How To Hire And Fire

1 GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

The National Industrial Court of Nigeria (NICN) is the court vested with the exclusive jurisdiction to adjudicate on labour and employment disputes in Nigeria. Appeals from decisions of the NICN lie to the Court of Appeal of Nigeria. Decisions of the Court of Appeal, on any civil matters arising from the NICN, is final, while criminal appeals from decisions of the NICN can be made to the Court of Appeal and up to the Supreme Court of Nigeria. See sections 233, 243(4), and 254(C) of the Constitution of the Federal Republic of Nigeria 1999, as amended (the "Constitution"), and section 7 (1) of the National Industrial Court Act, 2006.

The NICN also has appellate jurisdiction to hear appeals from (a) the decision of the Registrar of Trade Unions, and (b) the decisions or recommendations of any administrative body or commission of enquiry, arising from or connected with employment, labour, trade unions or industrial relations. See section 254C(1)(I) of the Constitution.

Under the National Industrial Court of Nigeria (Civil Procedure) Rules, 2017 (the "NICN Rules") a Judge of the NICN may refer any matter initiated at the NICN to the Alternative Dispute Resolution Centre of the NICN, for amicable settlement through arbitration, conciliation or mediation. In addition, parties to an employment contract may also agree to refer their employment dispute to any alternative dispute resolution mechanism.

Where parties agree to refer their employment dispute to an alternative dispute resolution mechanism, the exclusive jurisdiction of the National Industrial Court of Nigeria is immediately suspended until the outcome of the agreed alternative dispute resolution proceeding. See Lagos State Water Corporation v. Sakamori Construction (Nig.) Ltd. (2013) 12 NWLR (Pt. 1262) 569.

The Main Sources Of Employment Law

The main sources of employment law in Nigeria are:

• the Constitution of the Federal Republic of Nigeria 1999 (as amended) (the "Constitution");
• the Labour Act, 1971 (the "Labour Act");
• National Industrial Court Act, 2006,
• the Federal laws enacted by the National Assembly (Nigeria's national legislative houses) and the State laws enacted by the House of Assembly (the State legislative authority) of each State that relate to labour and employment, pension, and workplace compensation, including the following:
  • Employees' Compensation Act 2010 (ECA).
  • HIV and AIDS (Anti-Discrimination) Act 2014.
  • Immigration Act 2015.
  • Industrial Training Fund (Amendment) Act, 2011 ("ITF Act").
  • National Health Insurance Authority Act, 2022.
  • National Housing Fund Act, 1992 (as amended).
  • Pension Reform Act, 2014 (the "PRA").
  • Trade Disputes Act, 1976.
  • Trade Unions Act, 1973, as amended by the Trade Union (Amendment) Act 2005 (the "TUA").
  • National Minimum Wage (Amendment) Act 2019 (the "NWA").
  • Factories Act, 1987.
  • Finance Act, 2019 (as amended).
  • Personal Income Tax Act, 1993 (as amended) ("PITA").
  • Discrimination against Persons with Disabilities (Prohibition) Act, 2018.
  • Lagos State Special Peoples Law, 2011.
  • Nigerian Oil and Gas Industry Content Development Act, 2010.
  • Nigeria Data Protection Regulation, 2019 ("NDPR").
  • Nigeria Data Protection Act 2023 (the "NDPA").
  • National Youth Service Corps Act, 1993 (the "NYSC Act").
  • Guidelines for the Release of Staff in the Nigerian Oil and Gas Industry, 2019.
  • Business Facilitation (Miscellaneous Provisions) Act 2022.
• Case Laws; and
• International conventions, treaties and protocols relating to labour, employment, workplace, industrial relations or matters connected therewith that have been ratified by Nigeria.

National Law And Employees Working For Foreign Companies

Foreign companies intending to carry on business in Nigeria are required by law to incorporate a separate entity in Nigeria unless the foreign company is granted exemption by the Minister for Trade. Upon registration in Nigeria, the company will be required to comply with the laws mandatorily applicable to employers in Nigeria. For example, every employer of three (3) or more persons in Nigeria, is required under the PRA to contribute a minimum of 10% of each employee's monthly emolument towards the employee's contributory pension.

Except for the mandatory laws, the governing law stipulated in the contract of employment will govern the employment contract. Nigerian tax laws will apply to employees resident in Nigeria even though they are employed by foreign companies who are not registered in Nigeria. See section 3(1) PITA. The NDPR and NDPA will also apply to a foreign company where it processes personal data of a data subject in Nigeria. See section 2(2)(b) and (c) NDPA.

National Law And Employees Of National Companies Working In Another Jurisdiction

Employees of Nigerian companies working in another jurisdiction are not subject to or regulated by Nigerian laws on employment matters and relations, except they agree to be bound by such Nigerian laws in the employment contracts.

Data privacy

Yes. Nigeria has data privacy laws that impact employment practices. The primary laws governing data privacy in Nigeria are the NDPA. In addition, Section 37 of the Constitution guarantees and protects the privacy of citizens, their homes, correspondence, telephone conversations and telegraphic communications. An employee's right to data privacy is protected under the Constitution and the NDPA.

The NDPA prescribes minimum data protection standards for all organisations or persons that control, collect, store or process the personal data of Nigerian citizens. See NDPA, sections 24 and 25. Sensitive personal data of employees can only be processed with the consent of the employee freely granted. See NDPA, section 30. In addition, employers must only collect data that is relevant and necessary for employment-related purposes and shall not use this data for any other purposes without further consent. See NDPA, section 24(1).

There are also statutory provisions governing the cross-border transfers of personal data from Nigeria. Further to these provisions, an employer can only transfer employee data to another country subject to certain conditions; (i) the recipient of such transferred data must be subject to a law in the recipient country that affords an adequate level of protection; (ii) in the absence of such protection, that the employee has consented to such transfer; and (iii) the transfer is necessary for the performance of the employment contract among others. See sections 41 and 43 of the NDPA.

Overall, compliance with the NDPA and any other applicable laws is crucial for employers to ensure they handle employee data responsibly and legally.

2 HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

The Labour Act which applies to clerical or manual workers require that every employer must issue a written contract to the employee within three months of the commencement of the employment relationship. The Labour Act, section 7. The employment contract must stipulate, amongst others, the name and address of the employer and employee, the nature of the employment; the termination process and the applicable remuneration. With respect to employees who are not workers under the Labour Act (professional, administrative or technical work) who are not regulated by the Labour Act, there is no statutory requirement for their employment contracts to be in writing. All the legal requirements or ingredients for an enforceable contract applies to a contract of employment. It is advisable that employment contracts be made in writing for clarity, protection and certainty of the employment terms.

Mandatory Requirements

• Trial Period
  
  There are no mandatory trial periods otherwise known as 'probationary periods' under Nigerian laws. Thus, the concept of trial periods is strictly a matter of contract which must be stipulated in the employee's contract of employment to be effective. The typical trial period is Nigeria is between three (3) to six (6) months.

• Hours Of Work
  
  The Labour Act does not specify working hours, The Labour Act provides that an employee working six hours or more per day is entitled to at least a one-hour rest break. Hours of work can be fixed (a) by mutual agreement usually in the contract of employment; or (b) by collective bargaining within the organization or industry concerned; or (c) by an industrial wages board where there is no machinery for collective bargaining. Anything in excess of the fixed normal working hours, which the employee agrees to be bound by, will generally be considered to be overtime. An employer is entitled to formulate rules on overtime and pay for overtime either by mutual agreement with each employee or via collectively bargaining with all employees within the establishment. There are no statutory provisions on the overtime work limit and overtime pay.

• Special Rules For Part-time Work
  
  There are no special rules or additional protection relating to part-time work. The terms and conditions for part-time are strictly governed by the terms of the contract of employment. Employers are not mandated to provide part-time employees with benefits like, group life insurance policy, transportation, housing, medical insurance.
  
  However, the minimum wage is not applicable to workers in part time employment. See NWA, section 4(1) (a) (i).

• Earnings
  
  The earnings of an employee are dependent on the mutual agreement of parties. The earning structure varies depending on the industry, policies, size, profitability and type of organisation, as well as the position of the employee. The most common earning structures include salaries, performance bonuses and allowances.
  
  All agreements relating to salaries must also be in accordance with the applicable national minimum wage which is N70,000.00 (Seventy Thousand Naira) (approx. USD50) per month. See section 2 of the National Minimum Wage (Amendment) Act 2024.
  
  This minimum wage does not apply to; (a) an establishment in which workers are employed or paid on part-time basis, and (b) an establishment in which workers are employed or paid on commission or piece-rate basis (c) an establishment employing less than twenty-five (25) persons (d) workers in seasonal employment like agriculture and (e) any person employed in a vessel or aircraft to which the laws regulating merchant shipping or civil aviation apply. See section 4 National Minimum Wage Act, 2019.

• Holidays/Rest Periods
  
  HOLIDAYS
  
  Under the Labour Act, every worker is entitled, after twelve (12) months' of continuous service, to annual holiday, with full pay, of at least six (6) working days. Apprentices and other people below the age of sixteen years are entitled to, at least, twelve (12) working days as holiday after twelve (12) months of continuous service. See section 18 (2) of Labour Act. For employees' who are not covered by the Labour Act, holidays will depend on the terms of the contract of employment. The usual practice in Nigeria is 15 to 30 working days of holiday every 12 months of continuous service. In addition to the above, public holidays declared by the government are also observed.
  
  REST PERIODS
  
  The Labour Act stipulates that workers working for six (6) hours or more a day, shall be entitled to one or more 'suitably spaced' rest-intervals not less than one-hour on the aggregate with exceptions only for unforeseen circumstances. See the Labour Act, section 13.
  
  In addition, in every period of seven (7) day, a worker shall have one day of rest which shall not be less than 24 consecutive hours. For employees not captured by the Labour Act, the rest period will be depend on the terms of the contract of employment.

• Minimum/Maximum Age
  
  Broadly, the general minimum age for employment in Nigeria is fifteen (15) years. Children under 15 years are prohibited from being employed in industrial work, which includes mining, manufacturing, and construction. However, children under 15 can be employed by a family member for light work, provided the work is not harmful to the child's health and development. See section 59 of Labour Act.
  
  Retirement age generally differs depending on the sector of employment. However, it generally ranges from the age of 60 to 65 years.The mandatory retirement age in the public sector is generally sixty (60) years or after thirty-five (35) years of service, whichever comes first.
  
  There are exceptions to the above maximum mandatory requirement for certain professions, such as judges and academic staff in universities, where the retirement age might be higher. For instance, the Constitution (Fifth Alteration, No. 37) Act 2023 ("Amendment Act") raised the retirement age of judges of the High Courts of States, Federal High Court, National Industrial Court, Customary Courts of Appeal, and Sharia Courts of Appeal from 65 to 70 years. Also, the Universities Miscellaneous Provisions (Amendment) Act 2012 stipulates that the compulsory retirement age for academic staff in the professorial cadre shall be seventy (70) years while that of non-academic staff shall be sixty-five (65) years.

• Illness/Disability
  
  ILLNESS
  
  Generally, employers are required to ensure that employees are medically examined at the expense of the employer when entering a contract of employment. See section 8 of Labour Act.
  
  Under the Labour Act, a sick employee is entitled to a sick leave and would be entitled to claim twelve (12) working days of paid leave due to temporary illness in a calendar year. See section 16 of Labour Act. The affected employee must, however, furnish the employer with a doctor's report, certified by a registered medical practitioner. Sick leave is fully paid leave and is calculated as the worker's basic wage exclusive of overtime pay and other allowances.
  
  In addition, the ECA specifically addresses compensation for work-related injuries, disabilities, or death, establishing a framework for employer liability in such cases. See sections 7-10 of ECA. Employers must also contribute to the Employee's Compensation Fund, which is used to pay out claims for work-related health issues. See sections 56- 63 of ECA.
  
  For employees who are not covered by the Labour Act, sick leave period will depend on the terms of the contract of employment.
  
  DISABILITY
  
  All forms of discrimination, including discrimination based on sex or disability, whether direct or indirect, are prohibited in Nigeria. In Nigeria, persons with disabilities have dequal opportunity to earn a living through work that they choose. The Constitution prohibits discrimination against Nigerian citizens on the basis of their disability. The Discrimination against Persons with Disabilities (Prohibition) Act 2018 prohibits discrimination against persons with disabilities. The Lagos State Special Peoples Law 2011, which only applies in Lagos State, also prohibits discrimination on the basis of an employee's disability.

• Location Of Work/Mobility
  
  An employee may work remotely, hybrid or on site depending on the terms of the contract of employment. It is usually part of the contract of employment that the employer may require the employee to work at any location that the employer may direct and subject to any conditions. Considering the post-covid era, employers usually include provisions relating to remote working in the contracts of employment.
  
  The Labour Act makes it mandatory for an employer to either provide free transportation or an allowance in lieu where a clerical, manual or unskilled employee is required to travel 16km or more from his or her normal place of work to another worksite. See the Labour Act, section 14.

• Pension Plans
  
  Under Nigerian law, an employer may with the consent of a worker make deductions from the wages of the worker and pay any contributions to provident or pension funds or other schemes agreed to by the worker and approved by the State Authority. See section 5 (2) of the Labour Act.
  
  Pension schemes are regulated in Nigeria by the Pensions Reform Act 2014 ("PRA"). The PRA mandates employers with three or more employees to contribute a minimum of 10% of each employee's monthly emolument towards the employee's contributory pension while a minimum of eight per cent (8%) is contributed by the employee. See section 4(1) (a-b) of PRA. This rate could be revised upwards from time to time upon agreement between any employer and his employee, and the National Pension Commission shall be notified of such revision. Every employee is required to maintain a Retirement Savings Account (RSA) with Pension Fund Administrators (PFA) of his choice. With this, a holder of a RSA shall upon retirement or attaining the age of fifty (50) years, whichever is later, utilize the amount credited to his RSA and enjoy certain benefits. See section 7 of PRA.
  
  Further, it is mandatory for employers to maintain a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee. See section 5 of the PRA.

• Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
  
  PREGNANCY/MATERNITY
  
  A pregnant female worker is entitled to both pre-natal and post-natal time away from work. This Labour Act provides for six weeks of leave before the expected delivery date and another six weeks after the delivery making it a total of twelve weeks. See section 54 (1) (a) (b) of Labour Act. While this is the statutory minimum, the employment contract can provide for a longer period of time. In Lagos State, the duration for maternity leave has been increased from three months to six months with full pay for its public service employees.
  
  The Labour Act further provides that a female worker who has been continuously employed by her employer for a period of six months or more immediately before her maternity leave, shall be entitled to not less than fifty per cent (50%) of the wages the employee would have earned if the employee had not been absent. Further more, where the woman is nursing her baby, she must be permitted half an hour, twice a day during working hours, for that purpose. See section 54 (1) (c) (d) of Labour Act.
  
  For employees who are not covered by the Labour Act, maternity leave period will depend on the terms of the contract of employment.
  
  PATERNITY RIGHTS
  
  There is currently no legislation that provides for paternity leave in Nigeria. Thus, an employee is entitled to paternity leave to the extent permitted in his contract of employment.
  
  The Federal Government of Nigeria has however approved a 14-day paternity leave for male employees in the Federal Civil Service. Also, some states in Nigeria have adopted proactive policies which provide for paternity leave for employees. The Lagos State Government granted a 10 working days paternity leave to civil servants for the birth of their first two children. The Enugu State Government in Nigeria grants a 3-week paternity leave to civil servants.
  
  ADOPTION
  
  The Labour Act does not provide for rights of employees following adoption. Employees' entitlement in this respect will be depend on the terms and conditions of such employee's contract of employment. It is not unusual to have maternity and paternity leave provisions apply in case of adoption.

• Compulsory Terms
  
  Section 7 of the Labour Act sets out minimum terms and conditions of employment that employers must comply with. Therefore, an employer must furnish the employee with a written statement or contract not later than three months from the commencement date of employment containing the following compulsory terms:

• Non-Compulsory Terms
  
  In Nigeria, parties to an employment contract can include terms in the contract which are not mandated under the statute provided that these are not unfavorable, illegal or contrary to existing law.
  
  These terms can include remote working conditions, relocation assistance, bonuses and other incentives among others.

Types Of Agreement

Parties to an employment contract are principally regulated by any agreements freely entered into. This agreement may either be oral or written by the parties and it may be for full-time, part-time, apprenticeship, or any other employment structure parties may so decide to be bound by. There are also implied terms in contracts of employment such the employer's duty to provide work to employees and to provide a safe place of work.

Secrecy/Confidentiality

Yes. The common practice amongst employers is to insert a non-disclosure clause and/or restrictive covenants in the employment contract or require the employee to execute a letter of undertaking not to disclose confidential information. Similarly, there is an implied obligation on employees working for an employer who has trade secrets, not to disclose the employer's trade secrets.

Generally, Nigerian courts relying on common practice are reluctant to enforce restrictive covenant provisions unless such term is shown to be reasonable in the circumstance. However, the Federal Competition and Consumer Protection Act, 2018 (the "FCCPA") now allows for restrictive covenants against trade for not more than 2 years. Any restrictive covenant provision over two years will likely be deemed unfair and unenforceable by the courts.

Ownership of Inventions/Other Intellectual Property (IP) Rights

Intellectual Property Rights under Nigerian law ordinarily vests in the creator or inventor of such work in the first instance. For example, section 2(4) of the Patent and Designs Act states that, where an invention is made in the course of employment or in the execution of a contract for the performance of specified work, the right to a patent in the invention is vested in the employer or, as the case may be, in the person who commissioned the work. It is usual in Nigeria to have provisions in the employment contracts specifically vesting the intellectual property rights made in the course of employment in the employer.

Pre-Employment Considerations

Employment relations are purely contractual and dependent largely on the terms agreed by the parties. There are no restrictions or prohibitions against pre-employment checks; however, an employer that intends to carry out such checks must ensure that it does so in a manner that does not breach the employee's constitutional right to privacy or be considered as discriminatory. In practice, the employer will usually obtain the consent of the prospective employee before carrying out such background checks. Other notable pre-employment considerations include (a) background checks (to verify experience, employment records, criminal records, among others); (b) verification of certifications and qualifications; (c) health status of employee especially for employees in the health or food industry; (d) reference and release from previous place of work; (e) capacity of prospective employees to contract; among others.

Hiring Non-Nationals

Yes, there are rules regulating the employment of non-Nigerians to physically work in Nigeria. At the point of entry, non-Nigerians are required to obtain a visa which would legally permit them entry to Nigeria for a period. See section 18 of the Immigration Act, 2015. The specification of the visa to be obtained varies on the purposes and the length of time the non-Nigerian wishes to stay in Nigeria. See Regulations 4,5,6 of the Nigeria Immigration Regulations, 2017.

Every company that seeks to employ a foreign worker for more than six (6) months must apply for the grant of an expatriate quota, renewable yearly. Every foreign national intending to work in Nigeria must have the valid working and residence permits, called the Combined Expatriate Residence Permit and Aliens Card ("CEPRAC"). The company seeking to employ the expatriate applies for the expatriate quota and CERPAC. Expatriate quota is issued in the name of the company that is employing. The company assumes the immigration responsibility on behalf of the employee. This enables a non-Nigerian to be legally employed and resident in Nigeria during his/her period of employment. See sections 36 and 38 of the Immigration Act, 2015. Employers of non-Nigerians are also required to obtain an expatriate employment levy card on behalf of such non-Nigerian employee.

Where a company intends to employ a foreigner for less than six (6) months period, the company can obtain a temporary work permit issued by the Ministry of Interiors.

Hiring Specified Categories Of Individuals

Yes. There are provisions of law under the Labour Act and the Nigerian Constitution that prohibit discrimination of all forms in employment. More specifically, the Discrimination against Persons with Disabilities (Prohibition) Act, 2018 guarantees the right of a disabled person to work on equal basis with an abled person. Employers of labour in public organisations are statutorily required to ensure that persons with disabilities constitute at least 5% of their employment. See sections 28 and 29 of the Discrimination against Persons with Disabilities (Prohibition) Act, 2018.

However, there are no legal requirements under Nigerian law that give preference to hiring particular groups of people. However, for federal employment and appointments the principle of "federal character" must be applied to ensure that appointments to public service institutions (exclusively) fairly reflect the linguistic, ethnic, religious and geographical diversity of the country. For some professional and specialized role, special qualifications and certification may be required to practice the profession in Nigeria. For example, certification by the professional regulatory body in Nigeria is required to practice professions such as law, medicine and engineering in Nigeria.

Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Outsourcing, subcontracting and temporary work arrangements are not unusual in Nigeria. There are agencies who provide such services in Nigeria. However, there is no legislation that deals with such services in Nigeria. As such, outsourcing, subcontracting and temporary work services will depend on the terms of the contract governing such engagement. Where the terms are unreasonable, the courts in Nigeria will set aside such terms of the contract and will apply best industry practices.

3 MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

The terms and conditions of the employment contract can be varied and modified by the mutual consent of the employer and employee. The significant alterations must be documented in writing. The changes must comply with the terms of the contract, and with laid down statutory and regulatory requirements, if any.

Change In Ownership Of The Business

Upon change of ownership of business, employees do not transfer automatically to the new owner. The consent of each employee is required to transfer from one employer to another. The employment contracts will have to be novated to the buyer. The buyer may also elect to engage the services of the employees directly, in which case the contracts of employment between the seller and the employees are terminated, and the buyer, thereafter, enters into new contracts with the employees. Where the employee is regulated under the Labour Act, the contract pursuant to which the worker is transferred to the new employer must be endorsed by an authorised labour officer.

In relation to a share sale, other than the changes to the beneficial ownership of the shares of the employer, the employer remains the same. There is, therefore, no requirement to transfer the employees or to obtain their consent to the share acquisition unless the contract provides for such.

Social Security Contributions

The social security contributions/remittances currently in place in Nigeria include:

Contributions to the Pension Fund - Every employer of three (3) or more persons is required under the PRA to contribute monthly on behalf of the employee to the pension fund. The employer is to make a minimum contribution of 10% and the employee a minimum of 8% of the monthly emoluments of the employee as pension contribution.

Contributions to the National Housing Fund – Every employer who has in its employment an employee earning a basic salary of NGN3,000 (Three Thousand Naira) (approx. USD2) and above per annum is required to deduct 2.5% of the employees' monthly emolument for contribution to the National Housing Fund ("NHF"). The deduction is to be remitted to the NHF within one month from the date of the deduction.

Contributions to the National Health Insurance Scheme – Any employer having at least ten (10) employees may jointly with each of its employee make contributions to the National Health Insurance Scheme. Contributions under the scheme are to be paid at rates determined by the council in charge of the scheme. For the Public (federal) sector, the employer will pay 3.25% while the employee pays 1.75% of the employee's total emolument. For other tiers of government and organized private sector, the employer will contribute ten percent (10%) of the employee's basic salary while the employee contributes five percent (5%). However, the employer may contribute the entire fifteen percent (15%) or make additional contributions above the 10% to cover the health benefit. It is usual in Nigeria to have the employer take on the entire contribution.

Contributions to the Industrial Training Fund- Any employer having five (5) or more employees or having less than 5 employees but with a turnover of NGN50,000,000 (Fifty Million Naira) (approx. USD33,333) or more annually shall contribute 1% of the annual payroll to the Industrial Training Fund. An employer is further required to train its Nigerian employees to be eligible for a 50% refund of its contributed amount.

Contribution to the Employee Compensation Fund- By the Employees' Compensation Act 2010 ("ECA"), every employer is required to make a monthly minimum contribution of 1% of the employees' monthly payroll to the Employee Compensation Fund. The fund is to provide definite and adequate compensation for workers or their dependents in the event of death, injury, disease or disability arising out of, or during, employment.

Accidents At Work

The ECA provides compensation for employees who sustain injuries or disabilities because of an accident, or contract an occupational disease, in the course of employment, whether at their usual place of work or elsewhere. Accidents include those sustained on the way between the place of work and the employee's home or the place where the employee usually takes meals or receives remuneration.

To make a claim for compensation under the ECA, the employee in the case of an injury, or the dependent, in the case of a death of the employee, should within 14 days of the accident or from the time the occurrence is discovered should report to the employer and make such report providing all the details required. The ECA then requires the employer to make a further report, within 7 days of receiving the report to the Nigeria Social Insurance Trust Fund Management Board.

Discipline And Grievance

Generally, the procedure for disciplining employees and stating grievances is determined by the contract of employment or the employee handbook. These rules and procedures must comply with the principles of natural justice and fair hearing.

Harassment/Discrimination/Equal pay

All forms of discrimination, including discrimination based on sex or disability, whether direct or indirect, are prohibited. There are legislations prohibiting all forms of discrimination and harassment in the course of employment. For instance, section 42 of the Constitution generally prohibit discrimination of Nigerian citizens. In addition, section 17(3)(e) of the Nigerian Constitution provides that the state shall direct its policy to ensure that there is equal pay for equal work without discrimination on account of sex or any other grounds whatsoever.

The HIV and Aids (Anti-Discrimination) Act 2014 further prohibits discrimination of employees by employers based on real or perceived HIV status or HIV-related illness. The Discrimination Against Persons with Disability (Prohibition) Act 2018 prohibits discrimination against persons with disabilities. The Lagos State Special Peoples Law 2011, which only applies in Lagos State, also prohibits discrimination on the basis of an employee's disability.

Nigeria has also ratified the Violence and Harassment Convention, 2019 ("ILO Convention No. 190"), which recognises the right of every person to a world of work free from violence and harassment, including gender-based violence and harassment.

Compulsory Training Obligations

The ITF Act imposes an obligation on employers who pay an annual training levy to provide adequate training for their indigenous staff with a view to improving on the skills related to their job and evidence of such training is required to be forwarded to the Governing Council. Such employers are also expected to accept students for industrial attachment purposes.

Offsetting Earnings

There are no laid down rules for offsetting employee's earnings in Nigeria. By mutual agreement, parties are guided by the terms and conditions stipulated in the employment contract and the employee handbook.

Payments For Maternity And Disability Leave

Section 54(c) of the Labour Act provides that a female worker who has been employed for a period of six months or more immediately preceding her maternity leave is entitled to receive at least 50% of her salary for the duration of the maternity leave. There are no stricto senso disability leave provisions and payment made there to under the Nigerian labour law statutes. Workers are however, entitled to up to twelve working days of paid sick leave in a year. Section 16 of the Labour Act.

For employees who are not covered by the Labour Act, terms and payment for maternity leave and disability leave will depend on the terms of their contract of employment.

Compulsory Insurance

Under Nigerian law, employers with a workforce of five or more individuals are mandated to secure a group life insurance policy for the employees.

This policy ensures financial protection for employees or their beneficiaries in the event of disability or death occurring during their employment. Also, the National Health Insurance Act 2022 (NHIA) obliges all residents of Nigeria to obtain health insurance. Organizations with five or more employees in both the public and private sectors are required to facilitate the acquisition of health insurance for their employees. See section 14 of the NHIA Act.

Absence For Military Or Public Service Duties

In Nigeria, rules regarding absence for military service are primarily governed by specific military service regulations. Graduates under 30 years are required to undertake mandatory one (1) National Youth Service Programme ("NYSC"). Graduates over 30 years are granted exemption from NYSC. It is illegal to employ a graduate who did not undertake the mandatory NYSC or obtain a valid waiver for same. NYSC Act, sections 12 and 13. Employers are required to grant leave for the mandatory one-year National Youth Service Corps (NYSC) program for Nigerian graduates under 30.

Works Councils or Trade Unions

The Trade Unions Act, 1973 (as amended) (the "TUA") regulates trade union activities and operations in Nigeria. There is no concept of work councils under Nigerian law,

Employees' Right To Strike

There is no positive constitutional or statutory provision guaranteeing the right to strike in Nigeria. Section 40 of the Constitution merely provides that every person shall be entitled to assemble freely and associate with other persons, and in particular, form or belong to any political party, trade union or any other association for the protection of his interests. The right to strike in Nigeria stems from the immunities granted to workers and trade unions against civil and criminal liabilities for engaging in industrial action.

Hence, the procedure for going on a strike is recognised under the TUA.

Employees On Strike

The TUA prohibits trade unions from carrying out a strike or lock-out, or engaging in any conduct in contemplation or furtherance of a strike or lock-out, unless:

• the trade union is not engaged in the provision of essential services;
• the strike or lock-out is in relation to a labour dispute that constitutes a dispute of right;
• the strike or lock-out concerns a dispute arising from a collective and fundamental breach of contract of employment or collective agreement on the part of an employee, the trade union or an employer;
• the provisions for arbitration in the TUA have first been complied with; and
• a simple majority of all registered members voted to go on strike.

Employers' Responsibility For Actions Of Their Employees

Generally, there is a master-servant relationship between employer and employee in Nigeria. Employers are vicariously liable and responsible for actions of their employees performed within the scope of their employment.

4 FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

Generally, there is a master-servant relationship between employer and employee in Nigeria. Employers are vicariously liable and responsible for actions of their employees performed within the scope of their employment.

The party terminating the contract of employment must comply with the procedure contained in the employment contract. The party terminating must provide the employee with the required notice period (or payment in lieu of notice), where the contract provides for it. For workers covered under the Labour Act, the required notice period is as follows: one day where the contract has continued for a period of 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, and one month, where the contract had continued for five years or more. Under the Labour act, any notice for a period of one week or more must be in writing.

Instant Dismissal

The employer can terminate an employment contract through instant dismissal—without notice—if the employee is guilty of gross misconduct, gross incompetence, or has committed a fundamental breach of contract. However, even in these instances, the employer must show that the allegation was disclosed to the employee who was given a right to fair hearing to avoid liability for unfair dismissal. See Imasa v. Odey (2013) LPELR-21402 and UBA Plc. v. Oranuba (2013) LPELR -20692(CA). Also, all earnings of an employee before the dismissal must be paid by the employer to the employee.

Employee's Resignation

The agreement can be terminated by resignation of the employee following the notice period contained in the agreement.

Termination On Notice

The required notice must be given in accordance with the provisions of the employee's contract of employment and any applicable severance payments, and accrued benefits enumerated in the relevant employment agreement and any other applicable employment-related document such as the employee handbook, must be paid to the employee.

Termination By Reason Of The Employee's Age

Although the constitution protects citizens against the right to discrimination, there are no specific laws directed at age discrimination against employees in Nigeria. However, the contract or specific statutes may specify the age for resignation or retirement of the employee.

Automatic Termination In Cases Of Force Majeure

Where the frustration of contract is established, the contract will be deemed discharged and brought to an end automatically by operation of law, irrespective of the wishes of the parties.

Collective Dismissals

Where there is collective dismissal of employees on the grounds of economic, technological, structural or similar reasons, otherwise known as redundancy, an employee is entitled to the certain payments at the termination of his/her employment, such as:

• agreed redundancy or severance payment;
• salary in lieu of contractual notice;
• accrued salary up until the effective termination date;
• monetary value of any accrued but unutilised annual leave entitlement as at the effective termination date;
• any accrued but unpaid incentives awards or bonuses (if applicable);
• any other payments due to any of the employees, under any of the company's employment and operational policies, such as redundancy or gratuity payments; and
• reimbursement of any out-of-pocket expense incurred by any employee in connection with the performance of his/her duties prior to the effective termination date.

The applicable payment will depend on the terms of the employment contract.

Termination By Parties' Agreement

Parties, by mutual consent, must comply with the procedure for termination contained in the contract of employment. Where it is agreed between the employer and the employee (whether or not in a contract of employment) that the employment is for a fixed term, the contract will terminate automatically at the expiration of such period in the absence of any extension of the employment.

Parties to a contract of employment can include in the contract of employment that the contract may be terminated when some conditions are met. For instance, the contract may be stipulated to come to an end once it has been performed or on some other mutual conditions agreed upon by the parties.

Directors Or Other Senior Officers

A director of a company may be removed either according to the procedure set out for removal of a Director in the articles and association of the company or by ordinary resolution of the members of the company at a general meeting. (Companies and Allied Matters Act, 2020 ("CAMA"), section 288(1)).

The company shall issue a Special Notice not less than 28 days before the meeting for the removal of a Director and shall send a copy of the notice to the affected director, inviting the Director to make a written representation to the Board of Directors, or a verbal representation at the meeting where the resolution for their removal will be passed (CAMA, section 288(2)). The Director is entitled to submit a written representation detailing their defence to the company secretary, which will be forwarded to the shareholders and read out at the meeting. (CAMA, section 288(3)). After the representation has been read out to the members, they would vote to pass an ordinary resolution to remove the director.

Upon removal, the company must file with removal of the Director at the Corporate Affairs Commission ("CAC"), Nigeria's companies registry and make consequential amendment to the statutory records of the company. (CAMA, section 304).

The termination of office of other senior officers will be subject to the provisions set out in the employment contract between the senior officer and the company. For executive directors, removal as Director will be in accordance with CAMA while the executive role will be terminated in accordance with the contract of employment.

Special Rules For Categories Of Employee

There are no specific regulations for formal employment in Nigeria, except the Labour Act which applies to unskilled workers doing manual labour or clerical work. (Labour Act, section 91). There are also no rules relating to part time work except that the minimum wage does into apply to part time workers. Skilled workers (technical and professional employees) are regulated by their contract of employment. Some sector specific regulations may apply to employees in particular sectors. For instance, employers in the oil and gas sector are required to comply with the regulation issued by the regulator on disengagement of staff. There are also regulations on employment and disengagement of employees in the Nigeria Banking sector, among others.

Specific Rules For Companies in Financial Difficulties

Corporate insolvency is regulated by the CAMA. A company is deemed insolvent where it is unable to pay its debts. Specifically, a company is considered unable to pay its debts in the following circumstances: (a) when a creditor to whom the company owes a sum to be determined by the CAC, then due, has served a demand letter for the debt and the company fails to make payment within three (3) weeks of receiving the demand (amended by the Business Facilitation (Miscellaneous Provisions) Act, 2023, pt. 1, section 19 to the Schedule); (b) when a creditor has obtained a court order or judgement, and the company has failed to satisfy the order in whole or part; and (c) when the Court, after taking into account any contingent or prospective liability of the company, is satisfied that the company is unable to pay its debts. (CAMA, section 572).

Restricting Future Activities

Non-competition, non-solicitation of customers and non-solicitation of employees are the more common forms of restrictive covenants in Nigeria. Generally, Nigerian courts are reluctant to enforce restrictive covenants in employment contracts unless the restriction is reasonable and justifiable in the circumstance. However, the Federal Competition and Consumer Protection Act 2018 (the FCCPA), allows for post-employment restrictive covenants of up to two years. Given that the FCCPA has provided for the maximum duration of a restrictive covenant, restrictive covenants for period over 2 years will likely be considered unreasonable and unenforceable. In addition, the NICN will consider the reasonableness of the scope and the terms of the restraint and whether the employer has a proprietary interest that it seeks to protect. Where the NICN finds the length of such restrictive covenants to be excessive or the geographic scope to be too wide, it will void such clause and hold same as unenforceable.

Whistleblower Laws

There is no comprehensive legislation on whistleblowing requirements. There are however, sector-specific legislation on this issue. Under the Whistleblowing Guidelines for Pensions 2008 (the "Pencom Guidelines"), pension fund administrators and pension fund custodians are prohibited from victimising any employee that blows the whistle. If they do victimise the employee, the Pencom Guidelines would employ appropriate regulatory tools to offer redress to the affected employee. Some of the protections offered to employees under the Pencom Guidelines include prohibition from dismissal, suspension or termination of the employee's appointment, or the demotion or redeployment of the whistleblower, without the prior consent of the Pencom.

The Central Bank of Nigeria's Guidelines for Whistleblowing for banks and other financial institutions in Nigeria 2014 (the "CBN Guidelines") offer protection to whistleblowers who disclose concerns, provided the disclosure is made (a) in the reasonable belief that it is intended to show malpractice or impropriety, and (b) to an appropriate person or authority. The CBN Guidelines require banks and other financial institutions ("OFIs") to treat all whistleblowing disclosures in a confidential manner and to keep the whistleblower's identity confidential.

Special Rules For Garden Leave

The concept of Garden Leave is not recognised under the Labour Act or any other extant regulation in Nigeria. The extent of their use is determined, not by law, but by the terms of the agreement negotiated between the employer and the employee.

Severance Payments

Severance pay is usually determined by the employment contract and in practice, is calculated based on length of service, position, age, and final salary of the employee.

Special Tax Provisions And Severance Payments

Severance pay is usually determined by the employment contract and in practice, is calculated based on length of service, position, age, and final salary of the employee.

Any compensation accruing to an employee from loss of employment is exempted from personal income tax. In addition, capital gains tax of 10% is imposed on any capital sum derived by way of compensation for any loss of employment (Capital Gains Tax Act, section 6).

Allowances Payable To Employees After Termination

Allowances payable on termination will depend on the terms of the employment contract. Ordinarily, the employee is only entitled to all earned allowance and bonuses for the time they have worked, prior to the termination. Employees do not have to be provided with financial compensation to comply with post-termination restrictive covenants. The employer may, however, agree to provide financial compensation in return for the employee's agreement to be bound by the covenants. Nigerian courts are also more likely to uphold the covenants against the employee if the employee receives compensation in exchange for his/her consent to be bound by the covenants.

Time Limits For Claims Following Termination

Generally, actions founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued. Section 8 (1)(a) of the Limitation Law of Lagos State, 2015. However, the NICN Lagos Judicial Division in Suit No. NICN/LA/270/2022 – Ndidiamaka Umeh v. United Bank for Africa (Judgment delivered by Honourable Justice S.A. Yelwa on April 29, 2024) excluded the application of statute of limitations to disputes arising from employment relations and further held that statutes providing for limitation of actions are no longer applicable to contracts of service.

5 GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

None, except as mentioned above.

Originally published by Multilaw.

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.