING AND NUMERICAL REGISTERING CO. v SAMPSON (1875) LR 19 Eq 462 at page 465).
Now, let’s understand which contracts and which individuals are covered by the new Employment Act, 2023. According to the definition of a “contract of employment or service”, the Act captures contracts of employment or service where a “worker agrees in return for wages or other remuneration to work for an employer, employing organisation, institution or business establishment.” A “worker” is a person that entered a contract of employment or a contract for service (see Section 1, Employment Act, 2023). The term “employer” captures everything from a government, a firm, a business, or any entity (see Section 1, Employment Act, 2023). These definitions appear to be wide and to capture anyone, whether an employee or a consultant, that is working for any entity. It blurs the age-old distinction between an independent contractor and an employee.
A literal interpretation of these terms leads the reader to conclude that every individual that is receiving a wage or any form of remuneration is a “worker” under this Act.
Next, let us clarify the application of the Act. It applies to all contracts of employment that were in force when the Act came into force (see Section 36). This means that an employer must abide by the provisions of the Act for each employment contract that existed as of May 2023, regardless of when the contract was signed. For example, if a worker began to work in January 2010 and was still employed in May 2023, the Act applies to that worker’s contract of employment.
Now, what is the worker caught by the Act entitled to? Section 71 provides that a person that has worked for the same employer for one year or more is entitled to one month of his basic salary as annual leave allowance, for each year of service. If a collective agreement provides for better terms, those terms will prevail. Section 80 confirms that the allowance is owed to every worker whose services are terminated, or who retires, dies, or resigns. The only exception is the worker that was terminated for gross misconduct.
Going back to our example of the worker that began to work for the employer in January 2010: as of April 2024, when this article is being published, the worker’s entitlement under the Act has amounted to 15 months. The employer may well have other long-standing, loyal workers among its staff. What the Act has done is create an invidious and a massive liability on the employer for each worker that has been employed for over one year, effectively ‘overnight’. Needless to say, this employer has likely not provided for this contingent liability in his books, year over year, and this new and significant liability may become due anytime one or more workers decide(s) to leave (for retirement or any reason), when their contract ends, or when they pass.
And what if the employer does not pay because – just maybe – they did not budget for this liability over the years? Well, the Act provides that if the employer does not pay within a month of the termination of the contract, the employer has committed an offence and is liable to a fine of not less than 24 months of national minimum wage. This translates to about [Le800/00 x 24 =] Le19, 200/00 in fines, on top of the liability that continues to be owed plus interest thereon until it is paid.
Admittedly, our legislators’ and the drafters’ motivation was apparently to protect workers’ rights. However, it is clear from a plain reading of the Act that both our legislators and the draftsmen or either of them did not consider the devastating effects the Act will have on employers. Surely the goal was not to close businesses – and certainly not to force some to liquidate – but that may well be the reality. What else can a small to medium-sized business, and especially one that may already be on the brink of existence by way of heavy indebtedness or a maxed-out loan facility, consider doing?
The legislator ought to consider the severity of the retroactive application of the Act. It is one thing for the Act to apply to contracts, including those that existed in May 2023, from its date of entry into force and going forward. But for the Act to oblige employers to pay end of service benefits to all workers with a valid contract as of its date of entry into force, going back to the contract start date, will force many employers to consider their ability to continue doing business in Sierra Leone.
The new Employment Act is to all intent and purposes a species of retrospective laws. Retrospective Laws are laws that are passed today, that change what was legal or illegal yesterday. In other words, they are made ex post facto – after the fact – to change what people’s rights and responsibilities were in the past.
Changing the legal status of certain actions that occurred in the past is seen as contrary to the Rule of Law. This new Employment Act seeks to criminalise conduct that is purely the subject-matter of a civil claim between an employer and his [former] employee. If the criminality of certain actions or activities is subject to change (i.e., they are legal at the time but later become illegal), people cannot, with certainty, act in accordance with the law.
Admittedly, retrospective laws are functional and operative in Sierra Leone despite their apparent inconsistency with the Rule of Law and their seeming interference with human rights. However, there are protections in our common law such as the presumption against retrospectivity and the principle of legality.
Retrospective laws breach the legitimate expectations of citizens that they hold based on the existing state of the law. Without appropriate checks and balances, retrospective laws subvert the effectiveness of legislation in two key areas.
In the first instance, they are unable to guide behaviour because the new law, targeting a particular act did not exist at the time the act was taken. Where such laws are vague, ambiguous or arbitrary it is difficult for citizens to confidently plan their affairs and know with certainty what is lawful and what is not. This is precisely one of the effects of this new Employment Act.
Secondly, retrospective laws establish an unhelpful precedent that fuels doubt and suspicion, and erodes public confidence in the integrity and reliability of legislation in general. If citizens recognise that all laws may be changed with retrospective operation, then they will be more likely to reject the authority of the law to guide their behaviour as it presently exists, or they will be unwilling to incur liabilities or take actions that may in the future be deemed unlawful.
Under our 1991 Constitution, Parliament is not only the supreme law-making authority but it is also virtually unanswerable to any other authority within the territorial limits of Sierra Leone. The absence of a limiting or protection provision in our 1991 Constitution coupled with the power of our legislators to enact retrospective legislation does not bode well at all.
RECOMMENDATIONS/SUGGESTIONS:
In the light of the above, I will strongly recommend the following:
- That the commencement date of this new Employment Act should be put on hold.
- That the provisions of the Act should be widely published to encourage representatives of the various employers in the various industries including the Employers Federation and the Sierra Leone Labour Congress to discuss and make recommendations.
- That members of the Sierra Leone Bar Association should be invited to debate the various provisions of the Act and make recommendations.
- That Parliament should revisit the said provisions in the light of the above debates and recommendations with a view to amending the requisite provisions and set a new commencement date.
© G. K. THOLLEY, ESQ of G. K. THOLLEY & CO, DIJAHMED CHAMBERS April, 2024
The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of the ILRAJ.
