21 Jun How to protect your business from legal risks in Nigeria
Steps to Legally Protect your business from risks
Running a business in Nigeria is not for the faint hearted. You need to worry about power, security, trustworthy staff etc, you don’t need to be adding the threat of being sued to that list! That’s why we at LawPàdí have decided to share this article discussing 5 things you can do to prevent yourself and your business from legal risks and lawsuits.
Step 1 – Tighten up Employee relations
One of the biggest reasons companies are sued, is when they are sued by their current or former employees. This can be for a large variety of reasons, but it always boils down to the employee not feeling they are treated properly by the company. To that end, the first thing you need to do is to have an Employment contract for all your employees. The employment contract is the document that governs the relationship dynamic between the employer and the employee. Also important is that there must be a Staff Handbook. These two documents ensure that both the employer and employee know what is expected of them, and as such they can ensure that if any party acts outside of the agreed documents, then it is clear in black and white who the defaulting party is.
Step 2 – Take a tough stance on Bullying and workplace discrimination
When individuals sue the company, most times it is not the ‘company’ itself that has wronged them, it is someone who works for the company, either a Manager or Supervisor. The company is sued because of the principle of ‘vicarious liability’, which basically means that one party (the company) is liable for the actions of another party (the Manager/Supervisor) because of the relationship between the parties (employer-employee).
It is therefore important that the company ensures that the Managers/Supervisors are held to a code of conduct (arguably higher than for regular employees), to ensure they do not engage in sexual harassment or discrimination, bullying, or any other activities that may cause discontent among the employees and ultimately lead to a lawsuit. Ways to deal with this would include employee education, implementation of non-discrimination policies, and a publicized procedure to formally report actual or potential discrimination, victimisation, and bullying in the work place.
Step 3 – Assess and Transfer Legal Risks
The most common way companies can transfer legal risks, is the use of warnings, disclaimers or limitation of liability clauses. While this approach is not fool proof, as there are some risks that cannot be transferred for statutory reasons, you can still use strategies to regulate your risk. This is where your lawyer comes in very useful, your lawyer should be able to assess your risks and suggest legal ways to transfer these risks. For example, if your company sells produces and sells over the counter pharmaceutical products, one of the ways you can assess and transfer risk is to include on your product packaging, all the possible adverse outcomes of using your product
Step 4 – If you can’t transfer it…insure it!
Having professional and product liability insurance is critical in a business environment. This is apart from compulsory insurance which you as a business owner need to take out over your property, and your employees. While having insurance won’t protect you from a lawsuit, it can limit its financial effects on you and your business.
There you have it, 4 steps you can take to protect your business from legal risks in Nigeria.
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