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The short answer
Nigeria's Labour Act requires written terms within three months of starting, notice from one day to one month depending on length of service, at least six working days' paid holiday after 12 months, up to 12 working days' paid sick leave a year, and maternity leave with at least 50% pay after six months' service. Many managerial and professional staff fall outside the Act's definition of 'worker', so their written contract matters even more.
UK employers are used to statutory sick pay, 5.6 weeks' holiday and unfair dismissal law. Nigerian law is built differently: the Labour Act sets fairly low minimums, and much of the real protection comes from the written contract, the National Industrial Court's case law and statutes on pensions, compensation and tax. This guide covers the Labour Act rules a UK company meets first. Section numbers are from the Labour Act, Cap L1 LFN 2004.
Who the Labour Act covers
Section 91 defines a 'worker' and excludes people exercising administrative, executive, technical or professional functions. In practice that means a software engineer, an accountant or a manager may not be a 'worker' under the Act, while a driver, cleaner or warehouse hand usually is. For excluded staff, the contract sets the terms. Write your contracts to at least the Act's standards anyway; it is simpler and it is what Nigerian staff expect.
The core minimums
| Topic | Labour Act rule | Section |
|---|---|---|
| Written terms | Within 3 months of starting; changes in writing within 1 month | s.7 |
| Wages | In legal tender; cheque only with prior written consent; paid at intervals of no more than a month | s.1, s.15 |
| Deductions | Total deductions in a month no more than one third of that month's wages | s.5(7) |
| Hours | Set by agreement or collective bargaining; extra hours are overtime, no statutory rate; one rest day in seven | s.13 |
| Sick pay | Up to 12 working days a year with a medical certificate | s.16 |
| Annual holiday | At least 6 working days after 12 months' continuous service; no pay in lieu while employed | s.18 |
| Maternity | 6 weeks before and after confinement; at least 50% of wages if 6+ months' service | s.54 |
| Records | Wage and personal records kept for 3 years | s.75 |
The Act has no paternity leave provision. Some state governments give it to their own public servants, but that does not bind private employers.
Deductions, advances and overpayments
The Labour Act is strict about what can come out of pay, which surprises UK employers used to recovering costs through payroll:
- No deductions for fines (s.5(1)). A reasonable deduction for injury or loss caused by the worker's wilful misconduct or neglect needs the prior written consent of an authorised labour officer.
- Pension or provident fund deductions need the worker's consent or a legal basis, such as the Pension Reform Act (s.5(2)).
- A wage advance can be no more than one month's wages, must be recovered over at least three months, and cannot carry interest (s.4).
- An overpayment can be recovered only for the three months before the month it was discovered (s.5(5)).
- All deductions in a month together cannot exceed one third of that month's wages (s.5(7)).
If you offer staff loans or salary advances, write the terms down and keep them inside these limits for anyone who is a 'worker' under the Act.
Notice and ending employment
Section 11 sets minimum notice on either side:
- One day, for service of three months or less.
- One week, for more than three months but less than two years.
- Two weeks, for two years but less than five.
- One month, for five years or more.
Notice of a week or more must be in writing, and either side can waive notice or pay in lieu, calculated on money wages excluding overtime and allowances. On redundancy, section 20 requires the employer to inform the trade union where there is one, apply last in, first out subject to merit, and use best endeavours to negotiate redundancy pay. Contracts for professional staff commonly give longer notice, often one to three months; the contract then governs. Termination is covered further in ending employment in Nigeria.
Minimum wage and statutory schemes
The National Minimum Wage (Amendment) Act 2024 set the minimum at ₦70,000 a month, with review every three years. SCP Law's summary says the earlier exemptions were retained, including part-time and commission workers and establishments with fewer than 25 employees. Alongside the Labour Act, employers meet:
- The Pension Reform Act 2014: at least 10% employer and 8% employee for employers with three or more staff; see pension for Nigerian staff.
- The Employees' Compensation Act 2010: 1% of monthly payroll to NSITF, covering staff from day one.
- PAYE under the Nigeria Tax Administration Act 2025, paid to the employee's state IRS.
Steps for a UK employer's first contract
- Decide who the employer is: your UK company, an employer of record or a Nigerian subsidiary.
- Draft a contract covering every s.7 item: job, pay, pay date, hours, leave, sick pay, notice.
- Choose the governing law and courts. A contract for work in Nigeria is usually under Nigerian law, with disputes in the National Industrial Court.
- Add confidentiality, IP assignment and data protection clauses.
- Keep records for at least three years, as s.75 requires.
Where Pryme fits
A Pryme Business Account can pay Nigerian salaries on a fixed monthly date through payroll, keeping a record of each payment. The Compliance agent can track contract renewals, probation dates and leave balances; a person approves any action.
Questions people ask
How much annual leave must a Nigerian employer give?
The Labour Act sets at least six working days' paid holiday after 12 months' continuous service. Many contracts give more.
What notice is required to end employment in Nigeria?
From one day (three months' service or less) to one month (five years or more), unless the contract gives longer. Payment in lieu is allowed.
Is there statutory sick pay in Nigeria?
Section 16 provides up to 12 working days' paid sick leave a year, certified by a registered medical practitioner.
Does the Labour Act cover managers and professionals?
Its definition of 'worker' excludes administrative, executive, technical or professional functions, so the contract usually governs for those staff.
Sources
- Labour Act, Cap L1 LFN 2004 (PLAC text) · accessed Oct 2026
- SCP Law: The 2024 Minimum Wage Act, a closer look (31 Jul 2024) · accessed Oct 2026
- ThisDay: CPS, what you should know about employee's rights (20 Mar 2023) · accessed Oct 2026
- NSITF: Compensation (Employees' Compensation Act 2010) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · 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.