TerraLex Cross-Border Guide to Cross-Border Labor & Employment Guidance

Employers and employees’ rights and interests have been guaranteed over time by a body of laws and regulations. The enactment of various statutes and the pronouncement of judgements in Nigeria undoubtedly have contributed a great deal to the jurisprudence of labour and employment law in Nigeria.

Some of the laws that have contributed to the protection of employment rights include Labour Act Chapter L1, LFN, 2004; Employees Compensation Act 2010; Trade Union Act Chapter T14, LFN, 2004; Trade Dispute Act, Chapter T8, LFN, 2004; National Industrial Court Act, 2006; Pension Reform Act 2014; and the Constitution of the Federal Republic of Nigeria cap C23, 1999.

In Nigeria, employment generally can be classified under three categories: employment governed by statute; employment by written contract; and employment at will.

Nigeria’s immigration regulations allow employers to hire foreign nationals when the required skills are unavailable locally. The Nigerian Immigration Act Cap 17, LFN, 2004, provides that any foreigner seeking employment or a work permit in Nigeria must obtain the consent of the Comptroller General of Immigration in the form of an Expatriate Quota (EQ), which allows the hiring company to employ a permitted number of foreigners with required skills, with a view toward training understudying Nigerians and transferring the requisite skills during the employment period.

Also, the immigration regulations require a foreigner to obtain the Combined Expatriates Residence Permit and Aliens Card (CERPAC). CERPAC allows a foreigner to reside in Nigeria and carry out an approved activity as specified in the permit or to accompany a resident of Nigeria as a dependent. The CERPAC application must have been preceded by an EQ approval from the hiring company. The CERPAC is valid for two years, after which time, a revalidation/renewal application must be submitted. Unlike the EQ, which is issued to a hiring company, CERPAC is issued directly to a foreigner.

In Nigeria, the Labour Act mandates that an employer must make employment terms available to an employee no later than three months after employment commences. Some details and terms that must be contained in an employment contract include the employer’s name and address, the nature of the employment, method of terminating the contract, rates and method of payment of wages, work hours (per day and week, including and excluding overtime), holidays and holiday pay, sick leave and other terms that employers may deem appropriate.

In Nigeria, wages are due to employees at the end of each period that the employment contract specifies, e.g., end of the day, end of the month, end of the year or any payment schedule to which both parties agreed.

However, when the employment period is more than one month, the wages shall become due and payable at intervals not exceeding one month.

The minimum wage in Nigeria is set at N30,000 per month, as prescribed by the National Minimum Wage Act of 2019; however, wages are dependent largely on the agreement reached by the employer and the employee.

In Nigeria, the Labour Act is silent on collective agreements’ enforceability, but the courts have ruled, at different times, that a collective agreement will be enforceable in Nigeria wherever the agreement’s terms are incorporated into employees’ individual employment contracts.

In Nigeria, employees’ pension and benefits are regulated largely under the Pension Reform Act of 2014, which provides for the following benefits to employees: monthly pension payment at retirement; employee disengagement (before reaching retirement age); benefits; employee disengagement under medical grounds benefits; and death benefits. In addition, the act also provides for foreigners enrolled under the Contributory Pension Scheme who want to relocate to their home country access the entire balance in their Retirement Savings Accounts upon fulfillment of some documentation requirements.

The act mandates that the employer and employee contribute to the employee’s retirement benefit. The employer must contribute 10 percent in relation to the monthly emoluments of the employee, and the employee shall contribute 8 percent in relation to the monthly emoluments of the employee.

Under Section 40 of the 1999 Constitution of the Federal Republic of Nigeria, employees in Nigeria are at liberty to form or belong to an association or trade union.

The Trade Unions Act mandates that a trade union must be registered before it can function legally or become operational. An application to register a trade union can be made, in the case of employees, but at least 50 employees must sign the trade union’s application form.

Under the Labour Act, the number of hours of work in any undertaking shall be fixed either by mutual agreement between an employer and employee or by collective bargaining within the industry. Whenever an employee works for a period of six hours or more in a day, the employer must ensure that such an employee is provided with one or more suitable rest intervals of not less than one hour.

Furthermore, every employee who has worked for an employer continuously for 12 months shall be entitled to a holiday of at least six working days with full pay.

Under the Nigerian Labour Law, an employer may dismiss an employee for cause, but proper procedures must be followed to determine the dismissal’s validity. Prior to the dismissal, the employee must have been offered the opportunity to defend himself or herself before a tribunal. A dismissal without cause would function as a termination.

The Nigerian Labour Law provides for redundancy in the following circumstances: acquisition of a company; restructuring; and technical or economic reasons. Section 20 of the Labour Act provides that in the event of redundancy, the employer shall inform the trade union or workers' representative concerning the reasons for and extent of the anticipated redundancy. The principle of ‘last in, first out’ shall be adopted in the discharge of the particular category of workers affected, subject to all factors of relative merit – including skill, ability and reliability – and the employer shall use his best endeavours to negotiate redundancy payments to any discharged workers who are not protected by regulations.

The act also empowers the Minister for Employment, Labour and Productivity to make regulations regarding the payment of redundancy allowances for affected employees.

In Nigeria, when a business is sold, the employees of the selling business do not automatically become employees of the buyer. When a company’s assets are sold to another, before there can be a transfer of employees, each must consent to the transfer. Section 10 of the Labour Act provides that before this transfer can take place, a labour officer must verify that employees’ consent was obtained wilfully. However, if any employees refuse and do not agree to the transfer, they would need to be retrenched and replaced.

Such employees may only have recourse against their previous employer to recover unpaid salaries, redundancy payments, and debts owed to them.

Under Section 254 of the Nigerian Constitution, the National Industrial Court of Nigeria (NICN) has exclusive jurisdiction over employment disputes, subject to certain conditions that may arise depending on the peculiarity of each case (an arbitration clause). Any matter instituted at the NICN may be referred to the Alternative Dispute Resolution Centre for mediation or conciliation by a judge, and when the parties cannot settle amicably, the NICN will continue to hear the case

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Section 59 of the Labour Act expressly prohibits the employment of children under age 12 in any capacity except in family enterprises such as agriculture, horticulture and domestic work, or any light work that will not injure his/her physical development or health, or that may be immoral.

The minimum age for employment in industrial sectors is 15 years, which does not apply to work done by young people in technical schools or similar institutions if the work is approved and supervised by the relevant government department (Ministry of Education).

A young person under 14 may be employed only on a day-to-day basis for daily wages, provided he or she returns each day to his or her place of residence. A young person under 16 is prohibited from working underground or at machinery jobs, on public holidays, longer than four consecutive hours or more than eight working hours in a day, except in domestic services.

The Constitution of the Federal Republic of Nigeria 1999 and other laws expressly prohibit discrimination of all forms directly or indirectly against employees on the basis of race, sex, gender, religion, circumstances of birth, ethnicity, or political opinion.

An aggrieved employee who has been discriminated against in the course of his employment may seek redress from the National Industrial Court of Nigeria, which has exclusive jurisdiction over labour-related matters.

No national law governs outsourcing in Nigeria, but sector-specific guidelines and rules govern this process when it occurs. Direct outsourcing is the most common legal structure of outsourcing in Nigeria, in which the client engages the contractor under a service agreement. The procurement process is usually done through tender.

These are protected under labour laws (i.e., Labour Act of 2004 and Employees Compensation Act of 2010).