Employment Contracts in Nigeria: Rights and Obligations of Employers and Employees

If you run a business or work for one, chances are you’ve signed an employment contract. But beyond being “just paperwork,” an employment contract is the backbone of workplace relationships. What does Nigerian law say about the rights and obligations of both employers and employees?

What is an Employment Contract?

An employment contract is a legally binding agreement between an employer and an employee that sets out terms of work, rights, and responsibilities.

It may be written, oral, or implied. However, for enforceability in court, a written employment contract is always preferable. The principal legislation is the Labour Act, Cap L1 LFN 2004.

A typical employment letter or offer letter usually includes:

• Names of the parties

• Type of employment

• Position and responsibilities

• Compensation

• Termination process

• Other agreed terms

Legal Basis for Employment Contracts in Nigeria

Employment relationships are regulated by:

1. Labour Act (Cap L1, LFN 2004) – governs contracts of employment, particularly for manual and clerical workers.

2. Trade Disputes Act – governs resolution of workplace disputes.

3. Pension Reform Act (2014) – provides obligations for retirement benefits.

4. Employee Compensation Act (2010) – covers workplace injury/compensation.

5. Judicial precedents – case law continues to refine employer–employee relations.

Rights of Employees

1. Minimum Wage – Employers must comply with the national minimum wage.

2. Right to Leave – Includes annual, sick, maternity (12 weeks), and in some states, paternity leave.

3. Safe Working Conditions – Employers must ensure a safe and fair work environment.

4. Pension & Statutory Benefits – Under the Pension Reform Act and related laws.

5. Written Particulars of Employment – Section 7(1) of the Labour Act requires this within 3 months.

6. Right to Fair Hearing Before Termination – As upheld in Imoloame v. WAEC (1992) 9 NWLR (Pt. 265) 303.

Obligations of Employees

1. Fidelity & Confidentiality – Employees must not undermine employer interests or disclose trade secrets.

2. Care & Competence – Work must be carried out skillfully and diligently.

3. Compliance with Policies – Employees must obey lawful instructions and company rules.

Rights of Employers

1. Hire and Dismiss – Subject to contract terms and legal limits.

2. Discipline & Work Standards – Employers can set reasonable workplace standards.

3. Remuneration for Services – Employers are entitled to employee performance.

4. Confidentiality & IP Protection – Employers can enforce non-disclosure and IP clauses.

Obligations of Employers

1. Timely Payment of Wages – Salaries must be paid when due.

2. Safe Work Environment – Employers must provide necessary tools and safety.

3. Compliance with Statutory Contributions – Taxes, pension, NHF, NSITF, etc.

4. Lawful Termination – Dismissals must follow due process.

Termination of Employment Contracts

Termination clauses usually cover:

• Notice periods (1 day–1 month under Labour Act, depending on length of service)

• Grounds for termination (misconduct, redundancy, mutual agreement, etc.)

• Severance pay where applicable

Where violations occur, remedies may include damages or specific performance via the courts or ADR (e.g., mediation, arbitration).

Key Cases:

• Ogunleye v. Global West Vessel Specialist Ltd (2017) – Termination must comply with contract terms.

• Union Bank of Nigeria Ltd v. Salaudeen (2017) LPELR-CA/L/241/2006 – Employer must follow due process; dismissal without it was struck down.

Conclusion

Employment contracts protect both employers and employees by setting clear expectations and ensuring fairness. From wages and leave to workplace safety and termination, they define rights and obligations essential for professional, legally secure workplace relationships.

At Maverick Solicitors, we draft and review employment contracts that protect your interests. Don’t leave your workplace rights to chance let us guide you.