Where the rules come from
Labour Act (Cap L1, LFN 2004)
Contracts, wages, hours, leave, redundancy — applies mainly to manual and clerical 'workers'.
Constitution & National Industrial Court
The NICN applies international best practice, which is why unfair-dismissal reasoning now bites even outside the Labour Act.
Pension Reform Act 2014
Contributory pension and compulsory group life cover for employers with 3+ employees.
Employees' Compensation Act 2010 (NSITF)
1% of payroll for workplace injury and death benefits.
National Minimum Wage (Amendment) Act 2024
Raised the national minimum wage to ₦70,000 a month.
NHIA Act 2022
Made health insurance mandatory in principle, with phased implementation.
Nigeria Data Protection Act 2023
Employee data — CVs, payroll, health records — is regulated personal data.
Nigeria Tax Act 2025
New PAYE bands and reliefs from 1 January 2026, plus opt-in NHF.
What has changed recently
₦70,000 national minimum wage
The 2024 amendment lifted the floor from ₦30,000 to ₦70,000 a month and shortened the review cycle to every three years. Employers with 25 or more employees are covered. The knock-on effect most firms underestimate is compression: once the floor moves, the differential to supervisors collapses and your whole lower grade structure needs re-pricing.
PAYE overhaul from January 2026
The Nigeria Tax Act 2025 replaced the Consolidated Relief Allowance with rent relief, zero-rated the first ₦800,000, and made NHF opt-in. Payroll, payslips and employment letters that quote net pay all need updating.
Data protection reaches HR
Under the Nigeria Data Protection Act 2023 employee records are regulated personal data. Recruitment files, background checks, biometric attendance and payroll all need a lawful basis, a retention period and a named person accountable.
Courts tightening termination practice
The National Industrial Court increasingly requires a valid reason and a fair process for dismissal, even where the contract says 'termination with one month's notice or salary in lieu'. Contractual compliance alone is no longer a safe defence, particularly in misconduct cases.
Casualisation under pressure
Long-running use of 'casual' staff doing permanent work continues to be struck down. If someone has worked continuously beyond a short engagement, treat them as an employee with full entitlements.
Remote and cross-border work
Nigerian staff employed by foreign companies remain subject to Nigerian PAYE and pension obligations. Expect more scrutiny of contractor arrangements that look like employment.
Core entitlements at a glance
| Written particulars | Must be given within 3 months of starting — parties, role, wages, hours, leave, notice. |
| Annual leave | Minimum 6 working days paid after 12 months of continuous service; most employers offer far more. |
| Sick leave | Up to 12 working days paid per year on a certified illness. |
| Maternity leave | 12 weeks under the Labour Act (Lagos State public service offers longer). Dismissal during maternity absence is prohibited. |
| Hours and overtime | Normal hours fixed by agreement; overtime must be paid where worked beyond them. |
| Notice periods | 1 day under 3 months' service; 1 week under 2 years; 2 weeks under 5 years; 1 month at 5 years or more — or pay in lieu. |
| Redundancy | Inform the union or workers' representatives, apply last-in-first-out subject to merit, and negotiate redundancy pay. |
| Public holidays | Paid, as declared federally. |
These are statutory minimums. Your contracts, handbook or collective agreement can be more generous — and once granted, those terms bind you.
Statutory contributions employers owe
| Obligation | Rate | Regulator |
|---|---|---|
| Pension (CPS) | Employer 10% minimum, employee 8% of basic + housing + transport | PenCom / PFA |
| Group life assurance | Employer-funded, minimum 3× annual total emolument | PenCom |
| NSITF (Employees' Compensation) | 1% of monthly payroll, employer only | NSITF |
| ITF | 1% of annual payroll for employers with 5+ staff (or ₦50m turnover) | ITF |
| NHF | 2.5% of basic — now opt-in for the employee | FMBN |
| PAYE | Per the 2026 bands, remitted by the 10th of the following month | State IRS |
Lapsed pension or group life cover costs you more than a penalty: it blocks the PenCom compliance certificate you need for most government and large corporate contracts.
Termination: doing it defensibly
The safest sequence has not changed, and it is not complicated. Put the concern in writing as a query. Give the employee a real chance to respond. Hold a hearing they can attend with a colleague. Decide, and put the reason in writing. Pay everything owed — notice or pay in lieu, accrued leave, and terminal benefits — on the last day.
For redundancy, add consultation with the union or staff representatives, an objective selection basis, and a documented negotiation on redundancy pay. Cases are rarely lost on the decision itself; they are lost on the absence of a paper trail.
Six mistakes that create liability
- No written particulars of employment on file, then relying on 'the offer letter said so' in court.
- Terminating for misconduct without a query, a hearing and a written outcome.
- Paying pension on gross or on basic only, instead of basic + housing + transport.
- Keeping staff on 'casual' or 'contract' labels for years while they do core permanent work.
- Lifting the lowest grade to ₦70,000 and leaving supervisors unchanged, then losing them within two quarters.
- Storing CVs, medical reports and payroll data indefinitely with no retention policy.
This guide is general information for Nigerian employers, not legal advice. Take counsel on any specific dismissal, redundancy or dispute.
Turning compliance into a system
Compliance fails through record-keeping, not intent. Contracts nobody signed, leave balances in a spreadsheet, remittance schedules in one person's head. Talento HRIS holds contracts, leave and statutory deductions in one record, and our HR advisory work covers handbook, contract and disciplinary policy reviews.
Pair this with our breakdown of the new PAYE tax rules for the payroll side of the same obligations.