Executive Viewpoint

As we grow closer through technology, and find significant reserves in countries as far-flung as Nigeria, Canada, Norway and Brazil, international energy companies must remember that there are significant differences in workplace laws. These laws vary from country to country, and these important legal variances must be understood and obeyed.

In some countries, labor laws are embedded in the country’s constitution, while in others they are reflected in their social programs. Complicating it further, some countries are just developing their labor and employment laws, and in some, generalizations simply cannot be made, because it depends where the workplace is located.

Recognizing that a single approach to labor laws will not work everywhere is an important first step in managing a global workforce. The following summaries illustrate some significant differences in workplace laws in different countries, where oil and gas companies operate.

Brazil. As with many Latin American countries, employee protections are included in Brazil’s constitution. Brazil’s labor courts exert jurisdiction over all employment matters related to Brazilian citizens, even if the employer is outside Brazil. The protection of Brazil’s employees extends to a complicated compensation system, which includes additional bonuses paid to the employee and payments to an unemployment account, that an employee can withdraw from, if he is terminated or retires. Brazil does not follow the at-will employment rule, but rather requires just cause for termination, such as a criminal conviction or intoxication in the workplace. Otherwise, the employer must add additional amounts to the employee’s account. It is the government and the laws that protect the employees. Unions generally have little power. Most significant is the preference that Brazil gives Brazilians in terms of hiring. By law, two-thirds of the workforce must consist of Brazilians.

Canada. Just north of the U.S. and with a similar economy, Canada is very different from the U.S., when it comes to workplace laws. Provincial law in Canada’s 10 provinces dominates Canadian labor law. Around 90% of Canadian employees have their workplaces regulated solely by provincial law where they are located, rather than Canadian federal law. There are exceptions for certain industries, including pipelines, where the federal employment law replaces provincial law. Because labor law in Canada is largely at the provincial level, it is often revised by the more nimble provincial governments. For example, Ontario significantly revised its employment laws in 2000. Since then, the law has been amended 18 times.

At-will employment does not exist in Canada, and unions are much stronger than they are in the U.S. All provinces require notice related to terminations of employment. Other than in Canadian federal jurisdiction, or in Ontario, the amount of severance paid to a terminated employee is a multiple-factor issue (position, age, salary level, etc.). When a company buys another operation, the union-represented employees and the collective bargaining agreement of the seller automatically transfers to the buyer. In all locations, except Quebec, non-union employees do not automatically transfer with an asset sale.

Nigeria has struggled with application of the rule of law in its workplaces, in more significant ways than other African countries. The terms and conditions of employees in Nigeria are largely governed by contract, either through individual employment contracts or collective bargaining agreements. Nigeria’s federal labor law sets out the minimum terms and conditions for manual laborers and clerical workers. While employers can terminate employment agreements without specifying a reason, they will have a required notice period. Unions are prevalent in Nigeria, as are strikes, despite the nation’s labor law which severely limits such action. When a company is sold, employees cannot be required to transfer to a buyer, and if the buyer must terminate the employee, it may trigger notice requirements or pay in lieu of notice. Employees will often force this payment, and then they consent to be employed by the purchaser.

Under the Nigerian Oil & Gas Industry Content Development Act, oil and gas companies must give Nigerian citizens first consideration for employment. Entry level jobs are to be filled only by Nigerian citizens. Companies must have a succession plan for how positions filled by non-Nigerian workers will go to Nigerian citizens within four years.

Norway. While Norway is not a member of the European Union (EU), it has numerous laws that are consistent with EU law. Each employee in Norway must have a written employment agreement and specific terms required by Norwegian law. Unions are very prevalent in Norway. As Norway has adopted the EU Transfer of Undertaking Directive, employees automatically transfer to the buyer of a business, and their existing terms of employment must stay the same. Buyers also must provide and consult with employees, prior to transfer.

Terminating of employment in Norway is very difficult for employers. The employer must have a reason that fits within the narrowly drafted “justification” required by Norwegian law, and the employer must follow specific requirements for notices. If an employee challenges the fairness of a termination, the employee may stay in the position while the challenge is pending. Reinstatement is a remedy for a wrongful termination of employment, and it is commonly awarded. Thus, employers in Norway enter into separation agreements with employees more frequently.