Nigeria: Overview Of Employment Related Laws In Nigeria

Last Updated: 11 December 2018
Article by Banwo & Ighodalo
  1. Employment Terms1

The principal legislation governing employment issues in Nigeria is the Labour Act, Cap L1 LFN 2004 (the "Labour Act"). Section 91 of the Labour Act defines a "worker," for purposes of the Labour Act, as:

"... any person who has entered into or works under a contract with an employer, whether the contract is for manual labour or clerical work or is expressed or implied or oral or written, and whether it is a contract of service or a contract personally to execute any work or labour ...."

Section 91 of the Labour Act goes further to exclude certain categories of persons from the above definition and, thereby, from the provisions of the Labour Act. For instance, it is pertinent to note the exclusion of "persons exercising administrative, executive, technical or professional functions as public officers or otherwise", from the ambit of the Labour Act.

Terms of employment of such excluded categories of employees are governed by the terms and conditions contained in their respective individual contracts of employment.

With regards to "workers" whose terms of employment are subject to the provisions of the Labour Act, Section 7 thereof provides that the employer must, not later than three (3) months after the commencement of employment, provide workers with a written statement specifying inter alia, the nature of the employment, rates of wages, termination notice, and terms and conditions of service i.e. work hours, holidays etc.

  1. Pensions

The Pension Reform Act 2014 (the "PRA") repealed the Pension Reform Act No. 2 of 2004 and makes provisions for a uniform contributory pension scheme for organizations in both the public and private sectors in Nigeria.

Section 2 of the PRA provides that private sector employers with fifteen (15) or more employees must establish a contributory pension scheme ("Scheme"), for the benefit of their employees, wherefrom retirement benefits would be paid to such employees. However, Section 2(3) of the PRA also provides that, notwithstanding the prescribed mandatory minimum threshold stated above, private sector employers with less than three (3) employees or self-employed persons are also entitled to voluntarily establish Schemes, in accordance with guidelines issued by the National Pension Commission.

The minimum2 rates of contribution are – (1) ten percent (10%) of an employee's monthly emoluments, to be contributed by the employer; and (2) eight percent (8%) of an employee's monthly emolument to be contributed by the employee.

An employer is duty bound to deduct at source, the employee's contribution and within seven (7) days from the date of payment of salary, remit the employee and employer's contributions to the employee's preferred Pension Fund Administrator.

  1. Employees' Compensation for Injuries

The Employees Compensation Act 2010 ("ECA") provides the framework for employee compensation issues in Nigeria. The ECA applies to all workers employed in private and public sector and provides for compensation for injuries sustained in the work place or occupational diseases picked up in the course of employment whether at the usual place of employment or outside it.

The ECA establishes an Employees' Compensation Fund to be administered by the Nigerian Social Insurance Trust Fund Management Board which is the authority responsible for implementing the provisions of the ECA. Employers are obligated to make a minimum contribution to the fund for the compensation of injured employees. The ECA also seeks to provide for the rehabilitation of injured employees, and expands the scope of injury to workers by including for example compensation for mental stress.

Every employer is required to pay a minimum of one percent (1%) of its annual payroll to the Fund in the first two (2) years of the enactment of the ECA. Subsequently, the applicable rate is determined by the Nigerian Social Insurance Trust Fund Management Board.

  1. Industrial Training

The Industrial Training ITF Act, Cap I9, LFN 2004, as amended by the Industrial Training ITF Amendment Act, 2011 (the "ITF Act") establishes the Industrial Training Fund (the "ITF"). The purpose of the ITF is to promote the acquisition of relevant skills in industry or commerce with a view to generating a pool of indigenous manpower to satisfy the needs of the economy. Every employer that is liable under the ITF Act must contribute one (1) percent of the amount of its annual payroll to the ITF. Employers that are liable to make contributions under the ITF are:

  • Employers having five (5) or more employees in their establishment;
  • Employers who have less than five (5) employees but having a turnover of fifty million Naira (N50,000,000) and above per annum;
  • Suppliers, contractors or consultants who bid for contracts from any federal government agency or parastatals or private companies; and
  • Companies operating in the free trade zone which seek expatriate quota approval(s) or make use of any custom services.

In the determination of the contributions to be made to the ITF, all employees including those who work part time and temporary employees are included in the assessment. Further, all the allowances and entitlements paid to such employees within or outside Nigeria are calculated when considering the total payroll of an employer.

The ITF Act further imposes a duty on employers to provide training for their indigenous staff with a view to improving their job related skills. Furthermore, the ITF Act provides that the ITF's Council may make a refund of up to 50% of the amount paid by an employer where it is satisfied that its training program is adequate.

Failure to make contributions within the stipulated period in a calendar year attracts a penalty of five per cent (5%) of the amount unpaid for each month or part of a month after the date on which payments should have been made.

  1. Trade Unionism

Section 1 of the Trade Unions Act, Cap T14 LFN 2004 defines a trade union as:

"any combination of workers or employers, whether temporary or permanent, the purpose of which is to regulate the terms and conditions of employment of workers, whether the combination in question would or would not, apart from this Act, be an unlawful combination by reason of any of its purposes being in restraint of trade, and whether its purposes do or do not include the provision of benefits for its members".

Under Nigerian law, one of the fundamental human rights entrenched in and protected by the Constitution is the right to peaceful assembly and association. Specifically, Section 40 of the Constitution of the Federal Republic of Nigeria provides inter alia that

"every person shall be entitled to assemble freely and associate with other persons, and in particular, he may form or belong to any political party, trade union or any other association for the protection of his interests..."

Nigerian courts have upheld this right to freedom of association by holding that the right to form or join any political party or trade union is exclusively that of the individual citizen and not that of his employer.

Accordingly, every worker or employee in Nigeria has the right to, in conjunction with others form a trade union or join an existing one. The decision whether or not to exercise this right rests solely with such an employee, and he can neither be compelled to form or join a trade union nor can he be prevented by his employers from so doing, at least not overtly.


The Trade Disputes Act makes provisions for the settlement of trade disputes and other matters ancillary thereto.


1 Please note that Organisation which hold oil mining leases, oil prospecting licences, permits (or any interests in the foregoing) issued pursuant to the Petroleum Act or regulations made thereunder or persons registered to provide services in the Nigerian oil & gas industry are also required to comply with the provisions of the Guidelines and Procedure for the Release of Staff in the Nigerian Oil and Gas Industry issued by the Department of Petroleum Resources on March 5, 2015.

2 More than the statutorily prescribed minimum amount may be contributed by either or both the employer and the employee. Indeed, the PRA sets out instances where the employer may agree to make both contributions (i.e. the employer and the employee's contributions) to the Scheme.

The information contained here is based on relevant Nigerian laws, regulations and practices applicable to doing business in Nigeria, as of November 14 2018. This Manual only highlights legal issues, in general, and is not exhaustive. Also it does not, and it is not intended to, constitute legal advice and or opinion. If you have questions or require advice in respect of matters contained herein or any other specific issues, kindly contact us for such advice and we would be happy to assist you on an individual basis and walk with you on your journey to explore the limitless opportunities for investments in Nigeria.

Banwo & Ighodalo does not accept liability for any action (or lack thereof) by you or anyone else as a result of reliance on, or any other use of, information contained herein. For the avoidance of doubt, under no circumstance shall Banwo & Ighodalo be liable for any consequences resulting from reliance on or use of information contained in this Manual.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions