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The short answer
Section 7 of the Labour Act requires an employer to give each worker a written statement of key terms no later than three months after they start, covering pay, hours, holidays, sick pay and notice. A good contract does that on day one, sets pay at or above the ₦70,000 national minimum wage where it applies, and adds the clauses the Act does not cover, such as confidentiality and property return.
What the Labour Act requires in writing
The Labour Act (Cap L1, Laws of the Federation 2004) applies to 'workers', a term that, under section 91, excludes people in administrative, executive, technical or professional roles. Managers and professionals are covered by their contracts and common law, but the Act's checklist is still a sensible minimum for everyone.
Section 7 says that within three months of starting, the employer must give a written statement of:
- the names of employer and worker, and the employer's address;
- the nature of the work and, for a fixed-term contract, the date it ends;
- the notice each side must give;
- pay: the rate, how it is calculated, and how often it is paid;
- normal hours of work;
- holidays and holiday pay;
- sick pay and incapacity terms;
- any special conditions.
Changes must be notified in writing within one month. The statement can refer to another document, such as a staff handbook, if the worker can reasonably get to it.
Statutory floors the contract cannot go below
| Topic | Labour Act rule |
|---|---|
| Notice (s.11) | 1 day if employed 3 months or less; 1 week if over 3 months but under 2 years; 2 weeks for 2 to 5 years; 1 month for 5 years or more. Notice of a week or more must be in writing. Pay in lieu allowed. |
| Pay period (s.15) | Wages due at the end of each agreed period, at intervals of no more than a month. |
| Deductions (s.5) | Total deductions in a month cannot exceed one-third of that month's wages. No deductions for fines. |
| Sick pay (s.16) | Up to 12 working days' paid sick leave a year, with a certificate from a registered medical practitioner. |
| Annual holiday (s.18) | At least 6 working days' paid holiday after 12 months' continuous service; no pay in lieu while employed. |
| Maternity (s.54) | Six weeks before and six weeks after confinement; at least 50% pay if employed six months or more. |
| Records (s.75) | Keep wage and staff records for three years. |
Pay must also respect the National Minimum Wage. SCP Law's July 2024 summary of the 2024 amendment sets it at ₦70,000 a month, and notes that the Act's exemptions, including establishments with fewer than 25 employees and part-time or commission workers, were retained. Check whether your business is covered before relying on an exemption.
The template
- Start date and role. Employment starts on [date]. Job title: [title]. Main duties are set out in the attached job description, which may be updated reasonably.
- Place of work. [Address], or other locations within [city] as reasonably required.
- Probation. The first [3/6] months are probation. During probation either party may end employment on [one week's] written notice, subject to the Labour Act minimum.
- Pay. Gross pay ₦[amount] per month, paid by bank transfer on or before the [last working day] of each month, less PAYE, pension and other deductions required by law.
- Hours. [8:00 to 17:00], [Monday to Friday], with a [one-hour] break. Overtime [paid at ____ / given as time off], by prior written approval only.
- Annual leave. [number] working days per year after 12 months' service [or pro rata from start].
- Sick leave. Up to 12 working days' paid sick leave per year on a medical certificate.
- Pension and statutory schemes. The employer will register and remit pension, NHF and employee compensation contributions as required by law.
- Confidentiality. The employee will not disclose the employer's confidential information during or after employment.
- Company property. Laptops, phones, keys and documents are returned on leaving. The employer may deduct the agreed value of unreturned property within the one-third limit.
- Notice. After probation, [one month's] written notice by either party, or pay in lieu.
- Discipline and grievance. As set out in the staff handbook.
- Data. The employee's personal data will be processed for employment and legal purposes in line with the Nigeria Data Protection Act 2023.
- Signatures. Employer (name, position), employee, date, witness.
Clauses owners forget
- Property return and handover. Without it, recovering a laptop becomes a negotiation.
- Who approves overtime. The Act does not set an overtime rate, so the contract should.
- Salary advances. Section 4 caps advances at one month's wages, recovered over at least three months, with no interest. See salary advance in Nigeria.
- Restraint after leaving. Nigerian courts read restraints narrowly. An IBA article (August 2024) cites cases where a one-year worldwide bar was held unreasonable. Keep any restraint short and specific; see are non-compete clauses enforceable?
What to check first
- Pay at or above the minimum wage unless a specific exemption applies.
- Notice periods no shorter than section 11.
- A job description attached; our job description template helps.
- Both parties sign and keep a copy.
Where Pryme fits
Once contracts are signed, Pryme payroll can pay staff on the agreed date, and the payroll basics are covered in running payroll in Nigeria. This article is information, not legal advice.
Questions people ask
Is a verbal employment contract valid in Nigeria?
Yes, a contract can exist without writing, but section 7 of the Labour Act requires the employer to give a written statement of terms within three months of the worker starting.
What is the minimum notice period under the Labour Act?
One day for three months' service or less, one week up to two years, two weeks for two to five years, and one month for five years or more. Notice of a week or more must be in writing.
How many days of annual leave must I give staff in Nigeria?
Section 18 sets at least six working days' paid holiday after 12 months' continuous service. Many employers give more by contract.
Can I deduct money from an employee's salary for damages?
Deductions for fines are not allowed. Total deductions in a month cannot exceed one-third of wages, and losses from misconduct need the conditions in section 5 to be met.
Sources
- Labour Act Cap L1 LFN 2004 (PLAC Laws of Nigeria) · accessed Oct 2026
- SCP Law: The 2024 Minimum Wage Act, a closer look (31 Jul 2024) · accessed Oct 2026
- IBA: Employment agreement and non-compete clauses, topical issues in Nigeria (27 Aug 2024) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.