The main law governing employment-related issues and the relationship between an employer and employee in Nigeria is the Nigerian Labour Act of 1971.

11/23/20226 min read


Nigeria has several laws that regulate issues relating to employment. Among these are the Trade Unions Act, the Pensions Act, the Industrial Training Act, the Employee Compensation Act, and the Nigerian Labour Act. We shall quickly discuss the effects of some of these legislation on employment-related issues in Nigeria in this article.


The main law governing employment-related issues and the relationship between an employer and employee in Nigeria is the Nigerian Labour Act of 1971. The word "workers" is used in the Act to refer to employees, and Section 91 of the Act defines workers 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 where it is a contract of service or a contract personally to execute any work or labour".

There are also other groups of people who are not considered to be workers, and the terms and conditions of their employment contracts apply to these groups of people. These individuals are further described in Section 91 of the Act as "persons exercising administrative, executive, technical or professional functions as public officers or otherwise"

According to Section 7 of the Labour Act, regarding employment contracts, "Not later than three months after the beginning of a worker's period of employment with an employer, the employer shall give to the worker a written statement specifying the following;

  • The name of the employer or group of employers and where appropriate of the undertaking by which the employee is employed.

  • The name of the employee, address, position to be occupied, and the date of engagement.

  • The nature of the employment.

  • If the contract is for a fixed term, the date when the contract expires.

  • The appropriate period of notice to be given by the party wishing to terminate the contract.

  • The rate of wages and method of calculation and the manner and periodicity of payment.

  • The terms and conditions relating to the hours of work, holiday pay, and conditions for incapacity to work due to sickness, injury, inclusive of provisions of sick pay.

  • Leave allowance, medical and other special allowances to be accrued.

  • Special conditions of the contract.

Section 11 of the Labour Act, which allows for the termination of an employment contract by the giving of written notice, is another noteworthy element of the Act. It states that either party to a contract of employment may terminate the contract on the expiration of a notice given by him to the other party of his intention to do so.

The law's provisions require that the notice be issued in this format;

  • One day, where the contract has continued for three months or less.

  • One week, where the contract has continued for more than three months but less than two years.

  • Two weeks, where the contract has continued for two years but less than five years.

  • One month, where the contract has continued for five years or more.


All employees in Nigeria's private and public sectors must comply with the Employee Compensation Act 2010 (ECA). Employers of labour in the private and public sectors of the economy are required by the Act to withhold 1% of their employees' monthly salaries and remit it to an Employee Compensation Fund (which is the organisation in charge of carrying out the Act), as specified in Section 33 of the Act, in the event that an employee passes away, contracts a disease, becomes disabled, or is injured while working.

A board with the authority to administer the fund created by the Act was also formed by the Act, and that board is known as the Nigerian Social Insurance Trust Fund Board (NSITF). The program's goal is to shield private-sector workers' dependents from financial hardship in the case of illnesses, accidents, or deaths related to their employment.

Part IV of the Act specifies the range of compensation for a disease, injury, or death contracted while working. According to Section 17 of the Act, if an employee's accident results in death, compensation must be granted to the deceased person's dependents. Depending on the conditions of the dependents, the amount paid to the employee's widow(er) or children might range from 30% to 90% of the employee's entire monthly income as of the date of death.

When accepted, the employee compensation prevents or stops the impacted employee and his siblings from bringing any additional legal claims against the employer relating to the same subject matter.


The Industrial Training Act Cap. L9, Laws of the Federation of Nigeria 2004, which was updated by the Industrial Training Amendment Act 2011, is another employment law in Nigeria. The Act was passed to encourage the development of pertinent skills in business and industry in order to create a pool of native workers to meet the demands of the economy, as stated in Section 2 of the Act.

The Act further imposes a duty on employers to provide training for their indigenous staff to improve their job-related skills. It also provides that the Fund'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 as provided by Section 4 of the Act.

Section 6 of the Act provides that every employer having five or more employees in his establishment or having less than 5 employees but with a turnover oof N50 Million and above per annum shall in respect of each calendar year or the prescribed date contribute to the Fund 1% of his total annual payroll.

For each month or portion of a month beyond the date on which payments should have been made in accordance with Section 9, failure to make contributions within the allotted time in a calendar year results in a penalty of 5% of the amount unpaid.


The Pension Reform Act 2014, which repealed the Pension Reform Act No.2 of 2004, is another law that governs employment-related issues. The Act was passed in order to support and regulate the management of the uniform contributory pension system for an organisation in both the public and private sectors of the Nigerian economy.

Section 1 of the Act provides that the objectives of the Act include establishing a uniform set of rules, regulations, and standards for the administration and payments of retirement benefits for the public service of the Federal Capital Territory, the Public Service of the State Governments, the Public Service of the Local Government Councils and the Private sector. It also includes making provisions for the smooth operations of the Contributory Pension Scheme.

In accordance with Section 2 of the Act, private sector employers who employ fifteen or more people are required to set up a Contributory Pension Scheme for their benefit, from which the employees would receive retirement benefits.

Section 2(3) of the Act provides "that notwithstanding the prescribed mandatory minimum threshold stated, private sector employers with less than three (3) employees or self-employed persons are also entitled to voluntarily establish schemes, following guidelines issued by the National Pension Commission".

According to Section 4 of the Act, an employee must contribute 8% of their monthly salary and an employer must pay a minimum rate of contribution of 10% of the employee's monthly salary.


  • In Nigeria, trade unions are organisations that workers or employees join in order to work together to better working conditions. They also try to benefit their members economically and socially.

The Trade Union Act Cap T4 LFN 2004 is another law that regulates employment-related matters in Nigeria. It defines trade union in Section 1 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 purpose does or do not include the provision of benefits for its members". By the provision of this Act, every worker or employee has the right to form a trade union or join an already existing trade union.

Section 17 of the Act provides for the deductions from wages of union members, that upon the registration and recognition of any of the trade union, the employer shall;

  • Make deductions from the wages of every worker who is a member of any of the trade unions to pay contributions to the trade union so registered and also,

  • Remit such deductions to the registered office of the trade union within a reasonable period or such period as may be prescribed from time to time by the registrar.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com


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