What You Need to Know About The Nigerian Labour Law

By Roselyn Onalaja | 13 min read
15th June 2017
What You Need to Know About The Nigerian Labour Law

The foundation of the modern labour law was laid during the colonial era in Nigeria. Despite the fact that it has undergone some forms of reviews, changes and updates in the past, these have not been adequate to reflect modern HR developments and practices. The current version of the act was however put into place in 2004. It is pertinent to note that reliance is sometimes placed on the judiciary to interpret some provisions of the Act due to some observed ambiguity therein. The Nigerian Labour Act, which provides the legal framework and regulatory environment for employment, has remained the principal legislation governing employment relations in Nigeria.

Although there are other agencies of government whose activities directly or indirectly affects labour and employment, the Ministry of Labour and Productivity has the primary responsibility for issues relating to labour and employment in Nigeria. Exclusive jurisdiction in civil and criminal matters relating to or connected with labour, employment, trade unions, industrial relations and matters arising from the workplace resides with the National Judicial Council.

The following four sections/parts make up the Nigerian Labour Law:

  1. General Provisions - Protection Of Wages, Contracts Of Employment And Terms And Conditions Of Employment
  2. Recruiting - Recruiters and recruiting generally, Recruiting for employment in Nigeria, Recruiting for employment outside Nigeria, Enforcement provisions
  3. Special Classes Of Worker And Miscellaneous Special Provisions- Apprentices, Employment of women, Young persons, Domestic service, Labour health areas, Registration, employment exchanges, Forced labour
  4. Supplemental- Records and returns, Labour Administration, Settlement of disputes

For the purpose of this article, we shall focus mainly on the following:

All Employees must have a Written Contract of Employment

The provision of the Act, under this section, requires that the contract of employment be documented. Every employer is mandated to, within the first three months of employment, give to its employees a written and detailed contract of employment. Although the law provides some specifics (e.g. the name and address of the employee and the place of his engagement, the nature of the employment, duration, wages etc.) which are considered as minimum employment terms and conditions, the law requires that contract of employment must sufficiently disclose all information, necessary for the harmonious working relationship between the employer and the employee regarding the job. The key thing here is to ensure that the employee is protected by all the relevant terms being reduced to writing so the employee knows what is expected of him/her. It is also expected that if there is any change in the terms of the employment, it should be made known in writing to the employee within 1 month.

What determines Standard Hours of Work?

Working hours are as specified in the employment contract. Section 13 of the Labour Act provides that normal hours of work in any contract of employment shall be those fixed; (i) by mutual agreement; (ii) by collective bargaining within the organisation or industry concerned; or (iii) by an industrial wages board (established by or under an enactment providing for the establishment of such boards) where there is no machinery for collective bargaining.

Forced Labour is Illegal

It is important for every Nigerian to know that it is illegal to force anyone to work for you. It is every Nigerian's right to be free from forced labour, and this right is enshrined in the Labour Act, as well as guaranteed under the 1999 Constitution. Therefore, if you or someone you know is being forced to work against your will, you can report to the police, as it is a crime.

Employers have the Obligation to pay Wages

Any contract where the whole or part of the worker's wages is made payable in any other manner apart from legal tender shall be illegal, null and void. Therefore, it is illegal for an employer to attempt to pay an employee with things other than money. A few other key things to note around wages are:

  • It is illegal for any contract to be for the payment of wages at intervals exceeding one month unless with the written consent of the State Authority. This means if the employer makes a person sign an employment contract where the employee is to be paid every quarter or every 6 weeks etc., such a contract is illegal.
  • No employer can impose any restrictions as to the place and manner in which the employee can spend his/her wages. So your employer can't insist that you only buy lunch from the office canteen.
  • Employers are not allowed to provide an advance of wages in excess of 1-month wages.
  • An establishment in which less than fifty (50) workers are employed;
  • Any person employed in a vessel or aircraft to which the laws regulating merchant shipping or civil aviation apply.

Employers have the Obligation to pay Minimum Wage

Under the National Minimum Wage Act, section 1 and 3 provide that it shall be the duty of every employer to pay a wage not less than the national minimum wage of the amount prevailing at any given time (the current minimum wage is N18, 000. 00) per month to every worker under his employ clear of all deductions (except any deductions required by law or deductions in respect of contributions to provident or pension funds or schemes agreed to by the workers). It goes further to make null and void any agreement for the payment of wages less than the national minimum wage.

Note however, that the National Minimum Wage Act exempts the following establishments from the obligation to pay the national minimum wage:

  • An establishment in which workers are employed on a part time basis (part time work is defined by the Act as "work of a duration of less than forty (40) hours per week");
  • An establishment in which workers are paid on commission or on piece rate basis;
  • Workers in seasonal employment;

Deductions from Employee Salaries Prohibited

Employers are not allowed to deduct an employee's wages for any reason, unless reasonable deduction for injury/loss caused to the employer by the employee, but only with prior written consent of an authorised labour officer. Also, if you are lucky enough to have your employer mistakenly overpay you, then you should know that the money which was overpaid can only be deducted within 3 months from the date of the overpayment. Any attempt by your employer to deduct the overpayment from your future salary after the expiration of this 3-month period is illegal.

Employer is Vicariously Liable for Employee's Actions on its Behalf

Employers are vicariously liable for all work undertaken by their employees, on the employer's behalf, should such work cause injury or loss to a third party. For this reason, and to cover negligent conduct outside of the scope of the employee's contract, employers traditionally demand from their employees an acceptable Guarantor's indemnity or Fidelity Guarantee from the employee's Guarantor which indemnity or fidelity bond must cover such vicarious and unauthorised conduct of the employee while remaining bound by the contract of employment

Cost of Medical Examination of Employee to be borne by Employer

Section 8 of the Labour Act provides that every employee who enters into a contract shall be medically examined by a registered medical practitioner at the expense of the employer; but an exemption can be granted from this requirement by an order made by the State Authority (means the Governor or Administrator of a State) where the contract is for employment in agricultural undertakings not employing more than a limited number of workers, or where the employment is in the vicinity of the workers' homes in agricultural work or non- agricultural work which the State Authority is satisfied is not of a dangerous character.

Three Ways to Terminate a Contract of Employment

The Labour Act provides for the termination of contracts in three (3) ways, namely:

By the expiration of the period for which it was made; By the death of the employee before the expiration of that period; By notice in accordance with section 11 of the Act, or in any other way in which a contract is legally terminable or held to be terminated.

Section 11 of the Act provides that either party to a contract of employment may terminate the contract on the expiration of notice given by him to the other party of his intention to do so. Period of Notice to be given for the purposes of this provision are as follow;

One day, where the contract has continued for three months or less; One week, where the contract had continued for more than three months but less than two years; Two weeks, where the contract has continued for a period of two years but less than five years; One month, where the contract had continued for five years or more.

 It is noted that Section 11(3) provides that any notice for a period exceeding one week shall be in writing. Section 11(5) provides that nothing in the section with regards to Notice shall affect the right of either party to a contract to treat the contract as terminable without notice by reason of such conduct by the other party as would have enabled him to treat it before the making of this Act.

 Similarly, subsection 6 of the Act provides that nothing shall prevent either party from waiving his right to notice or from accepting payment in lieu of notice. Note that the Act also provides that all wages payable in money shall be paid on or before the expiry of any period of notice; and in the calculation of a payment in lieu of notice, the Act provides that it is only that part of the wages which a worker receives in money, exclusive of overtime and other allowances that shall be taken into account.

Employers can Dismiss Employees Contract without Notice

An employer is entitled to opt for the dismissal of its employee's contract, instead of the termination of a contract of employment, where the conduct of its employee "... is of some grave and weighty character that it undermines the relationship of confidence which must exist between a master and a servant".

Examples of conduct which could be considered to be of a grave and weighty nature will include cases of stealing, fraud, bribery, corruption, falsification of records, gross insubordination, dereliction of duty, sleeping at work, verbal or physical violence, fighting, assault and battery, working under the influence of illegal drugs, conflict of interest, competition with the employer's business, conversion of company's property for private use without the employer's permission or consent, assault and battery, etc. This is a departure from the old standard which prevented the employer from automatically dismissing his employee without notice where such employee has committed an offence that have a criminal element(s) which criminal offence requires the proof in a court of law, of proof beyond all reasonable doubt.

Employers to communicate Redundancy Appropriately

The Labour Act defines redundancy as the involuntary and permanent loss of employment caused by excess manpower. The Act places an obligation upon the employer to inform the workers union of the reason for and anticipated extent of the redundancy; operate the principle of 'last-in' 'first out' (subject to relative merit) and use best efforts to negotiate redundancy payments to employees who are not protected by regulations made under the Act for compulsory redundancy payments.

Employers to Provide Safe System of Work

The Labour Act places a qualified obligation upon an employer to provide a safe system of work i.e. to carry out his operations in a manner that complies with safety regulations. Sections 66 and 67 of the Act provide for the creation of Labour Health Areas and the matters in such areas for which regulations can be made. Labour Health Areas are areas designated as such due to their remoteness from modern amenities like medical facilities; water and communications. The matters for which regulations can be made include the provision of sanitary arrangements; supply of water, food and fuel; medical examination of workers; measures to be taken to check spread of infectious diseases; establishment of proper hospitals and employment of qualified medical personnel.

Employees are entitled to free Transportation in certain circumstances

Section 14 of the Labour Act provides that where an employee is required to travel sixteen kilometres or more from his normal place of work to another worksite he shall be entitled to free transport or an allowance in lieu thereof. Where free transport is provided in the form of a vessel or vehicle, it is mandatory of the employer under the Act to ensure that the vessel or vehicle is suitable, is in good sanitary condition and is not overcrowded.

Employees are entitled to Paid Leave

The Act provides in Section 18 that every employee shall be entitled after 12 months' continuous service to a holiday of;

 At least six (6) working days; or In the case of a person under the age of sixteen (16) years (including an apprentice), at least twelve (12) working days.

 The same section provides that the above stated holiday period shall be with full pay to the employee. However, an exception to the entitlement to a holiday after 12 month's continuous service is that such holiday can be deferred to a later date by agreement between the employee and employer provided that the holiday earning period shall not be increased beyond 24 months' continuous service.

 Subsection 3 of section 18 of the Act makes it unlawful for an employer to offer or pay wages to an employee in lieu of the holiday period mentioned in section 18 (1) above.

Employees are entitled to Paid Sick Leave

The Labour Act in section 16 makes it the obligation of the employer to grant an employee paid sick leave of up to twelve working days in one calendar year where absence from work is caused by a temporary illness certified by a registered medical practitioner. Where, however, the sickness is so serious and so protracted as to frustrate the purpose or objects of for which the employee was engaged, the contract may be discharged, and the employer absolved from further liabilities without prejudice to the earned entitlements before discharge.

In calculating leave pay and sickness benefits, section 19 of the Labour Act provides that only that part of an employee's wages which he receives in money (excluding overtime and other allowance) shall be taken into consideration.

Prevention of employees from joining trade unions illegal

No employment contract can prevent workers from joining trade unions, and any contract which makes it a condition of employment that the worker should relinquish membership of a trade union or prejudices workers by reason of trade union membership is illegal.

Employers are to Make Statutory Deductions & Remittances

Employers are obligated to deduct at source the following from employees' emoluments, as well as remit major statutory remittances:

  • Personal Income Tax: employers are required to withhold income tax from the monthly emoluments of their staff in accordance with the rates stipulated in the Personal Income Tax Act and remit same to the relevant State Inland Revenue Service on or before the 10th day of the month following the payment of salaries
  • Pension Contribution: employers are mandated to withhold 8% of each
  •  National Housing Fund: employers are required to deduct 2.5% of employee's basic salary and remit same to Federal Mortgage Bank within 1 month of such deduction
  •  National Health Insurance Scheme: employers are required to deduct 5% of employee's basic salary (employers are to contribute 10% of employee's basic salary) as contribution towards National Health Insurance Scheme. The Scheme gives all employees access to affordable health care.
  •  Employee Compensation Scheme: employers are required to remit 1% of their total monthly payroll into the Employee Compensation Fund to compensate employees who suffered death or permanent incapacity resulting from accidents in the course of their employment
  •  Industrial Training Fund: Every Nigerian company with 5 or more employees or with less than 5 employees but with turnover of N50,000,000 is required to remit 1% of its total annual payroll to the Industrial Training Fund not later than 1st April of every year.

employee's salary and remit same (together with employer's 10% contribution) to the employee's chosen pension fund administrator within 7 days from payment of salary

By the provisions of the Employees Compensation Act, 2010 (ECA), an employee who suffers injury as a result of accident in work place or outside the work place if such accident occurs out of or in the course of employment shall be entitled to compensation in accordance with the provisions of the ECA. If death occurs due to the accident, the dependents of the employee involved would be entitled to compensation under the ECA. It is important to note that the provisions of the ECA are in lieu of any other action, whether in tort or in contract, maintainable by the employee against the employer. It is important to note that by virtue of the ECA, the scope of an employee being .in the course of duty. has been extended to cover accidents occurring while an employee is on his way to work from his place of residence.

Hours of Work, Rest Hours, Sick Leave, and Holidays for Employees

Section 13 of the Labour Act provides that normal hours of work in any contract of employment shall be those fixed by mutual agreement, collective bargaining within the organization or industry concerned, or by an industrial wages board (established by or under an enactment providing for the establishment of such boards) where there is no machinery for collective bargaining.

If a worker is at work for more than 6 hours a day, he/she must be given at least 1 hour of rest-interval in that day. Further, in every period of 7 days, a worker is entitled to at least 1 day of rest which must not be less than 24 consecutive hours. So for instance if you work Sunday all through Saturday, you must have the whole of the following Sunday as a mandatory day off.

Every worker is also entitled to 12 days' sick leave for temporary illness certified by a registered medical practitioner.

Every employee after 12 months of continuous service is entitled to a holiday with full pay of at least 6 working days (this is exclusive of all the public holidays)

Prohibition of Female Employees from Night Works

The law generally prohibits the employment of women for night works, it is however permissible for those employed as nurses and top management of organisations.

All Female Employees are entitled to Maternity Leave

The Labour Act provides that in any establishment, a pregnant female employee is entitled to 6 weeks leave before her expected delivery date and another 6 weeks after delivery making a total of 12 weeks statutory leave. The Act also provides that any female employee that has worked with the establishment for a period of at least 6 months before proceeding on maternity leave is entitled to at least 50% of the salary she ought to have earned if she had been present at work

The law also provides that every employee that is nursing a child is to be allowed 30 minutes twice a day during her working hours for the purpose of nursing her child. Where a woman is unable to resume work after her maternity leave because of conditions arising from her delivery, her employer cannot terminate her employment.

Although the attempts of the Labour Act to protect female employees from discrimination are laudable, its provisions are, however, limited in scope especially with respect to workers in the private sector whose employment are usually predicated on the contracts they enter into with their employers. The provisions of the contract bind parties to a contract and, as we highlighted in our earlier article on employment, the principle of freedom of contracts is followed religiously in Nigeria. As such, where a female job seeker enters an employment contract with a company, which provides that she is not entitled to maternity leave, the courts would uphold such contract because the job seeker freely entered it into.

Unfortunately, the Nigerian Labour Act does not recognise paternity leave and makes no such provisions. However, in Lagos State civil servants are entitled to 10 days' paternity leave within the first 2 months of the birth of the baby.

 

Employees must consent to transfer of Employment

An employee must consent to the transfer of his/her employment from one employer to another for it to be valid; and an authorised Labour officer must endorse the transfer. So if for instance your company is taken over by another company, your employment will not automatically move to this new company (employer) without first consulting you and getting your agreement to transfer your employment.

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