Employment and employee benefits in Nigeria: overview | Practical Law

Employment and employee benefits in Nigeria: overview | Practical Law

A Q&A guide to employment and employee benefits law in Nigeria.

Employment and employee benefits in Nigeria: overview

Practical Law Country Q&A 7-637-8766 (Approx. 22 pages)

Employment and employee benefits in Nigeria: overview

Law stated as at 01 Jan 2017Nigeria
A Q&A guide to employment and employee benefits law in Nigeria.
The Q&A gives a high level overview of the key practical issues including: employment status; background checks; permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; intellectual property; restraint of trade agreements, relocation of employees and proposals for reform.
To compare answers across multiple jurisdictions, visit the employment and employee benefits Country Q&A tool.
The Q&A is part of the global guide to employment and employee benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-guide.

Scope of employment regulation

1. Do the main laws that regulate the employment relationship apply to:
  • Foreign nationals working in your jurisdiction?
  • Nationals of your jurisdiction working abroad?

Laws applicable to foreign nationals

The main laws that regulate the employment relationship in Nigeria apply to foreign nationals working in Nigeria, However, the Pension Act does not apply to foreign nationals who are covered by similar provisions in their country.
The Employees Compensation Act grants inalienable rights to employees in Nigeria. Therefore, this Act is mandatory and applies to all employees regardless of the choice of law in the employment contract. Certain provisions of the Labour Act are also implied into an employment contract regardless of the choice of law.

Laws applicable to nationals working abroad

Only the Labour Act is applicable to nationals working abroad, in particular Part II of the Act.

Employment status

2. Does the law distinguish between different categories of worker? If so, what are the requirements to fall into each category, the material differences in entitlement to statutory employment rights and are there any maximum time periods for which each category of worker can be engaged?

Categories of worker

There is no express statutory distinction between different categories of workers in Nigeria. The Employees Compensation Act and the Labour Act use the words "employee" and "workers", respectively, to cover any person who is employed. However, apprentices, domestic servants and young persons are classified as special workers under the Labour Act. Young persons and women employees cannot be engaged in night work, subject to certain exceptions stated in the Labour Act. Under the Companies and Allied Matters Act, employees who own shares are referred to as employee shareholders.
An independent contractor is a person who is engaged by an employer to carry out a specific type of work. An independent contractor is not under the control of the employer and performs their job as a professional. By contrast, an employee is engaged to provide services under the control of the employer.
An employee who is misclassified as an independent contractor loses all the rights and privileges of an employee. However, a person who actually performs their job as an employee under the control of an employer will be regarded as an employee under the law, and not as an independent contractor.

Entitlement to statutory employment rights

Employees are entitled to the full range of statutory employment rights provided under the various labour laws. However, some of these rights only apply to some employees after they have reached a minimum period of service.

Time periods

Public servants whose employment is provided for in a statute, and public servants in the civil service, can only be engaged for a limited period of time. These periods vary depending on the provisions of the contract or statute creating the employment.


3. Are any grants or incentives available for employing people? Does any information/paperwork need to be filed with the authorities or given to new employees when employing people?

Grants or incentives

Labour intensive industries are entitled to tax concessions. Concessionary rates are progressive so that;
  • Industries employing 1,000 persons or more benefit from a 15% tax concession.
  • Industries employing at least 200 persons benefit from a 7% tax concession.
  • Industries employing at least 100 persons benefit from a 6 % tax concession.
Certain industries benefit from various tax concessions, to encourage and promote investment. The availability of these tax concessions and their enjoyment are limited in time.
Social security is limited in Nigeria, and there is no clear social security policy. Available social security benefits include:
  • A social security pension scheme.
  • An employee compensation scheme.
  • An industrial training fund.


An employer that intends to recruit foreign nationals to work in Nigeria must file certain information/paperwork with the authorities. Employers in certain sectors may also need to make filings regarding new employees with the relevant regulatory bodies. New employees must be given a contract of employment.

Background checks

4. Are there any restrictions or prohibitions on carrying out background checks in relation to applicants?
An employer can generally carry out background checks in relation to applicants, subject to certain restrictions. Section 37 of the 1999 Constitution of Nigeria (as amended) provides for the protection of privacy of citizens. Therefore, an employer can only obtain personal information regarding an applicant's past, health or criminal record provided that the information is relevant, reasonable and lawful.
Background checks can be conducted by a third party on behalf of the employer.

Permission to work

5. What prior approvals do foreign nationals require to work in your country? What information/paperwork needs to be kept or filed with the authorities when they start work?


Procedure for obtaining approval. To work in Nigeria, a foreign national may require any of the following:
  • A subject to regularisation (STR) visa.
  • A temporary work permit (TWP).
  • Single or multiple entry visas.
To obtain an STR visa, the employer company must:
  • Apply to the Nigerian embassy or consular office in the employee's/applicant's country of residence, requesting that the applicant (and any accompanying spouse, fiancé(e) or children, if applicable) be granted an STR visa when they arrive in Nigeria.
  • Undertake to assume immigration responsibilities on behalf of the employee (and any accompanying spouse, fiancé(e) or children, if applicable).
  • Include the specified documents in the application.
  • Pay the applicable visa fees.
Companies and organisations wishing to engage the services of expatriates for short assignments must apply directly to the Comptroller-General in Abuja for a TWP visa. To obtain a TWP visa, the following are required:
  • A confirmed airline return ticket.
  • Acceptance of the foreign national's immigration responsibilities by the inviting organisation or individual.
Single and multiple entry visas are mostly issued to non-resident directors of Nigeria-based companies for attending meetings and for other frequent visits to pursue business arrangements or negotiations relating to investment projects.
Both single and multiple entry visas are also issued to employees of entities whose stay have been duly regularised, to enable them to return to their employment whenever they travel out either for business or holidays. In that case, the employee must make the application personally in Nigeria. The application must be supported by the employer, which must:
  • Confirm that the employee is returning to their job.
  • Reaffirm that it will assume all immigration responsibilities on behalf of the employee.
  • Provide evidence of the continued availability of the expatriate quota for the position to be occupied (see below, Expatriate quota).
Cost. Visa application fees vary depending on the applicant's country of origin.
Time frame. Typically, a Nigerian embassy or consulate may take two to 15 days to process a visa application.
An application for renewal must be made at least 28 days before the expiry of the visa. A visa that has expired can still be renewed, but the employee will only be allowed to stay in Nigeria for 90 days, after which they will be subject to deportation.
Sanctions. A foreign national who is employed to work in Nigeria without the required visa or entry permit is liable to deportation.


Procedure for obtaining approval. The procedure for obtaining a work permit is the same as for an expatriate quota (see below, Expatriate quota). The same documents are required.
Expatriates resident or working in Nigeria may qualify for a combined expatriate residence permit and aliens card (CERPAC). A CERPAC is a document that allows a foreign national to reside in Nigeria and carry out an approved activity as specified in the permit, or to accompany a resident or citizen of Nigeria as a dependant. To obtain a CERPAC, an applicant must:
  • Obtain and pay for the required forms.
  • Submit the required forms duly completed to the Immigration State Command where their files are located, for verification and clearance.
  • At the time of submitting the completed forms and documents, present their original passport for verification.
  • Ensure that their receipt or temporary card is authenticated and returned to them.
  • Go to a CERPAC office for the capture of their digital personal identification.
When the forms and documents are received, verified and endorsed by the relevant Immigration State Command, an immigration or CERPAC stamp will be applied to the applicant's receipt or temporary card.
Cost. The fees depend on the type of CERPAC to be obtained.
Time frame. It takes at least 21 working days to obtain a CERPAC.
Sanctions. A foreign national who does not have a work permit cannot assume any work responsibility in Nigeria. Taking up any work responsibility without a work permit is an offence. Salary(ies) received by the foreign national will be seised and their visa is likely to be revoked.

Expatriate quota

Various entities are given expatriate quotas, as approved by the Minister of Interior Affairs. However, an entity must first consider the availability of qualified Nigerians to fill a position. 5% of an entity's management positions can be maintained as expatriate positions. No preference is given to nationals from certain jurisdictions.
When they start work, all foreign nationals must register their presence at the immigration office closest to their places of residence or occupation. Foreign nationals must also be registered with the relevant tax regulatory body (this is usually done by the employer).
Procedure for obtaining approval. There are two types of expatriate quota: permanent until reviewed (PUR) and temporary. The type of quota required depends on the level of involvement in the organisation of the expatriate worker.
Before making either application for an expatriate quota to the Minister of Interior Affairs, the prospective employer must first make an application to the Nigerian Content Development and Monitoring Board and obtain approval from the Board in the form of a certificate of no objection (section 33, Nigerian Local Content Act 2010).
The prospective employer must make a written application to the Comptroller-General and satisfy all of the following:
  • Confirm that they have a vacancy corresponding to the expatriate quota.
  • State the position in which the prospective employee is to be employed.
  • Confirm acceptance of the prospective employee's immigration responsibilities.
The prospective employer must submit the completed immigration form T/1 and attach the required documents
The Minister of Interior Affairs will consider the application on submission of all the required documents.
Cost. The processing fees are NGN25,000.
Time frame. It takes about 20 working days to process an application for an expatriate quota.
Sanctions. Failure to obtain approval from the Minister of Interior Affairs is an offence, for which the foreign national is liable to deportation (see https://portal.immigration.gov.ng/pages/about).

Restrictions on managers and directors

6. Are there any restrictions on who can be a manager or company director?

Age restrictions

For both public and private companies in Nigeria, a person appointed as a director or managing director must be at least 18 years. There is no maximum age in private companies. The appointment of a person of 70 years or more as a director of a public company must first be disclosed to the company's members at a general meeting. Any resolution appointing such a person requires a special notice.

Nationality restrictions

There are no nationality restrictions.

Other restrictions

The following persons cannot be appointed as directors of a company in Nigeria:
  • Persons of unsound mind.
  • Persons disqualified from acting in this capacity by a court, or convicted of fraudulent trading.
  • Corporation, unless appointed by their representative for a specific term.
Additionally, a company's articles of association can include share qualification requirements.

Regulation of the employment relationship

7. How is the employment relationship governed and regulated?

Written employment contract

Under the Labour Act, an employer must give its employee(s) a written employment contract no later than three months after the start of the employment period. As the Labour Act does not apply to all categories of employees in Nigeria, certain employment relationships are entered into orally (although this is not common).
The employment contract must include the following information:
  • The name of the employer or group of employers, or of the undertaking by which the worker is employed (where relevant).
  • The name and address of the employee and the place and date of their engagement.
  • The nature of the employment.
  • If the contract is for a fixed term, the date when the contract expires.
  • The period of notice to be given by a party wishing to terminate the contract, subject to section 11 of the Labour Act (see Notice periods).
  • The rates of wages, their method of calculation, and the manner and periodicity of payment of wages.
  • Any terms and conditions relating to:
    • working hours;
    • holiday and holiday pay;
    • incapacity to work due to sickness or injury, including any provisions for sick pay; and
    • any special conditions of the contract
Nigerian employment law does not specify the language in which a contract of employment must be written. However, employment contracts are written in English, as English is the official language in Nigeria. If an employee does not understand English, the terms of the contract must be read and explained to that employee in the language that they understand and consent to.

Implied terms

Certain terms are implied into contracts of employment. Implied terms derive from statute and judicial decisions.
An employee has the following implied obligations:
  • To use reasonable care and skill.
  • To serve the employer with fidelity and in good faith.
  • Not to disclose confidential information.
  • To be ready and willing to work.
An employer has the following implied obligations:
  • To pay wages.
  • To provide a safe workplace and safe work systems.
  • To indemnify the employee against reasonable expenses in the performance of their employment.
  • Not to disclose sensitive information regarding employees without their consent.

Collective agreements

Collective agreements with trade unions or employee representatives are voluntary agreements and are not binding on employers, unless the terms of a collective agreement are expressly incorporated into a contract of employment.
In the banking sector, the Nigerian Employers' Associations of Banks, Insurance and Allied Institutions and the Association of Senior Staff of Banks, Insurance and Financial Institutions have concluded a collective agreement that sets out specific terms for all employees working in this sector, including in relation to:
  • Salaries.
  • Working hours.
  • Leave and leave conditions.
  • Disciplinary procedure.
  • Redundancy.
  • Allowances.
  • Transport and housing.
  • Sickness benefit.
  • Medical scheme.
  • Loans.
  • Lunch subsidy.
  • Membership of unions.
  • Burial expenses.
  • Staff conversion.
  • Equity participation.
  • End-of-year payments.
8. What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?
An employer that wants to unilaterally change the terms and conditions of employment must both:
  • Inform the worker of the nature of the change in a written statement not more than one month after the change.
  • If it does not leave a copy of the statement with the worker, keep the statement and ensure that the worker has reasonable opportunities of reading it during the course of their employment, or ensure that the statement is made reasonably accessible to the worker in some other way.
An employer wishing to impose changes that go beyond those authorised by the contract, without the employee's express consent, can either:
  • Impose the changes and accept the potential consequences (for example, the employee can terminate the employment without notice if notice is required or the employee may sue the employer for breach of the agreement).
  • Give notice of termination to the employee and simultaneously offer a new employment arrangement.

Minimum wage

9. Is there a national (or regional) minimum wage?
The national minimum wage in Nigeria is NGN18, 000 per month. Various states have a specific minimum wage. The minimum wage in the state of Ondo is NGN22,000, which is the highest minimum wage in Nigeria. The minimum wage only applies to employees in the public sector, regardless of their age, industry and experience.
There are salary caps applicable to all public service employees of both the state and federal governments. The salaries of certain government functionaries are fixed by statute.
An employee's wages must be paid either (Labour Act):
  • In legal tender.
  • By cheque or postal order, subject to the employee's prior written consent.
Wages must not be paid at intervals of more than one month, or on certain premises, except if the employee is employed on the premises.

Restrictions on working time

10. Are there restrictions on working hours? Can an employee opt out on either an individual or collective basis?

Working hours

Normal working hours can be fixed by any of the following:
  • Mutual agreement.
  • Collective bargaining agreement within the organisation or industry concerned.
  • An industrial wages board, where there is no collective bargaining procedure available.
See section 9 of the Wages Boards and Industrial Councils Act for details on the collective bargaining procedure.
The hours that an employee works in excess of the normal fixed working hours constitute overtime. A worker can opt out of the working hours individually if their normal working hours are fixed by mutual agreement. A worker cannot opt out individually where their working hours are fixed by a collective bargaining agreement. Any change must be agreed on collectively through the union and the organisation or industry.

Rest breaks

A worker who works six hours or more per day is entitled to one or more suitably spaced rest breaks of not less than one hour in aggregate. If the work involves continuous strain or is stressful, the worker must be granted the appropriate number of suitably adjusted and spaced breaks.
A worker who works seven days per week is entitled to one day of rest, which must not be less than 24 consecutive hours. Otherwise corresponding time off must be granted as soon as possible, or wages at overtime rates must be paid in lieu.

Shift workers

Shift workers are also entitled to rest breaks. Women and young persons cannot work night shifts, subject to certain exceptions (Labour Act).

Holiday entitlement

11. Is there a minimum paid holiday entitlement?

Minimum paid holiday entitlement

A worker with a 12-month continuous period of employment is entitled to the following minimum annual paid holiday:
  • Six working days, for persons under the age of 16 years (including apprentices).
  • 12 working days.
This excludes all public holidays.

Public holidays

There are about 11 public holidays per year.

Illness and injury of employees

12. What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Who pays the sick pay and, if the employer, can it recover any of the cost from the government?

Entitlement to paid time off

Employees have the right to take time off in the case of illness or injury. The contract of employment may include specific provisions on sick pay. If not, an employee is entitled to the payment of wages for up to 12 working days in any calendar year during an absence from work caused by a temporary illness certified by a registered medical practitioner (Labour Act). The Employees Compensation Act makes provision for the payment of compensation to employees who suffer from work-related injuries or illnesses.

Recovery of sick pay from the state

Sick pay must be paid by the employer. However, where the employer fails to pay or is insolvent, the employee can recover sick pay from the Nigeria Insurance Trust Fund Management Board, which manages the Employment Compensation Fund.

Statutory rights of parents and carers

13. What are the statutory rights of employees who are:
  • Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
  • Carers (including those of disabled children and adult dependants)?

Maternity rights

A pregnant employee is entitled to 12 weeks' maternity leave if she provides a written medical certificate from a medical doctor stating that she should not or cannot work. Pregnant employees are entitled to at least 50% of their normal wages, provided that they have been employed for at least six months. Nursing mothers are allowed half an hour twice a day to attend to their babies.

Paternity rights

The Labour Act does not contain provisions on paternity leave. However, in Lagos State, civil servants are entitled to ten days' paternity leave within the first two months from the birth of the baby.

Surrogacy rights

Nigerian labour law does not recognise surrogacy rights. However, a surrogate mother may be entitled to maternity leave (see above, Maternity rights).

Carers' rights

Any employee with at least 26 weeks of continuous service can make a flexible working request as a carer, if certain criteria are met.

Continuous periods of employment

14. Does a period of continuous employment create any statutory rights for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?

Statutory rights created

A period of continuous employment creates some statutory rights for employees, such as entitlements to paid holiday, rights on termination and protection from dismissal.

Consequences of a transfer of employee

Generally, an employee who is transferred to a new entity enters into a new contract with the employer and foregoes their previous period of continuous employment. However, an employee that is transferred to a new entity may retain their period of continuous employment where the change of employer is the consequence of any of the following:
  • A transfer between associated employers.
  • A transfer to the employer's personal representatives on the employer's death.
  • A change of partners, personal representatives or trustees in the employer.

Fixed term, part-time and agency workers

15. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees? To what extent are part-time workers entitled to the same rights and benefits as full-time workers?

Temporary workers

The duration of a fixed term contract is usually stated in the contract of employment. There is no limit to the duration of a fixed term contract. However, where the employee continues to provide services to the employer after the contract expires, which the employer acknowledges, it can be deemed that a new fixed term contract has started. Alternatively, the employee can be deemed to be a permanent employee.
Fixed term employees accrue employment rights in the same way as permanent employees. It is easier and cheaper to terminate a fixed term contract, as it automatically terminates at the end of the period specified without any need to give notice.

Agency workers

Agency workers are not entitled to the same rights and benefits as permanent employees. Their rights in relation to the client they are assigned to work for are limited. Agency workers may not be entitled to sue for the enjoyment of special entitlements or rights given to permanent staff (for example, increased pay and certain protections against dismissal) or to recover damages directly from the client, as there is no contract of employment between them. Their employment is usually regulated by the terms of the agreement with their principal and by the agreement negotiated on their behalf by their principal and the client.

Part-time workers

Part-time workers are not entitled to the same rights and benefits as full-time employees. Remuneration and benefits apply on a pro rata basis to reflect the time actually worked.
An employer cannot justify less favourable treatment for part-time workers, as part-time workers are regarded as employees under the Employee's Compensation Act.

Data protection

16. Are there any requirements protecting employee privacy or personal data? If so, what are an employer's obligations?

Employees' data protection rights

Under section 37 of the 1999 Constitution of Nigeria, the privacy of citizens, their homes, correspondence, telephone conversations and telegraphic communications are guaranteed and protected as a fundamental right. An employee is not required to disclose personal data to the employer where this information is not relevant, reasonable and lawful. An employer cannot disclose an employee's personal data to a third party or use personal or sensitive information in a manner that is adverse to the interest of the employee without the prior consent of the employee, except in circumstances specified by law. Where an employer breaches, or intends to act in breach of those rules, the employee can either:
  • Obtain an injunction restraining the employer from using their personal data.
  • Sue the employer for breach of their right to privacy.

Employers' data protection obligations

An employer must not disclose sensitive information relating to an employee to a third party, or use the information in a manner that is adverse to the interest of the employee, without the prior consent of the employee, except in circumstances specified by law.

Discrimination and harassment

17. What protection do employees have from discrimination or harassment, and on what grounds?

Protection from discrimination

Section 42 of the 1999 Constitution of Nigeria (as amended) prohibits discrimination on the basis of sex, age, ethnic group and political affiliation. There are no specific protections based on gender orientation or identity in Nigeria. However, the African Charter on Human and People's Rights (Ratification and Enforcement) Act 2004 prohibits discrimination against women (Article 18 (3)). This provision may be used to claim protection from discrimination or harassment based on gender orientation or identity.
The protection against discrimination is a fundamental human right that is enforced under the Fundamental Rights Enforcement Procedure Rules 2009. There is no time frame within which human right claims can be enforced. Remedies that can be awarded include:
  • Declaratory relief.
  • Reinstatement.
  • Offer of employment.
  • Apology.
  • Injunction.
  • Damages.

Protection from harassment

There is no law specifically prohibiting harassment.


18. Do whistleblowers have any protection?
There is no law specifically protecting whistleblowers in Nigeria. However, the Central Bank of Nigeria (CBN) issued Guidelines in 2012 (revised in 2014) protecting whistleblowers in the banking sector. However, the CBN Guidelines fall short of offering a robust mechanism to protect whistleblowers.
Claims against a government department or agency are usually subject to a three-month limitation period. Claims based on fundamental human rights are not time barred, and this covers actions against public officers arising from a breach of fundamental human rights. Available remedies include:
  • Monthly payments.
  • Allowances.
  • Reinstatement.
  • Damages.
  • Apology.

Termination of employment

19. What rights do employees have when their employment contract is terminated?
The rights that employees have on termination depend on the nature of the employment. Generally, where employment is wrongfully or unlawfully terminated, an employee is entitled to one or more of the following remedies:
  • Severance payments, if the termination was based on redundancy.
  • Specific performance.
  • Reinstatement.
  • Right to unpaid salaries, debts and gratuities.
  • Damages corresponding to the amount the employee would have earned during the applicable notice period.

Notice periods

Notice periods to be given by employees and employers are as follows:
  • Where the employee has been employed for less than three months, either party can terminate the contract by giving a minimum one-day notice.
  • Where the employee has been employed for three months but less than two years, either party can terminate the contract by giving a minimum one-week notice.
  • Where the employee has been employed for two years but less than five years, either party can terminate the contract by giving a minimum two-week notice.
  • Where the employee has been employed for five years or more, either party can terminate the contract by giving a minimum one-month notice.
A notice of one week or more must be in writing.

Severance payments

Severance pay is often regulated by the contract of employment and sectoral collective agreements. Severance pay is generally calculated based on the worker's length of service and last salary. There is no general statutory severance pay, although the Minister of Labour can enact regulations providing for severance pay to redundant workers.

Procedural requirements for dismissal

An employment relationship that is governed and protected by statute must be terminated in the way and manner prescribed by the relevant statute. Any manner of termination inconsistent with the statute amounts to unlawful dismissal, and will be null and void and of no effect.
Where an employee has a special legal status, for example where a tenure of public office is attached to the contract of employment, the tenure must be completed before the employee can be dismissed.
The terms of a written contract of employment providing for notice of termination, or payment in lieu of notice, must be complied with.
No particular procedure must be followed where an employee's employment has not been confirmed. However, there must be a good cause for termination and reasonable notice must be given to the employee.
When an employee is dismissed on grounds of an allegation of crime, the allegation must first be proved.
An employee who is dismissed on grounds of misconduct must be given an opportunity to defend themselves.
In the oil and gas industries, the dismissal of a management-level employee requires the prior approval of the Department of Petroleum Resources.
Where the appointment of a director is terminated, form CAC 7a must be filed with the Corporate Affairs Commission (Companies and Allied Matters Act).
In the case of wrongful dismissal, the employee is only entitled to damages corresponding to the amount they would have earned during the relevant notice period.
In the case of unlawful dismissal, the dismissal will be declared null and void and of no effect. The employee will be entitled to obtain a court declaration of specific performance or reinstatement if they can prove that they are so entitled.
20. What protection do employees have against dismissal? Are there any specific categories of protected employees?

Protection against dismissal

An employee can be dismissed on any of the following grounds:
  • Allegation of crime.
  • Gross misconduct.
  • Redundancy (see Redundancy/layoff).
  • Breach of conduct.
  • Inability to work or negligence in carrying out responsibilities.
An employee cannot be dismissed in any of the following circumstances:
  • The reason given for the dismissal is unfair.
  • The dismissal amounts to discrimination.
  • The employee is dismissed for:
    • whistleblowing;
    • joining a trade union; or
    • being a part-time employee.

Protected employees

Specific categories of protected employees include:
  • Public servants whose employment is provided for in a statute.
  • Public servants in the civil service.
  • Employees hired under a contract of employment.
  • Workers covered by the Labour Act.


21. How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs? Are there special rules relating to collective redundancies?

Definition of redundancy/layoff

Redundancy means an involuntary and permanent loss of employment caused by an excess of manpower.

Procedural requirements

The employer must inform the relevant trade union or workers' representatives of the reasons for the anticipated redundancy.

Redundancy/layoff pay

The employer must use its best endeavours to negotiate redundancy payments for any discharged workers who are not covered by regulations issued by the Minister of Labour relating to redundancy.

Collective redundancies

Collective redundancy refers to redundancy that affects a particular category of employees rather an individual employee. In the case of collective redundancy, the principle of "last in first out" must be applied when selecting the workers affected by redundancy. However, an employee's merit (including skill, ability and reliability) must also be taken into account.

Employee representation and consultation

22. Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? What does consultation require? Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?

Management representation

Employees are not entitled to management representation. However, unions can approach management to protect their members against victimisation or other forms of arbitrary treatment.


Employers have no statutory obligation to inform or consult employees or their representatives before making business decisions that affect them, unless consultation is specifically required by a collective agreement or the terms of an employment contract.
Consultation requires taking the views of employees into account before decisions are made.

Major transactions

The employer can decide to consult its employees before transferring its business, and where consultation is required under a collective agreement, to ensure a smooth transfer.
23. What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?


The following remedies are available where an employer fails to comply with its consultation duties:
  • Employees can lodge a complaint with management and opt for peaceful renegotiation of the relevant decision.
  • Employees can file for an injunction to restrain the employer from implementing their decision, where consultation is required by the contracts of employment.
  • Where the employer's decision is to dismiss employees, the relevant trade union can seek a protective award before the court within three months of the last dismissal.

Employee action

The employees, through their representatives, can start a strike or lockout action where peaceful negotiations break down.

Consequences of a business transfer

24. Is there any statutory protection of employees on a business transfer?

Automatic transfer of employees

Employees are not automatically transferred with the business. For employees to be transferred, the consent of each employee must be obtained and the transfer must be endorsed by an authorised labour officer.

Protection against dismissal

There is no law protecting employees against dismissal as a result of a business transfer. Employees only have recourse against their previous employer to recover unpaid salaries, redundancy payments and debts owed to them.

Harmonisation of employment terms

When statutory continuity of employment is preserved or the employees are retained on a business transfer, the new employer is not required to issue a new set of terms of employment. The buyer can harmonise the terms of employment of transferred employees with those of existing employees. However, the transferred employees must be notified of the change before the transfer.

Employer and parent company liability

25. Are there any circumstances in which:
  • An employer can be liable for the acts of its employees?
  • A parent company can be liable for the acts of a subsidiary company's employees?

Employer liability

An employer can be liable for the acts of its employees in certain cases. This is known as vicarious liability. The employer will be vicariously liable where its employees incur liability either:
  • In the course of their employment and within the scope of their employment.
  • When carrying out any direction of the employer.

Parent company liability

Parent companies are not traditionally held liable for the debts or acts of their subsidiaries, as they are distinct legal entities. However, a parent company that exerts absolute control over a subsidiary can be liable for the acts of the subsidiary (or of its employees) if the following conditions are met:
  • The parent and subsidiary company share the same business.
  • The parent company knew or should have known that the subsidiary's practices were unsafe.
  • The parent company knew or should have had "superior" knowledge of the dangers of certain practices.
  • The parent company knew or should have foreseen that the subsidiary or its employees would rely on that "superior" knowledge.

Employer insolvency

26. What rights do employees have on the insolvency of their employer? Is there a state fund which guarantees repayment of certain employment debts?

Employee rights on insolvency

Under the Bankruptcy and Insolvency (Repeal and Re-enactment) Act 2016, the employees of a bankrupt or an insolvent employer can recover unpaid wages, salaries and compensation for services rendered due during the six months immediately preceding the bankruptcy or insolvency, subject to a cap of US$4000 per employee. Additionally, a court cannot approve any proposal relating to payments from the insolvent employer's assets unless employees' claims are included in that proposal.

State guarantee fund

The only state fund that guarantees the payment of certain employment debts is the Nigeria Social Insurance Trust Fund. The Nigeria Social Insurance Trust Fund only guarantees the payment of compensation for death, injury, disease or disability arising out of, or that occurred in the course of, employment, and which has been approved by the Fund's management board.

Health and safety obligations

27. What are an employer's obligations regarding the health and safety of its employees?
The Factories Act imposes a wide range of obligations on employers regarding the health, safety and welfare of factory workers, and of workers and professionals exposed to occupational hazards. The Labour Act also imposes responsibilities on employers regarding the health of workers.

Taxation of employment income

28. What is the basis of taxation of employment income for:
  • Foreign nationals working in your jurisdiction?
  • Nationals of your jurisdiction working abroad?

Foreign nationals

Foreign nationals who enter the country under a temporary work permit (that is, a permit granted to expatriates who intend to stay in Nigeria for a period not exceeding three months (see Visa)) and spend less than a cumulative period of 183 days per year in Nigeria are not liable to pay income tax on a pay as you earn (PAYE) basis. This is provided that their salaries are not recharged to the Nigerian employer company. Non-resident foreign nationals must pay withholding tax at rates of 5% to 10% on income received in Nigeria.
However, a foreign national who enters Nigeria under an expatriate quota (see Expatriate quota) and has duly obtained residence permits, which enables them to work in Nigeria, will be liable to PAYE taxes even where they spend less than a total of 183 days per year in Nigeria.

Nationals working abroad

Non-resident nationals who are employees of the Nigerian Government are subject to income tax. Nationals of Nigeria working abroad must pay income tax on their global income.
29. What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?

Rate of taxation on employment income

Employment income is subject to income tax, on a pay as you earn (PAYE) basis, at the following rates (Personal Income Tax Act):
  • First NGN300,000: 7%.
  • Next NGN300,000: 11%.
  • Next NGN500,000: 15%.
  • Next NGN500,000: 19%.
  • Next NGN1.6 million: 21%.
  • Above NGN3.2 million: 24%.

Social security contributions

The social security contributions that are deducted from workers' salaries in Nigeria are as follows:
  • National Housing Fund contribution.
  • National health insurance scheme contribution.
  • Life assurance premium.
  • National pension scheme contribution.
An employer must also pay a 1% social security contribution on its total payroll costs to the Industrial Training Fund and toward the employees' compensation scheme.


30. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded, whether generally or in particular sectors?
In the private sector, it is common to reward employees through either contractual or discretionary bonuses. These bonuses can take any of the following forms:
  • Performance bonus.
  • Overtime bonus.
  • Christmas bonus.
  • 13th month bonus.
  • Sales bonus.
  • Leave allowances.
  • Study allowances.
Persons who work in the public sector are not entitled to bonuses, but only to benefits either for hard work or long-term commitment to public service.

Intellectual property (IP)

31. If employees create IP rights in the course of their employment, who owns the rights?
Generally, whether an employer has exclusive rights to IP created by an employee (including inventions and improvements to existing products) largely depends on whether the employer and employee have entered into an agreement that fully and specifically provides that the employer owns IP created by that employee in the course of the employee's work duties.
Under the Patent and Design Act, where an invention is made in the course of employment or in the execution of a contract for the performance of specified work, the patent is vested in the employer or in the person who commissioned the work, as the case may be. The employer owns the patent rights where an employee creates an invention outside the scope of their employment duties, but using the employer's data or means. An employee who did not use the employer's data and means will own the patent rights over the invention.

Restraint of trade

32. Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

Restriction of activities

It is possible to restrict the activities of employees during employment and after termination. This is usually a condition precedent to the employment and is done with the full knowledge and consent of the employee. Those restrictions are known as employment contract restrictions or restrictive covenants. A restriction can be:
  • Inserted in the contract of employment.
  • Stated orally.
  • Implied.
  • Inserted in the staff handbook.
  • Be part of a code of practice of the organisation.

Post-employment restrictive covenants

After termination, a restrictive covenant usually lasts for a fixed period of time to protect the IP rights of the employer company, and prevent the employee from competing against the company or from taking trade secrets with them on leaving.
An employer is not required to continue to pay former employees while they are subject to post-employment restrictive covenants. However, payment can be required under an agreement between the employer and employee.
Common post-employment restrictive covenants include:
  • Non-competition covenants, which prevent former employees from working in similar employment for a competitor.
  • Non-solicitation covenants, which prevent poaching.
  • Non-dealing covenants, which prevent former employees from dealing with former clients, customers or suppliers.

Relocation of employees

33. Can employers include mobility clauses in employment contracts, or take any other measures, to ensure that employees are obliged to relocate?
There is currently no answer content for this Question, as it was added to the guide after this article was written.

Proposals for reform

34. Are there any proposals to reform employment law in your jurisdiction?
The effort of the Nigerian legislatures in enacting the Bankruptcy and Insolvency (Repeal and Re-enactment) Act 2016 is commendable, as employees are now given preference for the payment of wages, salaries and compensation (see Employer insolvency). Additionally, the Whistleblowers Protection Bill provides specific protections against the victimisation of persons who, in the public interest, disclose information relating to unlawful or other illegal conduct or corrupt practices. The Bill has passed the first and second reading stages, and is now currently before President Buhari for assent. Whether or not the Bill will be passed, and when, cannot be anticipated. However, the passage of the Whistleblowers Protection is of urgent national importance.
Despite this, much remains to be done, for example:
  • The arbitral powers of employers to terminate employees whose employment is not protected by statute need to be curtailed.
  • Collective bargaining agreement should be given the force of law, to be binding on employers and not render the efforts of trade unions nugatory.
  • Female workers should be expressly protected by the Labour Act from sexual harassment.
  • The following International Labour Organization Conventions should be enacted into law by the National Assembly:
    • Discrimination (Employment and Occupation) Convention 1958;
    • Occupational Safety and Health Convention 2006; and
    • Protection of Workers' Claims (Employer's Insolvency) Convention 1992.

Online resources

Nigeria Immigration Service

Description. This is the official website of the Nigeria Immigration Service.

Fisher Phillips Employment Law in Nigeria

Description. This unofficial website provides information on employment law in Nigeria.

Labour Act

Description. This official website provides access to the text of the Labour Act.

Contributor profiles

Ejide Sodipo, Senior Partner

Ejide Sodipo & Co

Professional qualifications. Nigeria, Lawyer
Areas of practice. General commercial law; corporate law.
Non-professional qualifications. LLB, University of London; LLM, University College London; BL, Nigeria
Recent transactions. Handled the unlawful termination of a senior management expatriate employee of Niger-dock PLC (2016).
Languages. English
Professional associations/memberships. Nigerian Bar Association.

Vivian. C. Nwachi, Associate

Ejide Sodipo & Co

Professional qualifications. Nigeria, Lawyer
Areas of practice. Industrial and employment relations; labour law.
Non-professional qualifications. LLB, University of Nigeria, Nsukka; BL, Nigeria
Recent transactions
  • Handled employment and labour claims in court.
  • Advised on employee statutory rights in employment claims.
Languages. English, French
Professional associations/memberships. Nigerian Bar Association.