EMPLOYMENT RIGHTS: TERMINATION, SEVERANCE PAY AND WORKPLACE PROTECTIONS UNDER THE LABOUR LAW
Do employees have rights in the workplace or are those rights voided just because they receive a salary?
Can you question your supervisor (“oga”) about how you are being treated?
Is your employment fair, or does it amount to modern-day slavery?
Can you be dismissed simply for standing up for your rights or because your supervisor’s tea was served cold?
This article will address the questions outlined above and further examine workplace rights, protections, termination procedures, and severance pay.
Importance of Employment Regulations
For a productive and harmonious employment relationship, it is essential for both employers and employees to understand and adhere to the relevant legal frameworks governing employment in Nigeria. Compliance with these regulations helps protect the rights of all parties and promotes a fair, transparent, and professional working environment.
For the purpose of clarity, the following definitions of an employee and employer are provided.
Who is an Employee?
An employee is an individual who has been hired to carry out specific tasks or duties in exchange for compensation. In addition to wages or salaries, employees may also be entitled to various benefits, including health insurance, retirement savings plans, paid holidays, and paid time off.
Who is an Employer?
An employer is any individual or legal entity, such as a company, that hires and compensates another person to perform designated tasks. The employer is responsible for assigning job responsibilities, monitoring work progress, and providing necessary feedback to ensure performance aligns with organizational goals.
Section 91 of the Labour Act (Cap L1, LFN 2004) provides that “worker” means 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 whether it is a contract of service or a contract personally to execute any work or labour, but does not include-
(a)any person employed otherwise than for the purposes of the employer’s business, or
(b)persons exercising administrative, executive, technical or professional functions as public officers or otherwise, or
(c)members of the employer’s family, or
(d)representatives, agents and commercial travellers in so far as their work is carried on outside the permanent workplace of the employer’s establishment; or
(e)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
(f)any person employed in a vessel or aircraft to which the laws regulating merchant shipping or civil aviation apply;
Anyone who falls within the ambit of the aforementioned legislation shall be deemed a beneficiary of the employment protections and entitlements therein. Conversely, where an individual is excluded from its application, is prudent to examine other applicable statutory provisions that may confer corresponding rights or protections. An example of such alternative legislation is the Civil Aviation Act, which governs the employment conditions of individuals engaged in work aboard aircraft.
Key Employment Legislation in Nigeria
The primary laws and regulations governing employment in Nigeria include:
- The Constitution of the Federal Republic of Nigeria 1999 (as amended) (the “Constitution”);
- The Labour Act, Chapter L1, Laws of the Federation of Nigeria (“LFN”) 2004 (the “Labour Act”);
- 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:
o Employees’ Compensation Act 2010.
o HIV and AIDS (Anti-Discrimination) Act 2014.
o Immigration Act 2015.
o Industrial Training Fund Act, Chapter 19, LFN 2004 (as amended).
o National Health Insurance Authority Act 2022.
o National Housing Fund Act, Chapter N45, LFN 2004 (as amended).
o Pension Reform Act 2014.
o Trade Disputes Act, Chapter T8, LFN 2004.
o Trade Unions Act, Chapter T14, LFN 2004, as amended by the Trade Union (Amendment) Act 2005 (the “TUA”).
o National Minimum Wage (Amendment) Act 2024.
o National Industrial Court Act 2006.
o Factories Act, Chapter F1, LFN 2004.
o Finance Act 2021.
o Personal Income Tax Act, Chapter P8, LFN 2004 (as amended by the Personal Income Tax (Amendment) Act 2011).
o Discrimination against Persons with Disabilities (Prohibition) Act 2018.
o Lagos State Special Peoples Law 2011.
o Nigerian Oil and Gas Industry Content Development Act 2010.
o Guidelines for the Release of Staff in the Nigerian Oil and Gas Industry 2019 (the “Staff Release Guidelines”), issued further to the provisions of the Petroleum (Drilling and Production) Regulations 1969 (as amended), made pursuant to the Petroleum Act, Cap P10, LFN 2004 (now the Petroleum Industry Act 2021 (the “Petroleum Act”)).
o Nigeria Data Protection Regulation 2019 issued by the National Information Technology Development Agency.
o Nigeria Data Protection Act 2023 (the “NDPA”).
o Business Facilitation (Miscellaneous Provisions) Act 2022;
- Decisions of the Nigerian courts – 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.
Below are key workplace protections that every employee and employer should be aware of and exercise:
- Minimum wage:
Section 3(1) of the minimum wage amendment act provides that every employer shall pay a national minimum wage of not less than N70,000.00 per month to every worker under his establishment, except otherwise provided under this Act.
Section 3(3) invalidates any agreement paying less.
Exemptions (Section 4(1)):
- Employers with fewer than 25 employees
- Part-time or seasonal workers
- Workers on commission, or working in vessels or aircraft under merchant shipping or civil aviation jurisdiction.
It is also pertinent to note that the minimum wage is subject to expiration and review every three (3) years.
- Child Labour Protections
Section 59 of the Labour Act provides that
(1) No child shall-
(a)be employed or work in any capacity except where he is employed by a member of his family on light work of an agricultural, horticultural or domestic character approved by the Minister; or
(b)be required in any case to lift, carry or move anything so heavy as to be likely to injure his physical development.
(2)No young person under the age of fifteen years shall be employed or work in any industrial undertaking:
Provided that this subsection shall not apply to work done by young persons in technical schools or similar institutions if the work is approved and supervised by the Ministry of Education (or corresponding department of government) of a State.
(3) A young person under the age of fourteen years may be employed only-
(a) on a daily wage;
(b) on a day-to-day basis; and
(c) so long as he returns each night to the place of residence of his parents or guardian or a person approved by his parents or guardian:
(4) provides that “No young person under the age of sixteen years shall be employed in circumstances in which it is not reasonably possible for him to return each day to the place of residence of his parent or guardian except- with the approval of an authorized labour officer; and on a written contract
(5) provides that No young person under the age of sixteen years shall be employed-to work underground; or on machine work; or on a public holiday.
The section as well as section 60 further provides for limitations for working hours for young persons under 16, bans hazardous work, and restricts night, underground, and machine work.
Section 28 of the Childs right Act prohibits a child from being subjected to forced, exploitive labour. Any labour is deemed exploitive if it deprives the child of education, is harmful to the child’s health, or is detrimental to the child’s physical, mental, spiritual, moral or social development.
Section 30 of the Act also prohibits the buying, selling, or dealing in children for employment.
In conclusion, the Child Right Act protects children from exploitative labour and harmful tasks. It also protects children from trafficking, exploitation, and being used in begging, prostitution, etc., with severe penalties.
The labour law however, allows regulated child labour under very specific conditions as approved by the Minister or regulated by the provisions of a Contract.
- Workplace Injury and Compensation
Employees are entitled to compensation for workplace injuries and should benefit from any applicable legislation that addresses injuries or disabilities sustained in the course of their employment.
Section 21 of the Employee Compensation Act provides that (1) Subject to this Act, if a permanent total disability results from the injury of an employee, the Board shall pay to the employee compensation that is a periodic payment equal to 90% of the remuneration of the employee.
(2) The compensation awarded under this section shall be payable monthly.
This means that an employee which suffers an injury that renders him or her disabled must pay 90% of what that employee is entitled to and it shall be monthly.
Section 24 provides that
(1) Subject to section 28(4) of this Act, if a temporary total disability results from an employee’s injury, the Board may pay the employee a lump sum in accordance with the Second Schedule to this Act, or any regulation made pursuant to section 22(3).
(2) This payment shall not apply to any disability that lasts more than 12 months.
- Discrimination
A person should not be subjected to discrimination on account of any disability, provided that the disability does not impede the performance of the essential duties of the job.
Section 42(1) of the Constitution of the Federal Republic of Nigeria prohibits discrimination against any citizen of Nigeria.
Section 4 and 6 of the Discrimination Against Persons with Disabilities (Prohibition) Act, 2018 prohibits against discrimination specifically against persons with disabilities, including in workplace settings.
- Leave:
- Annual leave: every employee shall be entitled to at least 6 days annual paid leave. This is protected by Section 18 of the Labour Act.
- Sick leave: Section 18 of the Act provides that a worker shall be entitled to be 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.
- Maternity leave: To promote health and ensure fairness, Section 54 of the Act provides that At least 12 weeks maternity leave (6 weeks before and 6 weeks after childbirth). It also provides that 50% of wages during leave if the employee has been employed for at least 6 months prior to leave. Additionally, it states that nursing mothers are allowed 2 half-hour breaks per day for nursing until the child is 6 months old.
- Public Holidays: Workers are entitled to paid time off to celebrate public holidays.
TERMINATION:
The common law position was that an employer may lawfully terminate an employee’s contract of employment at any given time and without assigning any reason, however this has been upturned by Article 4 of the ILO Termination of Employment Convention (No 158), which provides that the employment of a worker shall not be terminated unless there is a valid reason connected with the capacity or conduct of the worker, based on the operational requirements of the undertaking or service. The Convention further invalidates certain grounds for termination such as union membership or participation in union activities at appropriate hours, seeking office or acting as a workers’ representative, filing a complaint or participation in proceedings against an employer for violations of laws or regulations, race, colour, sex, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin, absence from work during maternity leave and temporary absence from work because of injury or illness. It also provides that the requisite notice is given or salary in lieu thereof is paid, in accordance with the terms of the contract or applicable statutory provisions. The National Industrial Court of Nigeria (NICN) has increasingly endorsed the view that, an employer ought to provide justifiable reasons for termination, particularly where the termination may question the employee’s reputation.
In the Cases of Aloysius v. Diamond Bank (2015) 59 NLLR (Pt. 119) 92 at 105 and Duru v. Skye Bank Nigeria Plc (2015) 59 NLLR (Pt. 59) at 724, the National Court of Nigeria held that the termination of employment without stating reasons is contrary to international best practices and labour standards.
It is pertinent to note that where an employer intends to terminate an employee for justifiable reasons, proper notice must be given. In the case of “workers” as defined under the Labour Act, the minimum statutory notice periods prescribed in Section 11 are as follows:
- One day, where the employee has been employed for a period of three months or less;
- One week, where the employee has been employed for more than three months but less than two years;
- Two weeks, where the employee has been employed for two years but less than five years; and
- One month, where the employee has been employed for five years or more.
The parties may, however, contractually agree to longer notice periods.
Furthermore, pursuant to Sections 11(6) and 11(9) of the Labour Act, either party to the contract of employment may terminate the contract by paying the other party wages or salary in lieu of the required notice.
The Supreme Court in Chukwumah v. Shell (1993) LPELR-864 SC at 28 where it was held that for a termination of employment via payment in lieu of notice to be effective, the payment must be made contemporaneously with the notice of termination and that it is not enough that in the letter of termination of employment the employer offers to pay the salary in lieu of notice.
An exception to the rule of an employer dismissing an employee is that for female staffs on maternity leave. Pursuant to Section 54(4) of the Labour Act, an employer is prohibited from terminating the employment of a female worker who is absent from work due to maternity leave, or who remains absent for a longer period on account of an illness arising from her pregnancy or confinement, which renders her unfit to resume work.
Where an employer terminates an employee’s contract of employment without following the procedure stipulated in the contract, the employee may institute an action for wrongful termination. If the claim is successful, the National Industrial Court of Nigeria (NICN) may award substantial damages in favour of the employee and, in appropriate cases, has order the reinstatement of the affected employee.
Employers may settle such claims either before or after litigation has commenced; however, any settlement must be concluded prior to the delivery of judgment by the Court.
SEVERENCE PAY
Where an employee is dismissed for reasons pertaining solely to that individual, any entitlement to compensation shall be governed by the terms and conditions set forth in the employee’s contract of employment.
However, termination of employment on grounds related to business exigencies may be deemed a redundancy. Section 20 (3) of the Labour Act provides that “redundancy” means an involuntary and permanent loss of employment caused by an excess of manpower.
Section 20(1) of the Act provides that in the event of redundancy-
(a)the employer shall inform the trade union or workers’ representative concerned of the reasons for and the extent of the anticipated redundancy;
(b)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
Section 20(1)(c) provides that the employer shall use his best endeavours to negotiate redundancy payments to any discharged workers who are not protected by regulations made under subsection (2) of this section.
For the purpose of redundancy and similar employment terminations, severance pay refers to a form of financial compensation provided to an employee upon the termination of their employment.
Severance pay serves two primary purposes:
- To provide financial support to the employee during the transition period before securing new employment;
- To recognize and reward the employee’s past service to the organization.
Severance pay is commonly applicable in the following circumstances:
Redundancy – when the employee’s role becomes surplus to the organization’s needs due to overstaffing, automation, or structural changes.
Restructuring – including mergers, acquisitions, or internal reorganization that leads to the elimination of positions.
Mass layoffs – where multiple employees are disengaged simultaneously due to economic or operational decisions.
Contractual entitlement – where severance benefits are specifically provided for under the terms of an employment contract, company policy, or a collective bargaining agreement.
Conclusion:
It is imperative for both employees and employers to have a thorough understanding of workplace protections, including matters relating to termination and severance pay. The existing legal framework offers adequate safeguards, and awareness of one’s rights and entitlements are crucial to their effective enforcement. Employers are hereby reminded that non-compliance with statutory obligations may attract serious consequences, including financial penalties and imprisonment, reinstatement orders, payment of damages, and prohibition orders.
