A General Overview of Labour and Employment Laws in Nigeria; The Statutory Narrative on Employment

Introduction

Over the years, the Nigerian labour space has been stiffened with many upheavals. The frequency in amendments of legislations, alterations in administrative policies, lack of continuity by successive governments coupled with fluctuations in foreign exchange rates occasioned by economic imbalances have constantly interrupted and impeded the progressive flow of business and incidental activities. This in turn has had a ripple effect on employment of labour.

The factors highlighted above have not worked in isolation. The rising dilemma of the new normal and the consequent drift it has caused in the way and manner labour is employed and carried out within work places has also contributed its own quota to the hassles experienced in the labour sector.  

We shall be appraising the extant legislations on labour and employment in Nigeria in relation to the rights, duties and obligations of the employer and employee, the modalities for creation of an employer and employee relationship, and the intricacies of the overlap of these rights, duties and obligations.

What is Employment?

Although not expressly provided by the Labour Act of 2004, a definition can be construed from the interpretation section thus: Employment is a contract between an employer and an employee wherein the employer agrees to employ the employee who in turn agrees to serve as a worker.[1] The Labour Act also spells out certain category of persons who are not considered workers. The Labour Act[2] does not consider the following persons as workers:

1. person employed otherwise than for the purposes of the employer’s business; or
2. persons exercising administrative, executive, technical or professional functions as public officers or otherwise; or
3. members of the employer’s family; or
4. representatives, agents and commercial travelers in so far as their work is carried on outside the permanent workplace of the employer’s establishment; or
5. any person to whom articles or materials are given out to be made up, cleaned, washed, altered, ornamented, finished, repaired or adapted for sale in his own home or on other premises not under the control or management of the person who gave out the articles or the material; or
6. any person employed in a vessel or aircraft to which the laws regulating merchant shipping or civil aviation apply.
   
   

However, the exclusion of these categories of persons from the purview of those considered as workers does not necessarily indicate that they are not valid employees. Rather, what it means is that for the purposes of the application of the Labour Act, they are not considered workers. Hence, the provision of their respective contractual agreements would apply sticto sensu. 

Legislations Regulating Employment in Nigeria

Before we delve into the discuss of what constitutes employment, employer and employee duties and obligations, it is important to consider the extant laws in Nigeria, regulating the relations between Employers and Employees.

The main legislation regulating employment in Nigeria is the Labour Act CAP L1 LFN, 2004. As such, heavy reliance would be placed on it in furtherance of our discussion. The 1999 Constitution of the Federal Republic of Nigeria (as amended) also provides some provisions regarding labour and employment in Nigeria. The said Constitution creates the National Industrial Court and vests exclusive original jurisdiction on it to carry out trials and resolve disputes where parties wish to resort to litigation.[3] 

Several other enactments have been made by the Nigerian Legislature to address specific subjects relating to employment in different labour sectors in Nigeria. These laws are highlighted below:

1. Factories Act, CAP F1 LFN 2004.
2. National Health Insurance Scheme Act, CAP N42 LFN 2004.
3. Trade Dispute Act, CAP T8 LFN 2004.
4. National Housing Fund Act, CAP N45 LFN 2004.
5. Trade Union (Amendment) Act, 2005.
6. Nigerian Oil and Gas Industry Content Development Act, 2010.
7. Employee’s Compensation Act, 2010.
8. Industrial Training (Amendment) Act, 2011
9. Personal Income Tax (Amendment) Act, 2011.
10. Pension Reform Act, 2014.
11. Nigeria Data Protection Regulations, 2019.
12. Guidelines for the Release of Staff in the Nigerian Oil and Gas Industry, 2019.
13. National Minimum Wage Act, 2019.
14. Finance Act, 2020.
    
    

In addition to these, a glut of legal authorities on labour related matters have been established by judicial precedents. Also, some treaties, which have been ratified by the Nigerian government, have established some protocols on trade, labour and employment transactions. 

Employment Contracts

Employment contracts as envisioned by the Labour Act could be oral, written, express or implied.[4] The Act does not restrict employment contracts to only be in writing before they are considered effective. However, it provides that within three months of a worker’s employment, a written statement must be given to the worker stipulating:

1. the name of the employer or group of employers, and where appropriate, of the undertaking by which the worker is employed;
2. the name and address of the worker and the place and date of his engagement;
3. nature of the employment;
4. if the contract is for a fixed term, the date the contract expires;
5. the appropriate period of notice to be given by the party wishing to terminate the contract;
6. the rates of wages and method of calculation thereof and the manner and periodicity of payment of wages;
7. any terms and conditions relating to-

(i) hours of work; or (ii) holidays and holiday pay; or (iii) incapacity for work due to sickness or injury, including any provisions for sick pay; and

• any special conditions of the contract.[5]

This statement may however be altered at the instance of the employer within one month after being issued to the worker provided that the worker is intimated with the changes effected in the statement.[6]

Employment contracts may be entered into by anyone belonging to the categories of employees as spelt out in the definition of worker contained in section 91(1) of the Labour Act, 2004. The said definition as earlier clarified suggests that not all employees are workers. This means that employment contracts made by persons not within the purview of the definition of workers take precedence over the Labour Act, subject to any overriding statutory provisions created to regulate that particular work sector. Nonetheless, the provisions of the Labour Act applies to all contracts to which workers so defined by the Act are parties.

Another interesting import of employment as spelt out by Act is that Nigerian Labour law permits triangular employment. This means that under the Labour Act workers can be employed by a person for the service of another person. The Labour Act, having defined an employer as any person who has entered into a contract of employment to employ any other person as a worker either for himself or for the service of any other person, clearly statutorily supports triangular employment in Nigeria.

The Labour Act also makes provision for employment contracts to which young persons are parties; provided that such young persons are at least sixteen years of age.[7] However, these contracts are specifically for apprenticeship and are specially distinguished from other employment contracts by the Labour Act in sections 49 to 53.

It is also important to note that certain terms are implied from the statutory provisions of the Labour Act. Some of them are highlighted below:

1. The Act prescribes the mode of payment of the wages of a worker.^[8]
2. An employer is to provide a safe environment for work and also provide work to the employee according to the employee’s capability.^[9]
3. Payment of salaries or wages must be made within a maximum of one month interval unless with the written permission of the State Authority.[10]
4. An exemption is implied by the provision of the Act to the effect that an employee’s relatives are not bound by the contract entered into by such employee unless there is an express provision to that effect.^[11]
5. An employer is by implication liable for the performance of contracts entered into by his agents.^[12]
6. An employer is liable to pay for any damages caused by his employee’s negligence or misconduct.^[13]
7. Every worker shall be medically examined by a medical practitioner at the expense of the employer unless in view of the exceptions so stated.^[14]

The Labour Act also prescribes the modes for termination of employment contracts. Accordingly, if otherwise than by death of an employee or effluxion of the contract tenure, an employment contract is to be terminated, it can be so terminated by a notice in accordance with the dictates of section 11 of the Act.

Leaves and Holidays

Section 18 of the Labour Act, 2004 provides thus:

(1) Every worker shall be entitled after twelve months continuous service to a holiday with full pay of –  

(a) at least six working days; or

(b) in the case of persons under the age of sixteen years (including apprentices), at least twelve working days.

(2) The holiday mentioned in subsection (1) of this section may be deferred by agreement between the employer and the worker:

Provided that the holiday-earning period shall not thereby be increased beyond twenty-four months continuous service.

This provision explicitly confers on workers who have worked for a continuous period of twelve months, the right to have a paid leave of at least 6 working days off. Where such a worker is an apprentice, the Act provides that such a worker (apprentice) shall be entitled to at least 12 working days off. The language of the Act suggests that the number of days off may be increased subject to the terms of employment. However, it must not be less than the statutory stipulated time.

Also a worker is entitled to paid wages up to twelve working days in any one calendar year during absence from work caused by temporary illness certified by a registered medical practitioner[15].

Additionally, in any public or private industrial or commercial undertaking or any branch thereof, or in any agricultural undertaking or any branch thereof, a woman (worker) shall have the right to leave her work if she produces a medical certificate given by a registered medical practitioner stating that her confinement will probably take place within six weeks.[16]

From the provisions highlighted above, the Act provides for general work leave with special recourse to apprentices, sick persons and maternity leave. The Act does not however provide for paternity leave, but in Lagos State, Civil Servants are entitled to 10 days’ paternity leave within the first two months of the baby’s birth.

Another kind of work leave permitted under Nigerian Labour law is ‘garden leave’. Garden leave usually ensues in the period of time between when an employee notifies the employer of his intention to terminate and when the employment is actually terminated, where pursuant to an employee’s notice of termination, the employer requests the employee to refrain from coming to work whilst his contract of employment continues and his emoluments paid. The employee cannot work with any other employer within the garden leave period. The Nigerian employment law does not prohibit garden leave, thus, where same is contained in a contract of employment, the Court may enforce same on the basis of sanctity of contract.

Compensation of Employees

As earlier highlighted, some other legislation have provided for employment and labour in respect of some specific subjects. One of such legislation is the Employees Compensation Act of 2010. The Act serves as the institutional framework regulating all issues bordering on compensation of workers and other ancillary matters.

The Employee Compensation Act establishes a trust fund[17] under the auspices of employers and administration of the Nigerian Social Insurance Trust Fund Management Board. The Act mandates employers to make contributions in the sums of 1% of the employee salaries to the trust fund in accordance with the prescription of the Nigerian Social Insurance Trust Fund Management Board for the compensation of employees in the event of an injury, disability or death of the employee arising in the course of employment.[18]

The Act further sets a range for compensation of employees at 30% to 90% of the employee’s salary, depending on the intensity of the injury.[19] Once such compensation is paid to the employee’s dependents as mandated by the Act, a bar is placed on the institution of any court process on the same subject.

Trade Unions

The Labour Act grants all workers freedom to join trade unions.[20] Accordingly, a worker cannot be prejudiced on the grounds of his trade union membership. The Act further gives credence to trade union membership by including payment of trade union dues as an exception for which deductions can be made from a worker’s salary.[21]

According to the Trade Union Act, a trade union is “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 purpose does or do not include the provision of benefits for its members”.[22] The Act also allows employers to deduct monies from employees who are members of trade unions for remittance of same to the respective trade unions.[23]

In light of these, employees are allowed to belong to any trade union of their choice for the purpose of association, welfare and solidarity. This right has constitutional backing[24] and cannot be deprived of an employee.

Worker’s Training

The Industrial Training (Amendment) Act of 2011 was enacted to establish a system, which promotes the continuous development of commercial and industrial skills necessary for the improvement of the quality of services rendered in those sectors.[25] The Act mandates all employers highlighted below to contribute 1% of all monies on its annual payroll inclusive of allowances to the Industrial Training Funds Council. The following are the categories of employers:

• 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, 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.[26]

If the Funds Council is pleased with an employer’s level of compliance in ensuring training of staff, it may reimburse the employer with 50% of the monies such employer has previously remitted for further training of the employees’.[27] On the contrary an employer who fails to comply will face the penalty spelt out in section 9 of the Act.

Remuneration

Ancillary to the provisions of the Labour Act on remuneration, the National Minimum Wage Act clearly spells out a specific threshold for remuneration of all employees under employment within the Nigerian labour space. It provides that every employer shall pay a minimum wage of not less than thirty thousand naira to every worker monthly[28] except where workers are paid on a part-time or commission basis or under seasonal employment, or in the case of an establishment paying less than 25 persons and persons employed under in vessels or aircrafts.[29] Also, the Minister of Employment has statutory powers to create further exceptions to the provision of Section 3 of the Act subject to public policy and in the interest of National Economy[30]. Note that the provision of the Act on National Minimum Wage i.e. Secction 3 is subject to statutory deductions.[31]    

Pensions

Another pertinent area of employment is retirement. A major issue always overlapping the consideration of retirement is the payment of severance benefits, gratuity or pension. The Pension Reform Act of 2014 inter alia establishes a pension scheme, which it mandates employers to comply with.[32]

The Act further provides a minimum rate for the contribution to be made by the employer in section 4 of the Act. It prescribes that employers are to bear and pay 10% of their employee’s monthly remuneration, while another 8% of the employee’s remuneration will to be borne by the employees to be remitted by the employer.

Termination of Employment

The Act allows for termination of employment at the instance of either party. It provides for minimum periods for notices thus:

The notice to be given for the purposes of termination shall be –

(a) one day, where the contract has continued for a period of three months or less;

(b) one week, where the contract has continued for more than three months but less than two years;

(c) two weeks, where the contract has continued for a period of two years but less than five years; and

(d) one month, where the contract has continued for five years or more.[33]

Conclusion

In précis, the employment sector in Nigeria has a robust provision of substantive laws on labour, trade and employment across all spheres of the economy. Sadly, the poor implementation and low-level of compliance with these legal provisions overwhelm even the volumes of the so-called provisions. Many factors may be blamed for this. The declining economy, administrative bureaucracies and lack of proper surveillance on the employment space within the country among many other factors have dampened the effect of legislations on labour. Nonetheless, relentless effort must be maintained towards ensuring that workers are not shortchanged of their entitlements because more often than not, they are the parties on the receiving end. Moreso, it should be noted that without prejudice to the jurisdictional powers conferred on the National Industrial Court, the Trade Disputes Act makes provisions for settlement of trade disputes and other incidental matters. Thus, the content of our examination does not cover the field on all subjects pertaining to employment as there are still some other laws not discussed within the contemplation of our examination.

[1] Section 91(1) of the Labour Act, 2004

[2] Ibid.

[3] Section 254C of the 1999 Constitution of the Federal Republic of Nigeria (as amended)

[4] Ibid.

[5] Section 7(1) (supra)

[6] Section 7(2) (supra)

[7] Section 9(3) (supra)

^[8] Section 1(supra)

^[9] Section 17 (supra)

[10] Section 9(4) (supra)

^[11] Section 9(1) (supra)

^[12] Section 9(2) (supra)

^[13] Section 12 (supra)

^[14] Section 8 (supra)

[15] Section 16 (supra)

[16] Section 54 (supra)

[17] Section 2(2) of the Employees Compensation Act, 2010

[18] Section 33 (supra)

[19] Section 17 (supra)

[20] Section 9(6) of the Labour Act, 2004

[21] Section 5(3) (supra)

[22] Section 1 of the Trade Unions Act, 2004

[23] Section 17 (supra)

[24] Section 40 of the 1999 Constitution of the Federal Republic of Nigeria (as amended)

[25] Section 2 of the Industrial Training (Amendment) Act, 2011

[26] Section 6 (supra)

[27] Section 4 (supra)

[28] Section 3 of the National Minimum Wage Act, 2019

[29] Section 4(1)(supra)

[30] Section 4(2) (supra)

[31] Section 9

[32] Section 2 of the Pension Reform Act, 2014

[33] Section 11 (supra)