Labour Law: Employment Laws, Contracts, And Termination In Nigeria

Before hiring a talent into your workforce or signing an employment contract, the employer and employee need to first acquaint themselves with Nigeria’s employment laws, which help foster transparency and provide legal protection for both parties.

 

It is essential to understand the legal procedures associated with employment contracts and terminations, so both parties can take the proper steps if needed. This  law article aims to educate employers and employees on employment laws, contracts, and the termination process. Let’s get started.

Employment Laws

Employment law regulates the employer-employee relationship in Nigeria. Below are the primary regulatory employment laws in Nigeria;

 

  1. The Labour Act, Cap L1 LFN 2004, is the principal legislation that oversees the employment of workers in Nigeria. It covers terms of employment, leave entitlement, payment of wages, contract details, etc.

 

  1. The Constitution of the Federal Republic of Nigeria, 1999 (as amended), guarantees certain rights to workers, including freedom from discrimination and the right to dignity.

 

  1. Trade Unions Act, Pensions Reform Act, Employee Compensation Act, and other sector-specific laws, which collectively address collective bargaining, retirement benefits, workplace safety, and more.

 

It is essential to note that Nigerian law categorises employees into two distinct categories. We have;

 

Workers: They are employees who are either clerks or perform manual labour, and the Labour Act governs their employment.

 

Non-Workers: These are employees who perform administrative, executive, technical, or professional roles, and individual contracts and general law typically govern their employment.

Employment Contracts

An employment contract is a legally binding agreement that outlines the terms of employment between an employer and an employee. It may be written or oral; either way, it is acknowledged by the Labour Act.

 

In fact, Section 7 of the Labour Act mandates employers to provide a written contract to their workers within three months of commencing work. Therefore, an employee can request it if it is not provided within three months.

 

A valid employment contract usually contains the following;

 

  • Names of parties and the organisation.
  • Job title and description.
  • Commencement date and duration.
  • Working hours and place of work.
  • Remuneration and benefits.
  • Leave entitlements.
  • Termination procedures.
  • Dispute resolution techniques

Types of Employment Contracts In Nigeria

There are two major types of employment contracts under the Nigerian law. I will briefly explain each contract type.

1. Contract of Service

The contract of service pertains to a direct employer-employee relationship, where the employer is responsible for supervising and providing work tools and a conducive working environment. Employees under this contract are entitled to statutory benefits, such as leave, safety, and pension, among others.

2. Contract for Service

This contract pertains to independent contractors or consultants hired for specific tasks and projects. They are not entitled to the same benefits as employees, but work under agreed-upon terms until the service is completed.

Termination of An Employment

There are different ways in which employment can be terminated in Nigeria. It can be achieved through retirement, dismissal, resignation, redundancy, or mutual agreement.

1. Retirement

Retirement marks the formal end of an employee’s career. It can occur voluntarily, mandatorily, or contractually, depending on how it is implemented in the workplace, as well as the terms agreed upon between the parties.

2. Dismissal

Dismissal is the termination of employment without prior notice due to negligence, theft, dishonesty, or other forms of misconduct. Dismissal doesn’t just happen; it must be justified and follow due process.

3. Resignation

Resignation occurs when an employee submits a resignation notice. When this happens, the employer is expected to pay the salary in lieu of notice. The minimum notice periods are specified in Section 11 of the Labour Act, and they are as follows;

 

  • One day for contracts under three months
  • One week for contracts of three months to two years
  • Two weeks for two to five years
  • One month for contracts over five years

4. Redundancy

When an employee’s role becomes redundant due to downsizing or restructuring, redundancy is said to have occurred. Before the employment is terminated, the employer must:

  • Inform the employee and trade union (where applicable)
  • Follow fair selection procedures
  • Pay redundancy benefits.

5. Mutual Agreement

This happens when both parties agree to terminate the employment without conflict. In that case, both parties negotiate the terms of termination.

 

 

Consequently, the Nigerian Labour Laws that govern the employer-employee relationship are well cleanly stipulated and defined, it is imperative that you adhere to these laws and follow them hitherto, regardless of whether you are an employer or employee.

 

 

Ignorance of the law is not an excuse. For professional and legal assistance on drafting contract terms, contact Bam and Gad Solicitors in Lagos, Nigeria.