An Appraisal of HR Laws in Nigeria

Written by Abdulsamad Jimoh and Adaeze P. Nwoba

Employees are unarguably the most valuable asset of any establishment as they are the ones who oversee the day-to-day activities of a company or organization and ensure that it remains a going concern. This is why Human Resources (HR) management is considered vital in any business.

It is pertinent to note that HR is about managing people and complying with the relevant laws and regulations that govern employment and labour relations in Nigeria. These laws and regulations aim to protect employers’ and employees’ rights and interests and promote harmonious and productive industrial relations. They also reflect the Nigerian context’s social, economic, and political realities and the international standards and best practices that Nigeria has adopted or ratified.

Hence, this article will examine the HR laws in Nigeria, focusing on the following aspects: the main sources of employment law, the employer’s rights, and the employee’s rights. We will also highlight the challenges and opportunities HR practitioners face in applying and implementing these workplace laws and regulations.

 

HR Laws in Nigeria

HR laws are the legal framework that regulates the relationship between employers and employees in Nigeria. They cover various aspects of employment and labour matters, such as terms and conditions of employment, business sales and transfers, employee representation and industrial relations, discrimination, maternity and family leave rights, data protection and employee privacy, termination of employment, protection of business interests after termination, and court practice and procedure.

Some of the main sources of HR laws in Nigeria are the Constitution of the Federal Republic of Nigeria 1999 (as amended), the Labour Act 1971 (Laws of the Federation of Nigeria 2004), the Employee Compensation Act 2010, the Industrial Training Amendment Act 2011, Pension Reforms Act 2014 and other federal and state laws enacted by the legislative authorities. Nigeria has also ratified some international conventions, treaties, and protocols concerning labour and employment issues.

The Constitution of the Federal Republic of Nigeria (CFRN) 1999 (as amended)

The Constitution of the Federal Republic of Nigeria (CFRN) 1999 (as amended) is the supreme law of the land, from which all other rules and norms derive their validity. Chapter Two of the CFRN lays down the fundamental objectives and directive principles of state policy, which include the social order, economic, educational, foreign policy, and environmental objectives. Among these objectives, Section 17(3)(a) provides that the State shall direct its policy towards ensuring that “all citizens, without discrimination on any group whatsoever, have the opportunity for securing adequate means of livelihood as well as adequate opportunity to secure suitable employment.” Section 17(3)(b) further states that the State shall ensure that “conditions of work are just and humane, and that there are adequate facilities for leisure and social, religious and cultural life.” Section 17(3)(e) also states that the State shall ensure that “there is equal pay for equal work without discrimination on account of sex, or on any other ground whatsoever.” These provisions establish the right to fair wages, working conditions, and social security for all citizens, and form the basis of employment and labour relations in Nigeria.

Labour Act

The Labour Act 1971 (Laws of the Federation of Nigeria 2004) is the principal legislation that governs employment-related matters and the relationship between an employer and employee in Nigeria. It establishes principles and procedures for the employment of workers, employment terms and conditions, wages, working hours, and termination.

The Act requires employers to provide workers with a contract of employment in writing three months after starting their job, as stated in Section 7 of the Act. The agreement must specify 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.

It is pertinent to note that the Act adopts explicitly the word “worker” to describe employee. According to Section 91 of the Act, a worker is “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.” The provision excludes people who perform administrative, executive, technical, or professional functions as public officers or otherwise from the definition of workers. These categories of persons are governed by the terms and conditions in their respective employment contracts. However, this distinction is only relevant to the Labour Act and not other Nigerian employment laws.

Employee Compensation Act

The Employee Compensation Act 2010 is a law that provides for the compensation of employees or their dependants in case of any death, injury, disease, or disability that occurs as a result of or during their employment. The law applies to all employers and employees in Nigeria’s public and private sectors. Under the law, employers must contribute 1% of their monthly payroll to the Employee Compensation Fund, managed by the Nigeria Social Insurance Trust Fund (NSITF) Management Board. The Board is responsible for implementing the provisions of the law and ensuring that employees or their dependants receive adequate and timely compensation for any work-related accidents or illnesses. The law also outlines the procedures for making claims, the compensation scale, and the parties rights and obligations.

Part IV of the Act specifies the compensation scale for different cases. Section 17 of the Act deals with fatal instances in which an employee dies as a result of an injury sustained during employment. In such cases, the Act stipulates that the dependants of the deceased employee are entitled to compensation from the employer. The amount of compensation varies depending on the relationship and situation of the dependants. The Act provides that the employee’s widow(er) or children should receive between 30% and 90% of the employee’s total monthly remuneration at the time of death. When deciding the appropriate compensation, the Board determines the exact percentage by considering factors such as the dependants’ number, age, and financial needs.

The Act also allows compensation to be paid to other dependants, such as parents, siblings, or grandparents, if they can prove that they were wholly or partly dependent on the deceased employee for support. The compensation for other dependants is limited to 20% of the employee’s total monthly remuneration at the time of death. The Act further states that once the employee or the dependants accept the compensation, they cannot take any further legal action against the employer for the same matter. This means the compensation is a final claim settlement, and the employer is not liable for additional damages or costs.

Industrial Training Act

The Industrial Training Amendment Act 2011 is a law that aims to enhance the skills development of workers in various sectors of the economy. The law amends the Industrial Training Fund Act 2004, which established the Industrial Training Fund (ITF) as a statutory body to provide, promote, and encourage the acquisition of skills in industry and commerce. Section 2 of the Amendment Act expands the functions of the ITF to include:

• Providing training for skills in management, technical, and entrepreneurial development in the public and private sectors;
• Setting training standards and monitoring compliance in all sectors of the economy;
• Evaluating and certifying vocational skills acquired by apprentices, artisans, and technicians in collaboration with relevant organizations.

The Amendment Act also introduces changes to the composition, powers, and functions of the ITF Governing Council, the Director-General, and the staff of the ITF. The law seeks to improve the quality and relevance of skills training in Nigeria to meet the needs of the economy and the labour market.

Pension Reforms Act

The Pension Reforms Act 2014 is an employment law that replaced the Pension Reform Act No. 2 2004 and established a uniform contributory pension scheme for public and private sector employees in Nigeria. The law aims to ensure that workers receive adequate and timely retirement benefits and encourage savings and investment in the economy. It also regulates the administration, management, and supervision of the pension scheme, as well as the roles and responsibilities of the stakeholders involved.

Section 2 of the Act mandates that private sector employers with fifteen (15) or more employees must set up a contributory pension scheme for their employees, from which they will receive their retirement benefits. The scheme requires the employer and the employee to make monthly contributions to the employee’s retirement savings account, which a licensed pension fund administrator manages. The employee can also make additional voluntary contributions to the account.

Section 2(3) of the Act allows private sector employers with less than three (3) employees or self-employed persons to opt into the scheme voluntarily, as long as they follow the guidelines issued by the National Pension Commission. The Commission is the authority responsible for implementing and enforcing the provisions of the law.

Section 4 of the Act stipulates that the minimum contribution rate to the scheme is 10% of the employee’s monthly remuneration by the employer and 8% of the employee’s monthly remuneration by the employee. The monthly remuneration includes the basic salary, housing allowance, and transport allowance. The employer and the employee can agree to increase the contribution rate above the minimum, and they must notify the Commission of any such revision. The employer is also responsible for remitting the contributions to the pension fund custodian within seven days of paying the employee’s salary.

Other laws on HR practices in Nigeria include the Trade Union (Amendment) Act 2005, the Trade Disputes Act (Laws of the Federation of Nigeria 2004), the National Industrial Court Act 2006, and the Factories Act (Laws of the Federation of Nigeria 2004).

Some of the recent laws and regulations that affect HR practices in Nigeria are:

• The Business Facilitation (Miscellaneous Provisions) Act 2023 aims to promote the ease of doing business in Nigeria, eliminate bottlenecks, and improve transparency and efficiency. The Act introduces some changes to the Companies and Allied Matters Act 2020, such as allowing public companies to hold virtual meetings, electronic voting, and share certificates, as well as relaxing the rules on pre-emptive rights for private companies.
• The Data Protection Act 2023 provides the legal framework for protecting personal information and establishes the Nigeria Data Protection Commission as an autonomous authority to implement and enforce the Act. The Act also maintains the existing subsidiary legislation issued by the National Information Technology Development Agency and the Nigeria Data Protection Bureau.
• The National Minimum Wage (Amendment) Act 2019 increased the national minimum wage from N18,000 to N30,000 per month for public and private sector workers.
• The Discrimination against Persons with Disabilities (Prohibition) Act 2018 prohibits discrimination based on disability and imposes a fine of N1,000,000 or a term of six months imprisonment or both for any offender. The Act also mandates public buildings and structures to be accessible to persons with disabilities within five years of its enactment.

 

Employer’s Rights

Employers in Nigeria have various rights under the HR laws derived from multiple sources, such as the Constitution, the Labour Act, and other statutes, regulations, and case laws. Some of the primary rights of employers are:

1. Right to hire and fire

The employer has the right to hire and fire employees, subject to the terms and conditions of the employment contract and the relevant laws. Employers can terminate an employee’s employment for various reasons, such as misconduct, poor performance, redundancy, or mutual agreement. However, employers must ensure the termination is fair and lawful and does not violate the employee’s rights to due process, fair hearing, and non-discrimination.

2. Right to determine wages and benefits

Employers have the right to negotiate and agree with the employees on the remuneration, allowances, bonuses, and other benefits they will receive. However, employers must pay the employees at least the national minimum wage, which is currently ₦30,000 per month, and remit the statutory deductions, such as income tax, pension, and employee compensation, to the relevant authorities.

3. Right to regulate the working hours

Employers have the right to set the regular working hours for their employees, which should be at most 8 hours per day and 40 hours per week unless otherwise agreed. Employers must also provide the employees with at least one hour of rest after every 4 hours of work and pay them overtime rates for any work beyond the regular working hours or on weekends and public holidays.

4. Right to manage and supervise

Employers have the right to assign duties and responsibilities to employees and monitor and evaluate their work. Employers can also impose disciplinary measures, such as warnings, suspension, or dismissal, on employees who breach the rules and regulations of the workplace. However, employers must ensure that the discipline is proportionate, reasonable, and consistent and that the employees can defend themselves before any adverse action is taken.

5. Right to protect business interests and confidential information

Employers have the right to require the employees to sign non-disclosure, non-compete, and non-solicitation agreements, which prohibit them from disclosing, using, or exploiting the employer’s trade secrets, intellectual property, or customer data or from working for or soliciting the employer’s competitors or clients, during or after the employment. However, employers must ensure that these agreements are reasonable, necessary, and enforceable and do not unduly restrict the employee’s right to work and earn a living.

6. Right to join/form trade unions or employers’ associations

Employers have the right to associate with other employers who share common interests and objectives and to form or join trade unions or employers’ associations, which can represent them in negotiations and consultations with the employees or their representatives, or with the government or other stakeholders, on matters relating to labour, employment, or workplace issues. Employers can also engage in collective bargaining with the employees or their trade unions and enter into cooperative agreements, which regulate employment terms and conditions and the parties’ rights and obligations. Employers can also participate in industrial actions, such as lockouts, strikes, or protests, to express their grievances or demands, as long as they comply with the law and the collective agreement.

 

Employee’s Rights

The employees or workers in Nigeria have certain rights under HR laws derived from various sources, including the Constitution, the Labour Act, and other statutes and case laws. The employers must respect these rights to maintain a harmonious and productive employment relationship. Some of the principal rights of employees are:

1. Right to fair and decent work

Employees or workers have the right to fair and decent work, including a safe and healthy work environment, reasonable working hours and rest periods, a good living wage and equal pay for equal work, and freedom from forced or child labour.

2. Right to freedom of association

Employees have the right to join or form trade unions or workers’ associations and participate in the activities and affairs of their trade unions. They also have the right to bargain collectively with their employers or representatives and enter into collective agreements, which regulate employment terms and conditions and the parties’ rights and obligations. Moreover, they have the right to engage in industrial actions, such as strikes, pickets, or boycotts, to express their grievances or demands as long as they comply with the law and the collective agreement.

3. Right to equality and non-discrimination

The right to equality and non-discrimination means that employees should not be discriminated against based on their sex, race, colour, religion, political opinion, national origin, social origin, disability, age, marital status, or any other ground. Employees should also enjoy equal opportunities and treatment in terms of recruitment, promotion, training, remuneration, and termination of employment.

4. Right to fair hearing

The employees have the right to be duly informed of the reasons for any disciplinary action or termination of employment and to be allowed to defend themselves before any adverse action is taken. They also have the right to appeal or challenge any decision or action that affects their rights or interests and to seek redress or compensation for any violation or infringement of their rights.

5. Right to data protection and privacy

The employees have the right to data protection and privacy. This is because they can control and protect their personal information and prevent unauthorized access, use, or disclosure of their data. They also have the right to access, correct, or delete their data and to object or withdraw their consent to any processing of their data that is not under the law or their agreement.

 

Challenges and Opportunities Concerning HR Practice

HR practice in Nigeria is influenced by various factors, such as the economic, political, social, and cultural environment, the legal and institutional framework, the nature and size of the formal and informal sectors, the diversity and complexity of the workforce, and the impact of globalization and technology. These factors pose both challenges and opportunities for HR professionals and practitioners in Nigeria.

The Challenges

• The lack of a comprehensive and coherent HR policy and strategy at the national level leads to inconsistencies and gaps in the regulation and implementation of HR issues across different sectors and regions.
• There needs to be a higher level of awareness and compliance with the existing HR laws and regulations, especially among small and medium enterprises and the informal sector, which account for a large proportion of the Nigerian economy and employment.
• The inadequate and outdated HR infrastructure and systems, such as payroll, performance management, training and development, and data management, hinder the efficiency and effectiveness of HR functions and services.
• The scarcity and mismatch of skills and competencies affect the workforce’s quality and productivity and the Nigerian economy’s competitiveness in the global market.
• High unemployment and underemployment create social and economic problems, such as poverty, crime, and insecurity, and limit the pool of qualified and motivated talent for employers.
• The prevalence of corruption, nepotism, and favouritism undermine the principles of merit, fairness, and transparency in HR processes and decisions and erodes the trust and confidence of the employees and the public.
• The diversity and complexity of the workforce, which reflect the ethnic, religious, linguistic, and cultural differences of Nigerian society, also pose challenges for managing conflicts, communication, and integration among the employees.

The Opportunities

• The emergence and growth of various HR associations and bodies, such as the Chartered Institute of Personnel Management of Nigeria, the Nigerian Industrial Relations Association, and the Nigerian Employers’ Consultative Association promote the development and professionalism of HR practice in Nigeria, and also provide platforms for networking, advocacy, and collaboration among the HR stakeholders.
• The advancement and adoption of technology, such as the internet, mobile devices, and social media, enable the innovation and improvement of HR functions and services, such as recruitment, training, communication, and feedback, and also facilitate the access and dissemination of HR information and knowledge.
• The increasing demand and recognition of HR as a strategic partner and value creator in the organization enhances the role and influence of HR professionals and practitioners in formulating and implementing the organizational vision, mission, goals, and strategies.
• The potential and prospects of the Nigerian economy and market offer opportunities for growth and expansion for the employers and the employees and attract foreign investment and talent to the country.
• The diversity and complexity of the workforce also provide opportunities for learning, creativity, and innovation and enrich the organizational culture and performance.

 

Conclusion

HR laws are the legal framework and guidelines for the rights and obligations of employers and employees, as well as the mechanisms and institutions for resolving disputes and grievances. However, there are still many challenges and gaps in formulating, implementing, and enforcing HR laws in Nigeria, which require urgent attention and action from the relevant stakeholders. At the same time, there are also many opportunities and potentials for improving and developing HR practice in Nigeria, which can be leveraged and harnessed by HR professionals and practitioners. Therefore, HR laws and practices in Nigeria must be constantly reviewed, updated, and aligned with the best practices and standards in the global and regional context, as well as the needs and aspirations of the Nigerian people and the economy.

 

References

• Yekini Abubakri and Tanimola Anjorin. “Non-compete Clauses in Contracts of Employment in Nigeria: A Critical Evaluation of the Decision in Aprofim Engineering Ltd V Bigouret Anor (2015).” 2017, https://core.ac.uk/download/234650915.pdf.

 

• Overview Of Employment Laws In Nigeria – Manpower Policy & Regulations – Employee Benefits & Compensation – Nigeria. https://www.mondaq.com/nigeria/employee-benefits–compensation/1029308/overview-of-employment-laws-in-nigeria–manpower-policy–regulations-

 

• Employment & Labour Laws and Regulations Nigeria 2023-2024. Employment & Labour Laws and Regulations Report 2023-2024 Nigeria (iclg.com)