Reconciling Employment Laws with Local Content Requirements in Africa: Focusing on Natural Resources and Extractive Industries.

Transcription

1 Reconciling Employment Laws with Local Content Requirements in Africa: Focusing on Natural Resources and Extractive Industries February 28, 2018

2 Moderator Lusanda Raphulu South Africa

3

4 If you need another copy of the PowerPoint slides: Open a new window Go to the ELA homepage Click the webinar title

5 Audio Webinar Documents Questions and Tech Support

6 Speakers: Sonal Sejpal Anjarwalla & Khanna ALN, Kenya Mary Ekemezie Udo Udoma & Belo-Osagie, Nigeria Shamiza Ratansi ATZ Law Chambers ALN, Tanzania Bahieldin Elibrachy Ibrachy Dermarkar, Egypt Ernest Sembatya Kaggwa MMAKS Advocates ALN, Uganda

7 Sonal Sejpal Kenya

8 Introduction Kenyan Citizen as defined under the Constitution of Kenya Defining Local Content Who is a local person?

9 Local Content: Subsisting Provisions Set out more specifically in the PSC & the Mining Act Preferential recruitment of local persons Submission of a local content plan as a licensing requirement Training and development of local persons. Succession plans

10 Local Content: Proposed Statutes Local Content Bill, 2016 Petroleum Exploration, Development & Production Bill, 2017

11 Local Content: Why? African countries are emerging as critical players in global hydrocarbon production Case studies - Positive impacts of Local Content laws various countries

12 Proposals Under the Local Content Bill, 2016 Employment of locals Provision of insurance and reinsurance Local Ownership Requirements Provision of banking services Provision of legal services

13 Local Content: Challenges Training & capacity building Defining Locals Technology Transfer

14 Local Content: Way Forward How Can Employers Protect Themselves? Avoiding Challenges of Non-Compliance with the Local Content Laws Stakeholder Interaction Employers acquainting themselves with the local content regulations Training Audits

15 Mary Ekemezie Nigeria

16 Overview of Nigerian Situation Classes of employees Workers and Non Workers General Restrictions on employment of foreigners expatriate quota approval requirements

17 Legal Regime / Applicable Laws Nigerian Oil and Gas Industry Content Development Act 2010 (the Act or NOGICDA ) NCDMB Handbook of Operational Guidelines 2016 NCDMB Public Notice, December 2013 Petroleum (Drilling and Production) (Amendment) Regulations 1988 issued pursuant to the Petroleum Act, chapter P10, LFN 2004 DPR Guidelines and Procedures for the Release of Staff in the Nigerian Oil and Gas Industry 2015

18 Local Content Protections in the Oil & Gas Industry NOGICDA Established the Nigerian Content Development and Monitoring Board (the NCDMB ) Requires operators to submit Nigerian content plan (the NC Plan ) to the NCDMB Prescribes minimum Nigerian content required in any project in the industry (man-hours, spend, volume)

19 Local Content Protections in the Oil & Gas Industry (cont d) NOGICDA Requires that Nigerians be given first consideration for employment and training in any project executed by any operator/project promoter in the Nigerian oil and gas industry Compliance with its provisions major criterion for award of licences, permits and any other interest in the Nigerian oil and gas sector Requires that Nigerian Independent Operators to be given first consideration in the award of oil blocks, oilfield licenses, oil lifting licenses and in all projects for which contract is to be awarded in the oil and gas industry

20 Local Content Protections in the Oil & Gas Industry (cont d) NOGICDA Requires exclusive consideration to be given to Nigerian indigenous service companies, which demonstrate ownership of equipment, Nigerian personnel and capacity to execute work for contracts and services to be executed on land and swamp operating areas in the oil and gas industry Labour Clause - any contract exceeding $100 million is required to include a labour clause, which mandates the use of a minimum percentage of Nigerian labour in specific cadres as stipulated by the NCDMB. Operators to submit quarterly returns on employment and training activities (Employment and Training Plan)

21 Local Content Protections in the Oil & Gas Industry (cont d) NOGICDA Operators must utilise local Insurance, legal and financial services, with limited exceptions. Maximum of 5% of management positions reserved for expatriates. Approval of the NCDMB required prior to submission of application to the Federal Ministry of Interior Penalties for non-compliance with requirement of the Act

22 Release of Employees in the Oil & Gas Industry Restrictions NCDMB Public Notice, Petroleum Regulations and DPR Guidelines: Operators and service companies to notify NCDMB of any proposed staff rationalisation exercise Obtain consent of the DPR prior to the release of any Nigerian employee Non-compliance with DPR Guidelines = significant penalties

23 Challenges NOGICDA Lack of clarity: definition of the term operator Gap in local skills and knowledge Training obligations Myriad reporting obligations DPR Guidelines on release of employees Questions around validity/legality of guidelines Compliance levels

24 Way Forward: Protection for Employers 1. Designate a local content compliance officer. 2. Retain services of expert on Nigerian content keep your advisers very close to hand 3. Conduct periodic staff audits 4. Engage the regulators NCDMB and DPR

25 Shamiza Ratansi Tanzania

26 Introduction Defining local Content Shareholding Employees Supply chains Tanzanian Bank Indigenous Tanzanian Bank

27 Laws & Regulations Employment laws Insurance laws Banking sector Petroleum Laws and local content Regulations Mining Laws The Natural wealth and resources

28 Local Content - Mining Preference to Tanzanian Companies for acquisition of goods and services Priority to Tanzanian employees -Requirement to only employ Tanzanians for junior level or middle level positions Long term local content plan Local content Committee

29 Local Content Mining (cont.) Detailed program for recruitment and training of Tanzanians Minimum employment local content for any mining activity in Mainland Tanzania Succession plan

30 Local Content Petroleum Mandatory requirement for employers to prioritize Tanzanians Ring fencing of jobs for Tanzanians in semi-skilled and unskilled labour positions Employment and training sub-plan Semi-annual report on its employment and training needs Succession plan

31 Why Local Content Capacity Building for Strategic sectors To increase local participation in natural resources sector To increase employment and business opportunities for Tanzanians

32 Challenges in Enforcing Local Content Lack of qualified professionals Unrealistic compliance dates Training and Capacity building timelines Ambiguity in legislations Inconsistences between different legislations Numerous reporting obligations

33 Challenges in Enforcing Local Content (cont.) Stringent offences and penalties under various legislations Risks of Employers LC content plan being rejected Lack of guidance and Support from the relevant Authorities.

34 Way Forward Employers familiarizing with local content regulations Undertaking Training for employees Having regular audits to ensure compliance Interaction with Regulators Investing in capacity Building

35 Bahieldin Elibrachy Egypt

36 General Legal Background General Restriction: Requirement: Based on Headcount Requirement: Based on Salaries Exceptions: Smaller operations: e.g. Scientific/Representative Offices (Studying the market and potential of investment in Egypt) Work permit based on Investment requirement.

37 Major Projects: Concessions Extractive Industries are among the major projects that require authorization of the GOE. This authorization is granted in a concession agreement. Concession agreements are passed by law. The SVE becomes governed by the concession agreement that created it as a special law that precedes the application of the general provisions of the Egyptian law.

38 Special Benefits to Foreign Employees Imports, subject to reexport, duties of personal belongings including a single car. This is a special benefit since customs at the time of sale, are assessed at its value at the time of sale. GOE grants residence to the foreign employees of the Concessionaire and its contractors. Foreign employees could be paid up to 75% of their salary in foreign currency (this is contrasted to the obligation of employees in general to pay their employees in Egyptian pounds). Concessionaire is obliged to undertake training programs to its employees and to give priority to the employment of Egyptians provided they are qualified.

39 Taxation of Foreign Employees Even though foreign employees are subject to Egyptian taxes, the various relocation expenses and a generous assessment of expenses including: Rent expenses; Transportation during holidays; Transportation of personal effects; Educational expenses for the children of foreign employees; Storage expenses of their personal effects; Retirement deductions; Group life insurance; and Health insurance

40 Ernest Sembayta Kaggwa Uganda

41 Local Content Protections in the Natural Resources Sector in Uganda The legal regime Overview Preference to local employees Challenges to employers Way forward

42 The Legal Regime The Petroleum (Exploration, Development and Production) Act, The Petroleum (Exploration, Development and production) (National Content) Regulations, The Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, The Petroleum (Refining, Conversion, Transmission and Midstream Storage) (National Content) Regulations, The Non Governmental Organizations Act The Non Governmental Organizations Regulations 2017.

43 The Legal Regime Application of the petroleum laws Regulator Petroleum Authority of Uganda (the PAU ) Definitions Registered entity Ugandan Company National content

44 Employment: Priority in Employment (National Content Regulations) Priority to be given to Ugandan citizens. Ring fencing of certain goods and services to be provided by Ugandans. Licencees to submit a policy and annual plans to PAU on employment and training of Ugandans. Labour clause in contracts exceeding USD 1million. Succession plan for positions held by expatriates. Work permits for expatriates.

45 Preference to Local Employees Licensee to ensure that the annual recruitment and training plan take into consideration a minimum percentage of Ugandan citizens. Preference in procurement of goods and services. Formation of a Joint Venture company where goods and services not available in Uganda. Penalties for non compliance with Regulations.

46 Staffing Requirements-NGO Organizational Structure A chart showing organizational structure specifying: Foreign staff requirements where necessary; and Indicating the period for the replacement of its foreign employees with qualified Ugandans

47 Rationale of Local Content To ensure participation of Ugandans in the natural resources sector. To generate employment and business opportunities for the national economy. To build capacity in Ugandan citizens.

48 Challenges to Employers Training staff without factoring in the continuity of the day to day running of the business. No guarantee that staff will acquire requisite skillsets. Ambiguity in the Regulations.

49 Level Playing Field Secretive natural resources administration in Uganda. Lack of transparence in petroleum activities.

50 Need for transparency Way Forward Capacity Building

51 Conclusions & Wrap Up

52 For More Information Please Contact: Sonal Sejpal Anjarwalla & Khanna ALN, Kenya Mary Ekemezie Udo Udoma & Belo-Osagie, Nigeria Shamiza Ratansi ATZ Law Chambers ALN, Tanzania Bahieldin Elibrachy Ibrachy Dermarkar, Egypt Ernest Sembatya Kaggwa MMAKS Advocates ALN, Uganda

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